WEST U.P. SUGAR MILLS ASSOCIATION & ORS. versus THE STATE OF UTTAR PRADESH & ORS.
[2020] 9 S.C.R. 530, Supreme Court of India, 2020
Outcome: Reference answered
Segment: Facts
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WEST U.P. SUGAR MILLS ASSOCIATION & ORS.
v.
THE STATE OF UTTAR PRADESH & ORS.
(Civil Appeal No. 7508 of 2005)
APRIL 22, 2020
[ARUN MISHRA, INDIRA BANERJEE, VINEET SARAN,
M. R. SHAH AND ANIRUDDHA BOSE, JJ.]
U.P. Sugarcane (Regulation of Supply and Purchase) Act,
1953 – s.16 – Authority of State of U.P. to fix the State Advised
Price (SAP) paid over and above the minimum price fixed by Central
Government – Matter referred by three Judge Bench having noted
conflict between two Constitution Bench judgments, Ch. Tika Ramji
& Others, Etc. v. The State of Uttar Pradesh & Others [1956] SCR 393
and U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills
Association and Others (2004) 5 SCC 430 – Held: Factual matrix and
the relevant provisions which fell for consideration in Tika Ramji
and in U.P. Coop. Cane Unions Federations case were altogether
different – Concept of fixation of minimum price by Central Govt.
vis-à-vis SAP to be fixed by State Government under the 1953 Act,
never fell for consideration in Ch. Tika Ram – While, in U.P. Coop.
Cane Unions Federations it was rightly held that there is no
inconsistency or repugnancy in fixing the remunerative/advised
price by the State Govt. and the “minimum price” fixed by Central
Govt. – And that if the price fixed by the State Govt. is higher than
that fixed by the Central Govt., there will be no inconsistency or
repugnancy as it is possible for both the orders to
operate
simultaneously and to comply with both of them – View taken by the
Constitution Bench in U.P. Coop. Cane Unions Federations is the
correct law – No conflict between the two decisions in Tika Ramji
and U.P. Coop. Cane Unions Federations case – Matter not required
to be referred to a larger Bench of seven Judges – U.P. Sugarcane
(Regulation of Supply and Purchase) Order, 1954 – Sugarcane
(Control) Order, 1955 – Clause 3 – Essential Commodities Act, 1955
– s.3(2)(c) – Sugarcane (Control) Order, 1966 – Clause 3 –
Constitution of India – Art.254; List III of Seventh Schedule –
Interpretation of Statutes.
[2020] 9 S.C.R. 530
530
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Constitution of India – List III of Seventh Schedule – Entries
33 and 34 – Power to fix price of sugarcane – Held: By virtue of
Entries 33 and 34, List III, Seventh Schedule, both the Central
Government as well as the State Government have power to fix the
price of sugarcane – Central Government having exercised the power
and fixed the minimum price, the State Government cannot fix the
minimum price of sugarcane – However, it is always open for the
State Government to fix the advised price which is always higher
than the minimum price – U.P. Sugarcane (Regulation of Supply
and Purchase) Act, 1953 – s.16 – Sugarcane (Control) Order, 1966.
Sugarcane (Control) Order, 1966 – Held: 1966 Order issued
u/s.16, 1953 Act confers power upon the State Government to fix
the remunerative/advised price at which sugarcane can be bought
or sold – This price shall always be higher than the minimum price
fixed by Central Government – U.P. Sugarcane (Regulation of
Supply and Purchase) Act, 1953 – s.16.
U.P. Sugarcane (Regulation of Supply and Purchase) Act,
1953 – s.16 – If repugnant to s.3(2)(c), 1955 Act and Clause 3 of
1966 Order – Held: No – Essential Commodities Act, 1955 – s.3(2)(c)
– Sugarcane (Control) Order, 1966 – Clause 3.
Constitution of India – Art.254; List III of Seventh Schedule
– Repugnancy in laws – Held: Question of repugnancy in List III,
Seventh Schedule, where both the Union and the States have the
power to enact a law, arises only where there is an
actual
irreconcilable conflict between the two laws.
Answering the reference, the Court
HELD: 1.1 From the legislative history and the relevant
provisions of Essential Commodities Act, 1955, U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953, U.P. Sugarcane
(Regulation of Supply and Purchase) Order, 1954, Sugarcane
(Control) Order, 1955, Sugarcane (Control) Order, 1966 which
fell for consideration by this Court in the case of Tika Ramji and
U.P. Coop. Cane Unions Federations, it appears that as such there
has been a sea change in the law. [Para 9][562-C]
1.2 The question involved in Ch. Tika Ramji & Ors., etc.
v. The State of Uttar Pradesh & Ors. AIR 1956 SC 676 was
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v.
THE STATE OF UTTAR PRADESH & ORS.
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concerning the validity of the Uttar Pradesh Sugarcane
(Regulation of Supply and Purchase) Act, 1953 and notifications
dated 27.9.1954 and 9.11.1955 issued by the Government of Uttar
Pradesh thereunder. The notification dated 27.9.1954 was issued
in exercise of the powers/ conferred under sub-section 1(a) read
with sub-section 2(b) of Section 16 of the Act of 1953 which
provided that not less than 3/4 of the cane growers of the area of
operation of a Cane Growers Cooperative Society to be members
of the society. The occupier of the factory for which the area is
assigned shall not purchase or enter into an agreement to
purchase cane grown by a cane grower except through such Cane
Growers Co-operative Society. The notification dated 9.11.1955
which was issued in exercise of the powers conferred by section
15 of the Act of 1953, reserved or assigned to the sugar factories
mentioned in column 2 of the Schedule annexed to it, the cane
purchasing centers, with the authorities attached to them,
specified against them in column 3 for the supply of sugarcane
during the crushing season 1955-56. Thus, it is apparent that the
notification dated 27.9.1954 related to the agency of supply of
sugar cane to the factories and the notification dated 9.11.1955
related to the creation of the zones for particular factories were
questioned. [Paras 12, 13][577-G-H; 578-A-C]
1.3 This Court held that the State of Uttar Pradesh had the
legislative competence to enact the Act, and there was no
repugnancy of the Act of 1953 with the Act of 1951 or the Essential
Commodities Act, 1955. This Court upheld the validity of the
Act and notifications and also held that there was no unreasonable
restriction imposed. There was no violation of fundamental right
under Article 19(1)(f) and (g) and Article 31 of the Constitution.
The question of fixation of price by the State Government under
the Act of 1953 did not fall for consideration in Ch. Tika Ram.
This Court noted that the Uttar Pradesh Government had never
fixed the price of sugarcane to be purchased by the factories by
the time the decision was rendered. While examining the
repugnancy, passing reference has been made to the provisions
contained in the Act of 1954. During the pendency of petitions,
the Sugar Control Order, 1955, was issued on 27.8.1955, which
was referred to in the judgment. It was not even submission raised
or considered that the power of regulation under Section 16 of
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the Act would include the power to fix the advised price of
sugarcane. The concept of fixation of minimum price by Central
Government vis a vis to State Advised Price to be fixed by State
Government, never fell for consideration of this Court in the said
decision. The ratio of decision has to be considered in the light
of questions considered and answered. In Tika Ramji, it was held
that there was no repugnancy in the Act of 1953 with Act of 1955
or with the Act of 1951, and notifications which were impugned
did not infringe the fundamental rights. [Paras 15-17][578-G-H;
579-A-D]
1.4 Thus, the factual matrix and the relevant provisions
which fell for consideration before this Court in the case of Tika
Ramji and which fell for consideration by this Court in the case of
U.P. Coop. Cane Unions Federations were altogether different.
Clause 3 of 1955 Order empowered the Central Government to
fix “the price or the minimum price”. The aforesaid Clause 3 of
1955 Order was under consideration by this Court in the case of
Tika Ramji. However, subsequently, 1955 Order has been
repealed by 1966 Order and Clause 3 of 1966 Order provides
that the Central Government may fix “the minimum price” of the
sugarcane. Therefore, when the legislature consciously deleted
the word “the price” and retained the power with the Central
Government to fix “the minimum price”, some meaning has to
be given to such a deletion. The intention of the legislature is
also required to be
considered when certain words in the
provisions of a statute are deleted or added and/or substituted.
In the case of Tika Ramji, this Court though specifically observed
and held that in the field of sugar and sugarcane, both, the
Parliament and the State legislature would have the concurrent
Jurisdiction as the same will fall under Entry 33 in the Concurrent
List of seventh Schedule. Considering the fact that the State
Government did not exercise the power of fixing the price, though
the powers were available and the Central Government fixed the
price/minimum price which came to be adopted by the State
Government, this Court in Tika Ramji’s case held that in such a
situation there is no conflict and the question of repugnancy does
not arise. Therefore, as such there is no apparent conflict between
the decisions in Tika Ramji’s case and U.P. Coop. Cane Unions
Federations, which require to be referred to a larger Bench of
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v.
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seven Judges. Under clause 3 of the 1966 order, the minimum
price can be fixed. Under Clause 3A of the said order, as amended
in 1978, the agreed price is to be mentioned in the agreement,
which can be higher than the minimum price and not less than
that. Under Clause 3(2), no person shall sell or agree to sell
sugarcane to a producer of sugar or his agent, and no such
producer or agent shall purchase or agree to purchase sugarcane
at a price lower than that fixed under sub-clause (1). Thus, the
price fixed under Clause 3(1) has to be treated as a minimum
price. Under Clause 3(A), as inserted on 2.2.1978, agreement in
writing is required, and the price has to be paid as agreed to
within 14 days. [Paras 18, 19][579-D-H; 580-A-D]
1.5 Even otherwise and on merits, this Court is in complete
agreement with the view taken in the case of U.P. Coop. Cane
Unions Federations, which lays down that the inconsistency or
repugnancy will arise if the State Government fixed a price which
is lower than that fixed by the Central Government. But, if the
price fixed by the State Government is higher than that fixed by
the Central Government, there will be no occasion for any
inconsistency or repugnancy as it is possible for both the orders
to operate simultaneously and to comply with both of them. A
higher price fixed by the State Government would automatically
comply with the provisions of Sub-clause (2) of Clause 3 of 1966
Order.
Therefore, any price fixed by the State Government which
is higher than that fixed by the Central Government cannot lead
to any kind of repugnancy. [Para 20][580-E-F]
1.6 Question of repugnancy under Article 254 of the
Constitution:
Concerning laws in List III of the Seventh Schedule of the
Constitution of India, where both the Union and the States have
the power to enact a law, the question of repugnancy arises only
in a case where there is an actual irreconcilable conflict between
the two laws. Inconsistency between the two laws is irreconcilable,
then the question of repugnancy arises. It is necessary to find
the dominant intention of both the legislatures, partial or incidental
coverage of the same area in a different context, and to achieve a
different purpose, does not attract the doctrine of repugnancy.
Clause (1) of Article 254 of the Constitution gives primacy to
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central legislations in case of conflict with State laws whether
enacted before or after. The central law operates only in case of
repugnancy and not in a case of mere possibility when such an
order might be issued under state law. [Paras 20.1, 20.3][580-G-
H; 581-A; 584-C-D]
Rajiv Sarin v. State of Uttarakhand (2011) 8 SCC 708;
M. Karunanidhi v. Union of India (1979) 3 SCC 431 :
[1979] 3 SCR 254; Belsund Sugar Co. Ltd. v. State of
Bihar & Ors. (1999) 9 SCC 620 : [1999] 1 Suppl. SCR
146; Punjab Dairy Development Board & Anr. v.
Cepham Milk Specialities Ltd. & Ors. (2004) 8 SCC
621; Southern Petrochemicals Industries Ltd. v.
Electricity Inspector and ETIO & Ors. (2007) 5 SCC
447 : [2007] 6 SCR 955; Bharat Hydro Power
Corporation Ltd. & Ors. v. State of Assam & Anr. (2004)
2 SCC 553 : [2004] 1 SCR 284 – relied on.
1.7 In U.P. Cooperative Cane Unions Federations,
Constitution Bench has rightly opined that under section 16 of
the Act of 1953, there is the power to fix a price with State, which
is State advised price. It cannot be said that the Central legislation
occupies the field, the Essential Commodities Act, 1955, and the
Order of 1966 issued thereunder deals with minimum price. The
Central Government has the power to fix the minimum price in
clause 3. The State Government is not denuded of the power
under the Act of 1953 to fix the “State Advised Price” under
section 16 as held in U.P. Cooperative Cane Unions Federations.
The power to regulate includes
the power to fix the price. But
State advised price has to be higher than the minimum price fixed
by Central Government. In a given case, the SAP price may be
an agreed price. But the exercise of the power under section 16
of the Act of 1953 to fix State Advised Price, cannot be said to be
irreconcilable with the minimum price fixation under section
3(2)(c) of the Essential Commodities Act, 1955 and clause 3 of
the Sugarcane (Control) Order, 1966. The power of fixation of
State advised price under section 16 of the Act of 1953 cannot be
said to be arbitrary or illegal in any manner. [Paras 20.4][584-E-
H; 585-A]
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v.
THE STATE OF UTTAR PRADESH & ORS.
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1.8  This Court took into consideration the effect, scope
and impact of Section 16 under the Act. This Court considered in
detail Section 16 of the Act – the provision to regulate purchase
and supply of sugarcane in the reserved and assigned area, under
which the State Government is vested with the power to regulate
the distribution, sale or purchase of sugarcane in any reserved
or assigned area and purchase of cane in any area other than a
reserved or assigned area by issuing an order to that effect.
Thereafter, this Court has held that the power to regulate includes
the power to fix the SAP. This Court has also specifically observed
and held that there was no repugnancy. This Court took into
account the relevance, importance, purpose and object, its impact,
implication and reasons for enacting Section 16 of the Act and
after taking into account all the relevant considerations this Court
has specifically held that the SAP is a price higher than that
determined by the Central Government which is known as
Statutory Minimum Price (SMP). Thus, in the case of U.P.
Cooperative Cane Unions Federations, this Court has specifically
upheld the power of the State Government to fix the SAP under
Section 16 of the Act. [Paras 20.4.2, 20.4.3][585-D-G]
1.9 The following factors are the relevant facts for
determination of SAP.
(i) The cost of cultivation of sugarcane.
(ii) The cost of transport of sugarcane by cane growers from
the
field to purchase center or to mill gate as the case may be.
(iii) A reasonable return on the aforesaid amount of his
produce to cane growers.
(iv) Availability of the cane area, demand of sugarcane by
industries, profitability of the industries by selling sugar, and other
bye products etc.
(v) The price of sugarcane paid by sugar factories in the
proceeding year.
(vi) The factors necessary to avoid diversion of sugarcane
from sugar industries to other consumers like Kolhu and
Khandsari Units.
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It appears that determination and fixation of the SAP is a
Cabinet decision which has been fixed after considering several
factors, including the cost of cultivation/production of the
sugarcane etc. and after taking into consideration the relevant
factors as above and including increasing of national economic
growth, cost of production of sugarcane, increase in the cost of
seeds, fertilizers, labour charges, irrigation etc., including the
profit earned by sugar factories from the produces from bye-
products, power projects etc. Thus it appears that authority is
guided by all relevant factors while determining such price – SAP.
[Para 20.5][585-H; 586-A-E]
1.10  In the 1966 Order the word “the price” has been
deleted and Clause 3 of 1966 Order provides that the Central
Government may fix “the minimum price” of the sugarcane to be
paid by the producer of sugar. There is a difference between “the
price” and “the minimum price”. The aforesaid shall be apparent
from the relevant Clauses of the 1966 Order. The provision of
State advised price has been made to protect the interests of the
sugarcane growers who are not in a position to negotiate. Clause
3(1) empowers the Central Government to fix the minimum price
of sugarcane to be paid by the producers of sugar or their agents
for the sugarcane purchased by them. Clause 3(2) provides that
no person shall sell or agree to sell sugarcane to a producer of
sugar or his agent, and no such producer or agent shall
purchase
or agree to purchase sugarcane, at a price lower than that fixed
under sub-clause (1). As per Clause 3(3), where a producer of
sugar purchases any sugarcane from a grower of sugarcane or
from a Sugarcane-grower’s Co-operative Society, the producer
shall, unless there is an agreement in writing to the contrary
between the parties, pay within fourteen days from the date of
delivery of the sugarcane to the seller or tender to him the price
of the cane sold at the rate agreed to between the producer and
the sugarcane- grower or Sugarcane- growers’ Co-operative
Society or that fixed under sub-clause (1), as the case may be.
Clause (3-A) provides that a producer of sugar or his agent shall
pay, for the sugarcane purchased by him, to the sugarcane grower
or the sugarcane growers’ coopearative society, either the
minimum price of sugarcane fixed under Clause 3, or the price
agreed to between the producer or his agent and the sugarcane
grower or the sugarcane growers’ cooperative society, as the
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case may be (agreed price). Agreed Price to be paid under the
Agreement may be even SAP fixed and/or determined by the State
Government. Clause (5-A) provides that where a producer of
sugar purchases sugarcane, from a sugarcane-grower during each
sugar year, he shall be liable to pay, in addition to the minimum
sugarcane price fixed under Clause 3, an additional price. Sub-
clause (2) of Clause 5-A authorizes the appropriate authority to
determine the additional price. Sub-clause (5) further provides
that no additional price determined under sub-clause (2) or sub-
clause (3) is required to be paid by a producer of sugar who pays
a price higher than the minimum price fixed under Clause 3 to
the sugarcane-grower, provided that, “the price so paid is not
less than the total price comprising the minimum sugarcane price
fixed under Clause 3 and the additional price determined under
sub-clause (2) or sub-clause (3).” [Paras 20.7, 20.7.1, 20.7.2][588-
A-C; 589-E-H; 590-A-D]
Sukhnandan Saran Dinesh Kumar & Ors. v. Union of
India & Ors. (1982) 2 SCC 150 : [1982] 3 SCR 371 –
relied on.
1.11 The State has the competence to determine and fix
the State Advised Price fixed under section 16 and therefore
fixation of SAP by the State Government cannot be said to be
beyond the purview of legislative competence. Once the fixation
of State Advised Price has been done, the Cane Commissioner
can direct the parties to follow the same as
held in U.P.
Cooperative Cane Growers Federation. It cannot be said that
fixation of price under the regulatory measure provided in section
16 suffers from arbitrariness, nor can it be termed to be
uncanalised power. Considering the entire scheme of 1966 Order,
it provides for “the minimum price” and “the additional price”
or “the advised price”. Considering the aforesaid provisions
under 1966 Order, there cannot be any sugarcane price (advised
price) below “the minimum price”. As per the agreement entered
into the “advised price” necessarily had to be higher than the
“minimum price”. Thus, there is a difference between “the price”
and the “the minimum price”. As per Clause 3 of 1966 Order, it
empowers the Central Government to fix the “minimum price”
and the State Government is authorized to fix the Advised Price
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which as observed hereinabove is always higher than the
“minimum price” fixed by the Central Government.
[Paras 21, 22][590-E-H; 591-A]
1.12  Thus, it is held that the view taken by the Constitution
Bench of this Court in the subsequent decision in the case of
U.P. Coop. Cane Unions Federations is the correct law. There is
no conflict between the two decisions of this Court in the case of
Tika Ramji and in the case of U.P. Coop. Cane Unions Federations
and therefore, there is no necessity to refer the matter to the
larger Bench consisting of seven Judges. Final conclusions are
as under:
a. By virtue of Entries 33 and 34 List III of seventh
Schedule, both the Central Government as well as the State
Government have the power to fix the price of sugarcane.
The Central Government having exercised the power and
fixed the “minimum price”, the State Government cannot
fix the “minimum price” of sugarcane. However, at the same
time, it is always open for the State Government to fix the
“advised price” which is always higher than the “minimum
price”, in view of the relevant provisions of the Sugarcane
(Control) Order, 1966, which has been issued in exercise
of powers under Section 16 of the U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953;
b. The Sugarcane (Control) Order, 1966 which has been
issued under Section 16 of the U.P. Sugarcane (Regulation
of Supply and Purchase) Act, 1953 confers power upon the
State Government to fix the remunerative/advised
price at
which sugarcane can be bought or sold which shall always
be higher than the minimum price fixed by the Central
Government;
c. Section 16 of the U.P. Sugarcane (Regulation of Supply
and Purchase) Act, 1953 is not repugnant to Section 3(2)(c)
of the Essential Commodities Act, 1955 and Clause 3 of
the Sugarcane (Control) Order, 1966 as, as observed
hereinabove, the price which is fixed by the Central
Government is the “minimum price” and the price which is
fixed by the State Government is the “advised price” which
is always higher than the “minimum price” fixed by the
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v.
THE STATE OF UTTAR PRADESH & ORS.
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Central Government and therefore, there is no conflict. It
is only in a case where the “advised price” fixed by the
State Government is lower than the “minimum price” fixed
by the Central Government, the provisions of the Central
enactments will prevail and the “minimum price” fixed by
the Central Government would prevail. So long as the
“advised price” fixed by the State Government is higher
than the “minimum price” fixed by the Central Government,
the same cannot be said to be void under Article 254 of the
Constitution of India.
d. The view taken by the Constitution Bench of this Court
in the case of U.P. Cooperative Cane Unions Federations
vs. West U.P. Sugar Mills Association and Others is the
correct law. [Para 23][591-D-H; 592-A-F]
U.P. Cooperative Cane Unions Federations v. West U.P.
Sugar Mills Association and Others (2004) 5 SCC 430:
[2004] 2 Suppl. SCR 238 – held correct law.
Ch. Tika Ramji & Others, Etc. v. The State of Uttar
Pradesh & Others AIR 1956 SC 676 : [1956] SCR
393; State of Orissa v. M.A. Tulloch & Co. [1964] 4
SCR 461; Dr. Preeti Srivastava v. State of M.P. (1999)
7 SCC 120 : [1999] 1 Suppl. SCR 249 – referred to.
Case Law Reference
[1956] SCR 393
referred to
Para 1
[2004] 2 Suppl. SCR 238
held correct law
Para 1
[1964] 4 SCR 461
referred to
Para 6.2
[1979] 3 SCR 254
relied on
Para 6.2
[1999] 1 Suppl. SCR 249
referred to
Para 7.2
(2011) 8 SCC 708
relied on
Para 20.1
[1999] 1 Suppl. SCR 146
relied on
Para 20.3
(2004) 8 SCC 621
relied on
Para 20.3
[2007] 6 SCR 955
relied on
Para 20.3
[2004] 1 SCR 284
relied on
Para 20.3
[1982] 3 SCR 371
relied on
Para 20.7.1
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541
CIVIL APPELLATE ORIGINAL JURISDICTION: Civil Appeal
No. 7508 of 2005.
From the Judgment and Order dated 07.10.2004 of the High Court
of  Judicature at Allahabad in Civil Misc. Writ Petition No. 26291 of
2004.
C.A. Nos. 7509-7510 of 2005, 150 of 2007, 2664 of 2007, 4026 of
2009, 4014-4023 of 2009,  4024 of 2009, 4025 of 2009, 3911-3912 of
2009, 3925 of 2009,  3996-3997 of 2009,  4764 of 2009, CONMT. PET.
(C) Nos. 169 of 2006, 254 of 2007, 253 of 2007 in C.A. Nos. 7508/2005
SLP (C) Nos. 18681 of 2008, 19183 of 2008, 20206 of 2008,  20205 of
2008, 21576-21581 of 2008, 21585-21587 of 2008,  23202 of 2008, 26026
of 2008, Contempt Petition (C) Nos. 263-264 of 2008, 267-268 of 2008
in CA Nos. 3996-3997/2009 and 265-266 of 2008, T.C. (C) No. 96 of
2013.
Jayant Bhushan, Krishnan Venugopal, Sr. Advs., Mahesh Agarwal,
Shubham Kulshreshtha, Yojit Mehra, Amartya Bhushan, Narender
Kumar Verma, Ms. Malvika Kapila, Apoorv Khator, Tushar Bhushan,
Amritya Bhushan, Ms. Anushree Menon, Mithun S., Vikas Mehta, E. C.
Agrawala, Rohit K. Singh, Uday Tiwary, P. N. Razdan, Mirza Kayesh
Begg, Ms. Saloni Tangri, Ms. Anshruta Maheshwari, Navpreet Singh
Ahluwalia, Salil Seth, Anuj Dhingra, Neeraj Malik, Umesh Kumar
Khaitan, Syed Shahid Husain Rizvi, Sanjeev Kumar Singh, Zeeshan Rizvi,
Ms. Anas Rizvi, Syed Imtiyaz  Ali,  Piyush Beriwal, Padmesh Mishra,
D. L. Chidananda, Ms. Binu Tamta, Nikhil Rohatgi, Arkaj Kumar,
Amlendu Jha Kumar, Sandeep Lala, Raj Bahadur, Pratap Venugopal,
Ms.
Surekha Raman, Akhil Abraham Ray, Vijay Valsan (for M/s K. J.
John & Co.), Ajay Majithia, Satyajit A. Desai, Ms. Anagha S. Desai,
Sumit Goeol, Ishan Nagar, Manu Bajaj, Raghav Bansal, Ms. Nikita
Pandey (for M/s. Parekh & Co.), Amol Chitale, Ms. Pragya Baghel,
G .N. Reddy, T. Vijaya Bhaskar Reddy, Digvijay Harichandan, Ms. Ruby
Singh Ahuja, Vishal Gehrana, Nakul Gandhi, Shravan Sahny, Mrs. Manik
Karanjawala (for M/s Karanjawala & Co.), Vikash S. Wagmare, Hitesh
Kumar Sharma, Akhileshwar Jha, Ms. Meenakshi S., Praveen Kumar,
Mr. Gunnam Venkateswara Rao, Y. Raja Gopala Rao, Y. Vismai Rao,
Prashant Kumar (for M/s. Ap & J Chambers,), P. N. Gupta, Parijat
Sinha, Vishnu Sharma, Ms. Anupama Sharma, V. P. Pathak, Kumar
Prasoon Ranjan, Dr. Abhishek Atrey, Ms. Ambika Atrey, Ms. Vidyottma,
S. S. Ray, Ms. Rakhi Ray, Amar Dave, P. S. Sudheer, Rishi Maheshwari,
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v.
THE STATE OF UTTAR PRADESH & ORS.
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Mrs. Mayuri Nayyar Chawla, Ms. Anne Mathew, Bharat Sood,
Ms. Shruti Jose, Vishwajit Singh, Akshat Kumar, Gaurav Agrawal, Pankaj
Gupta, Pradeep Misra, Mrs. Bina Gupta, Jatinder Kumar Bhatia, K. R.
Sasiprabhu, Vishnu Sharma, Ritesh Agrawal, Punit Dutt Tyagi, Abhishek
Atrey, Ms. C. K. Sucharita, Prashant Kumar, Siddhartha Chowdhury,
Mrs. V. D. Khanna, Bimal Roy Jad, V. K. Verma, Rohit K. Singh,
Ardhendumauli Kumar Prasad, Ambhoj Kumar Sinha, Ravi Prakash
Mehrotra, Mrs. Anil Katiyar, Praveen Kumar, P. K. Bhalla, T. Mahipal,
Akshat Kumar, P. I. Jose, Advs. for the appearing parties.
Petitioner-in-person.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Having noted that there is a clear conflict between the two
decisions of this Court, one in the case of Ch. Tika Ramji & Others,
Etc. vs. The State of Uttar Pradesh & Others [AIR 1956 SC 676 =
1956 SCR 393 = 1956 SCJ 625] and another subsequent decision in
the case of U.P. Cooperative Cane Unions Federations vs. West U.P.
Sugar Mills Association and Others [(2004)5 SCC 430], a three Judge
Bench of this Court has referred the matter to a larger Bench proposing
the following questions of law to be considered by the larger Bench,
preferably of a Bench consisting of seven Judges of this Court:
(1) Whether by virtue of Article 246 read with Schedule VII
List III Entry 33 of the Constitution the field is occupied by
the Central legislation and hence the Central
Government
has the exclusive power to fix the price of sugarcane?
(2) Whether Section 16 or any other provision of the U.P.
Sugarcane (Regulation of Supply and Purchase) Act, 1953
confers any power upon the State Government to fix the
price at which sugarcane can be bought or sold?
(3) If the answer to this question is in the affirmative, then whether
Section 16 or the said provision of the U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953 is repugnant
to Section 3(2)(c) of the Essential Commodities Act, 1955
and Clause 3 of the Sugarcane (Control) Order, 1966
[hereinafter referred to as “1966 Order”]? And if so, the
provisions of the Central enactments will prevail over the
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provisions of the State enactment and the State enactment
to that extent would be void under Article 254 of the
Constitution of India.
(4) Whether the SAP fixed by the State Government in exercise
of powers under Section 16 of the U.P. Sugarcane (Regulation
of Supply and Purchase) Act, 1953 is arbitrary, without any
application of mind or rational basis and is therefore, invalid
and illegal?
(5) Does the State Advised Price (for short “SAP”) constitute a
statutory fixation of price? If so, is it within the legislative
competence of the State?
(6) Whether the power to fix the price of sugarcane is without
any guidelines and suffers from conferment of arbitrary and
uncanalised power which is violative of Articles 14 and
19(1)(g) of the Constitution of India?
2. The core issue is whether the State of U.P. has the authority to
fix the State Advised Price (SAP) [hereinafter referred to as “SAP”],
which is required to be paid over and above the minimum price fixed by
the Central Government?
3. At the outset it is required to be noted that in Tika Ramji case
(supra), a Bench of five Judges of this Court held as under:
(i)
That, section 16 of the U.P. Sugarcane (Regulation of Supply
and Purchase) Act, 1953 [hereinafter referred to as “1953
U.P. Act”] does not include the power to fix a price;
(ii)
That, the price of cane fixed by the U.P. Government only
mean the price fixed by the appropriate Government which
would be the Central Government, under Clause 3 of
the
Sugarcane (Control) Order, 1955 [hereinafter referred to
as “1955 Order”];
(iii)
That, even the provisions in behalf of the agreement
contained in Clauses 3 and 4 of the U.P. Sugarcane
(Regulation of Supply and Purchase) Order, 1954
[hereinafter referred to as “1954 U.P. Order”] provided
that the price was to be the minimum price to be notified by
the Government subject to such deduction, if any, as may
be notified by the Government from time to time, meaning
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thereby the Central Government, the State Government not
having made any provision in that behalf at any time
whatsoever;
(iv)
That, there is no power to fix a price for sugarcane under
the U.P. Sugarcane Act or Rules and the Orders made
thereunder;
It is to be noted that in Tika Ramji case(supra), this Court did
not comment on whether a power which the State Government exercised
under Section 16 of the 1953 U.P. Act would be repugnant to the Central
legislation, since this Court found no such power exercised by the State
Government.
4. However, subsequently, another five Judges Bench of this Court
in the case of U.P. Coop. Cane Unions Federations (Supra) has
specifically gone into the question of repugnancy and held that the
inconsistency or repugnancy will rise if the State Government fixes a
price which is lower than that fixed by the Central Government. But, if
the price fixed by the State Government is higher than that fixed by the
Central Government, there will be no occasion for any inconsistency or
repugnancy as it is possible for both the orders to operate simultaneously
and to comply with both of them. A higher price fixed by the State
Government would automatically comply with the provisions of clause
3(2) of 1966 Order. Therefore, any price fixed by the State Government
which is higher than that fixed by the Central Government cannot lead
to any kind of repugnancy.
In the case of U.P. Coop. Cane Unions
Federations (Supra),
this Court held that the State Government has power to fix the price
which may be higher than the minimum price fixed by the Central
Government.
This Court in the reference order observed that to the aforesaid
extent there is a difference of opinion and/or conflict.
5. We have called upon the learned Counsel appearing on behalf
of the respective parties to first address on whether in fact there is any
conflict between the decisions of this Court in the case of Tika Ramji
(Supra) and U.P. Coop. Cane Unions Federations (Supra) or not and
whether there is a need to refer the matter to a larger Bench of seven
Judges?
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6. Shri Jayant Bhushan, learned Senior Advocate appearing on
behalf of the appellants has submitted that this case raises the following
important issues.
(1)
Whether the State Government / Cane Commissioner has
any power or authority under the 1953 U.P. Act or the Rules
and the Orders made thereunder to fix the sugarcane price?
(2)
If the State of U.P. had such a power, would such legislation
be repugnant to the Central legislation i.e. Essential
Commodities Act and the 1966 Order?
(3)
Whether there is any conflict between the Constitution
Bench judgment of this Court in the case of Tika Ramji
(Supra) and in the case of U.P. Coop. Cane Unions
Federations (Supra)?
6.1 So far as the question No.1 is concerned, it is submitted that
the power to regulate the distribution, sale or purchase of cane under
Section 16 of the 1953 U.P. Act does not include the power to fix the
price. It is submitted that this aspect has been comprehensively dealt
with in the case of Tika Ramji (Supra) which analyzed the legislative
history of laws relating to sugar and sugarcane both Central and State
and came to the specific conclusion that the power reserved to the State
Government to fix the minimum price of sugarcane which existed in
U.P. Act 1 of 1938 was deleted from the 1953 U.P. Act since that power
was being exercised by the Centre under Clause 3 of Sugar and Gur
Control Order, 1950. Reliance is placed upon paragraph 34 of decision
in the case of Tika Ramji (Supra).
6.1.1
It is submitted that in the aforesaid decision it has specifically
been held that the 1953 U.P. Act or the Rules and the Orders made
thereunder made no provision for fixation of price of sugarcane
whatsoever and therefore, there was no question of repugnancy with
the Central law. It is submitted that in the case of U.P. Coop. Cane
Unions Federations (Supra), this Court did not quote paragraph 34
and relevant paragraphs of the decision in the case of Tika Ramji (Supra)
and erroneously holds that Tika Ramji (Supra) only held that the State
did not in fact exercise the power to fix the price.
6.1.2  It is submitted that the argument that Tika Ramji (Supra)
only hold that the State Government did not fix the price as this was
fixed for the first time in 1973, is totally misplaced. It is submitted that
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Tika Ramji case has specifically held that there was no power to fix the
price for sugarcane under the 1953 U.P. Act or the Rules and the Orders
made thereunder. It is submitted that although the judgment in Tika Ramji
(Supra) does not specifically quote section 16 of the 1953 U.P. Act, it is
clear from the judgment that every section and every Rule was examined
to see whether there was any power to fix cane price or any provision
relating to price of cane. It is urged that the only provision that was
found on detailed scrutiny of the 1953 U.P. Act and the Rules was Rule
94 which provided for a notice showing the minimum price fixed by the
Government, which was held by the Constitution Bench to mean price
fixed by the Central Government.
6.2 Now, so far as question No.2 is concerned, it is argued that
even if such a power exists under Section 16 of the 1953 U.P. Act, such
power would be totally repugnant to the power of Central Government
to fix the minimum price under Clause 3 of the 1955 Order and thereafter
under 1966 Order. It is submitted that although Tika Ramji case (supra)
has not commented on whether such a power with the State Government
would be repugnant to the Central Legislation, since it found no such
power exercised by the State Government, the majority in the later
Constitution Bench judgment in the case of U.P. Coop. Cane Unions
Federations (Supra) held that this would not be repugnant to the Central
Legislation. It is argued that basis for holding that there is no repugnancy
is that it is possible for both the orders to operate simultaneously and to
comply with both of them. It is argued that in the case of U.P. Coop.
Cane Unions Federations (Supra), subsequently it is held that any
price fixed by the State Government which is higher than that fixed by
the Central Government cannot lead to any kind of repugnancy. It is
argued that this conclusion and its use for determining repugnancy is
incorrect and contrary to the earlier Constitution Bench judgment including
in the case of Tika Ramji (Supra). It is argued that therefore this issue
also needs to be referred to a larger Bench to resolve the conflict. Reliance
is placed on some of the observations in the case of Tika Ramji (Supra);
in the case of State of Orissa vs. M.A. Tulloch & Co. [1964 (4) SCR
461] and in the case of M. Karunanidhi vs. Union of India [(1979)3
SCC 431].
6.2.1  It is argued that therefore there cannot be two minimum
prices, one fixed by the Central Government as minimum price and other
fixed by the State Government as SAP, which is also a minimum price.
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It is submitted that once the Centre has fixed a minimum price, any
other price whether minimum price or SAP would be repugnant to the
Centre’s decision and the Centre’s power and such power of the State
Government would therefore have to yield to the Central legislation under
Article 254 of the Constitution, both legislations being under the
Concurrent List.
6.3 It is urged that there is a direct conflict between the Constitution
Bench Judgment of this Court in the case of Tika Ramji (Supra) on
one hand and the later Judgment also of the Constitution Bench in the
case of U.P. Coop. Cane Unions Federations (Supra), which needs
to be referred to the larger Bench of seven Judges.
7. On the other hand, Shri Krishnan Venugopal, learned Senior
Advocate appearing on behalf of the State of U.P. has vehemently argued
that as such there is no apparent conflict between the two decisions of
Constitution Bench of this Court in the case of Tika Ramji (Supra) and
U.P. Coop. Cane Unions Federations (Supra). In support, he has made
the following submissions.
(1)
That, there is a sea change in the law prevailing and
considered by this Court in the case of Tika Ramji (Supra)
and thereafter in the case of U.P. Coop. Cane Unions
Federations (Supra);
(2)
That, by the time of the challenge to the 1953 U.P. Act and
the 1954 U.P. Order made under Section 16 of the 1953
U.P. Act in the U.P. Coop. Cane Unions Federations
(Supra), there was a fundamental change in the substratum
on
which Tika Ramji case was decided to the extent that
the Central Government had repealed and substituted the
1955 Order by the 1966 Order. The 1966 Order issued under
Section 3 of the Essential Commodities Act, 1955 expressly
left room for the State to advise a price higher than the
minimum price fixed by the Central Government under
Clause 3(1) of the 1966 Order at which agreements for
cane procurement could be reached between farmers or
cooperative societies, especially in the context of the
reservation of cane-growing areas for exclusive
procurement by sugar factories.
WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v.
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(3)
That, the ratio of Tika Ramji (Supra) is not premised solely
on the complete absence of power under the 1953 U.P. Act
to fix prices. It is submitted that if so, there was no need for
this Court to hold premise its reasoning on the “fact” that
the State of U.P. had not actually fixed the price for
sugarcane.
(4)
That, in the case of Tika Ramji (Supra), though there is a
brief mention of section 16 of the impugned 1953 U.P. Act,
neither was the issue raised and the issue No.(iii) was
whether section 16 of the Essential Commodities Act read
with clause 7 of 1955 Order could have purported to repeal
Section 16 of the 1953 U.P. Act and the 1954 U.P. Order in
light of the proviso to Article 254(2) of the Constitution of
India, neither was the issue raised nor was there any
argument or discussion on the effect or implications of
section 16 of the 1953 U.P. Act on the fixation of the
“minimum price” under the 1955 Order in the context of
the discussion of repugnancy of 1953 U.P. Act.
(5)
That, there has been a sea change in the law relating to
repugnancy between Central law and State law in the
context of laws made under the Concurrent List, List III in
the VII Schedule to the Constitution of India, where both,
the Union and the States have power to make law.
(6)
That, being fully aware of the judgment of this Court in the
case of Tika Ramji (Supra), the Central Government
retreated from the field of fixing “the price” of
sugarcane
and only retain the power to fix “the minimum price” while
permitting an agreement for fixing higher price for
sugarcane. It is submitted that therefore, the Central
Government left it open for the State to fix the price above
the minimum price for purposes of the agreement to be
reached between the sugarcane growers and sugarcane
cooperative society, on the one hand, and the sugarcane
factories, on the other. It is submitted that therefore the
Central Government expressly indicated its intent to vacate
a particular portion of the field of price fixation in relation
to sugarcane and left it open to the State, the doctrine of
occupied field has no application whatsoever.
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(7)
It is submitted that the reliance placed upon the decision of
this Court in the case of M.A. Tulloch & Co. (Supra) on
the occupied field doctrine shall not be applicable to the
facts of the case on hand as that case relates to regulation
of mines and mineral development and the regulation which
involves the relationship between the Entry 23 in List II
and Entry 54 in List I of the Seventh Schedule, both of
which make it clear that the field of legislation can be taken
over by Parliament by making the declaration to that effect.
7.1 Shri Venugopal, learned Senior Advocate appearing for the
respondent - State of U.P. has made following submissions in support of
his submission that there has been a fundamental change in the provisions
of the 1955 Order to the extent that it was repealed by the 1966 Order.
(1)
That, Clause 3 of the 1955 Order empowered the Central
Government to fix “the price or the minimum price” to be
paid by a producer of sugar for sugarcane purchased by
him. The 1955 Order has been repealed by the 1966 Order
and clause 3 of the 1966 Order provides that the Central
Government may fix “the minimum price” of sugarcane to
be paid by producers of sugar.
(2)
That, there is a difference between “the price” which is a
fixed amount and “the minimum price” which only indicates
the lowest-permissible rate. The 1966 Order was further
amended in 1976 and 1978 and clauses 3(3) and 3-A were
introduced, which now contemplated an “agreed price”. In
view of the prohibition in clause 3(2) on transacting below
the minimum price, the “agreed price” necessarily had to
be higher than the “minimum price” fixed under clause 3(1).
(3)
That, it is evident from the amended provisions of the 1966
Order, as amended in 1976 and again in 1978, that the Central
Government intentionally vacated space in favour of the
State Legislature to regulate the price at which agreements
could be reached between sugarcane farmers and
cooperative societies of sugarcane farmers for procurement
of sugarcane, especially in the context of reservation of
areas for procurement by sugar factories.
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(4)
That, therefore, it is clear that as long as the State Advised
Price fixed by the State Government of Uttar Pradesh by
exercising powers under Section 16 of the 1953 U.P. Act
remains over and above the minimum price fixed by the
Central legislature under the 1966 Order, there is no
repugnancy to the extent that both laws can be obeyed
without infringing the other.
7.2 It is further argued that in the case of U.P. Coop. Cane Unions
Federations (Supra), this Court has rightly observed and held that so
long both, the Union law and the State law can be obeyed, the State law
does not become repugnant to the Union law when both the laws can
operate in the same field without conflict. In support, heavy reliance has
been placed upon the decision of this Court in the case of Dr. Preeti
Srivastava vs. State of M.P. [(1999) 7 SCC 120].
7.3 It is further argued that in the case of M. Karunanidhi
(Supra), while examining the issue of repugnancy with respect to State
enactment of Tamil Nadu Public Men (Criminal Misconduct) Act, 1973
in light of the Central enactments of Indian Penal Code, 1860, Prevention
of Corruption Act, 1988 and the Criminal Law (Amendment) Act, 1952
and after considering the relevant Entries in List I, List II and Concurrent
List – List III and Article 254 of the Constitution of India, it is held that
so far as Clause (1) of Article 254 is concerned, it clearly lays down that
where there is a direct
collision between a provision of a law made by
the State and that made by the Parliament with respect to one of the
matters enumerated in the Concurrent List, then, subject to the provisions
of clause (2), the State law would be void to the extent of the repugnancy.
It is submitted that it is further held that so far as the Concurrent List is
concerned, both, Parliament and the State Legislatures are entitled to
legislate in regard to any of the Entries appearing therein, but that is
subject to the condition laid down by Article 254(1). It is submitted that
in the aforesaid decision it is held that (1)Where the provisions of a
Central Act and a State Act in the Concurrent List are fully inconsistent
and are absolutely irreconcilable, the Central Act will prevail and the
State Act will become void in view of the repugnancy; (2) Where,
however a law passed by the State comes into collision with a law passed
by the Parliament on an Entry in the Concurrent List, the State Act shall
prevail to the extent of the repugnancy and the provisions of the Central
Act would become void provided the State Act has been passed in
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accordance with clause (2) of Article 254; (3) Where, a law passed by
the State Legislature while being substantially within the scope of the
entries in the State List entrenches upon any of the Entries in the Central
List the constitutionality of the law may be upheld by invoking the doctrine
of pith and substance if on an analysis of the provisions of the Act it
appears that by and large the law falls within the four corners of the
State List an entrenchment, if any, is purely incidental or inconsequential;
(4) Where, however, a law made by the State Legislature on a subject
covered by the Concurrent List is inconsistent with and repugnant to a
previous law made by Parliament, then such a law can be protected by
obtaining the assent of the President under Article 254(2) of the
Constitution. The result of obtaining the assent of the President would
be that so far as the State Act is concerned, it will prevail in the State
and overrule the provisions of the Central Act in their applicability to the
State only. Such a state of affairs will exist only until Parliament may at
any time make a law adding to, or amending, varying or repealing the
law made by the State Legislature under the proviso to Article 254.
7.4 It is submitted that therefore applying the law laid down by
this Court in the case of M. Karunanidhi (Supra) to the facts of the
case on hand, it is clear that in the present case, as the Essential
Commodities Act and the 1966 Order, on the one
hand, and 1953 U.P.
Act and the 1954 U.P. Order, have both been enacted under the
Concurrent List, and there is no direct conflict between the fixation of
the minimum price by the Central Government under Clause 3 of the
1955 Order and the fixation of a higher SAP by the State of U.P., there
is no real and irreconcilable conflict between the provisions of the two
Acts to the extent that both can be obeyed without violating the order.
Therefore, it is submitted that the decision of this Court in the
case of U.P. Coop. Cane Unions Federations (Supra) must be upheld
as there is no conflict with the decision in the case of Tika Ramji (Supra).
8. While considering whether there is any apparent conflict
between the decisions of the Constitution Bench of this Court in the
case of Tika Ramji (Supra) and U.P. Coop. Cane Unions Federations
(Supra) and whether the matter requires to be referred to the larger
Bench of seven Judges, the legislative history as well as the chronology
of lists and events which led to the controversy in the case of Tika
Ramji (Supra) and U.P. Coop. Cane Unions Federations (Supra)
and the relevant provisions which fell for consideration before this Court
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are required to be referred to, which are noted in U.P. Coop. Cane
Unions Federations (Supra) , as under:
a.
On 8th April, 1932, the Central Legislature, in the then British
India, passed the Sugar Industry (Protection) Act, 1932 [Act
13 of 1932] to provide for the fostering and development of
Sugar Industry in India. This led to a large number of farmers
taking up sugarcane cultivation and the establishment of a
number of sugar factories coming up, particularly in the
then Province of U.P. To protect the interest of the
sugarcane-growers’, and for the purpose of assuring them
a fair price, the Central Legislature enacted on 1st May,
1934 the Sugarcane Act, 1934, 1934 [Act 15 of 1934] to
regulate the price at which sugarcane intended for
manufacture of sugar could be purchased by or for the
factories. Since, sugarcane was grown in various Provinces
and the Sugarcane Act, 1934 left the declaration of
controlled areas and the fixing of minimum price for the
purchase of sugarcane in any controlled area to the
discretion of the Provincial Governments, the Provincial
Governments were also empowered to make rules for the
purpose of carrying into effect the objects of the Act.
b.
As a result of the Government of India Act, 1935, there
was a distribution of legislative powers between the
Dominion Legislature and the Provincial Legislatures.
Consequently, the entire subject matter of Act 15 of 1934
fell within the Provincial
Legislative List. It was felt that
Act 15 of 1934 was not sufficiently comprehensive for
dealing with the problems of the sugar industry. The
Governments of U.P. and Bihar decided to introduce
legislation on similar lines in both the provinces since,
between them, they accounted for nearly 85% of production
of sugar in India.
c.
The U.P. Legislature enacted on 10th February, 1938 the
U.P. Sugar Factories Control Act, 1938 [U.P. Act I of 1938].
This Act provided for (i) licensing of sugar factories, (ii)
regulation of the supply of sugarcane intended for use in
such factories, (iii) the minimum price for sugarcane, (iv)
the establishment of Sugar Control Board and Advisory
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Committee, and (v) a tax on the sale of sugarcane intended
for use in factories. Though this Act was to remain in force
initially until 30th June, 1947, its life was extended from time
to time and finally up to 30th June 1952. Parallel
developments during this period were the outbreak of the
Second World War and the legislative measures taken to
meet the situation by the then Government of India for
controlling the production, regulation of distribution and
supply of essential commodities. The Dominion Legislature
acquired the power to make laws for the Provinces with
respect to any of the matters enumerated in the Provincial
Legislative List. Under the Defence of India Act, sugar
was made a controlled commodity in the year 1942 and its
production and distribution as well as the fixation of sugar
prices were regulated by the Sugar Controller. The
proclamation of emergency was revoked by the Governor
General on 1st April 1946. Simultaneously, the laws made
by the Dominion Legislature in the field of the Provincial
Legislative List were to cease to be effective after 30th
September 1946.
d.
On 26th March 1946, the British Parliament enacted the
India (Central Government and Legislature) Act, 1946 [9
& 10 Geo.6, Chapter 39] which provided that,
notwithstanding anything in the Government of India Act,
1935, the Indian Legislature shall during the periods specified
in Section 4 of the Act have the power to make laws with
respect, inter alia, to “foodstuffs”.
Though the period
provided in Section 4 was one year from the expiration of
the declaration of the emergency by the Governor General,
this period was extended from time to time and would have
ended on 31st March 1948.
e.
On 18th July 1947, the Indian Independence Act came to be
passed leading to the Indian (Central Government and
Legislature) Act, 1946 which by way of adaptation provided
that the powers of the Dominion Legislature shall be
exercised by the Constituent Assembly. With the Constitution
coming into force on 26th January 1950, Article 369 invested
Parliament with the power for a period of 5 years from the
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commencement of the Constitution to make laws with
respect to some of the matters as if they were enumerated
in the Concurrent List. One such matter was “trade and
commerce within a State in, and the production, supply and
distribution of, .....foodstuffs (including edible oil seeds and
oil), ......”
f.
On 7th October 1950, the Central Government, in exercise
of the powers conferred upon it by Section 3 of the Act,
promulgated the Sugar and Gur Control Order, 1950 which,
inter alia, empowered it to prohibit movement of sugarcane
from any area and also to direct that no gur or sugar should
be manufactured from sugarcane except under and in
accordance with a licence issued by it. Power was also
given to the Central Government to fix the minimum price
of sugarcane and no person was to sell or agree to sell
sugarcane to a producer and no producer was to purchase
or agree to purchase sugarcane at a price lower than that
notified. This power of fixing the price of sugarcane was
exercised by the Central Government from time to time by
issuing notifications which fixed the minimum price to be
paid by the producer of sugar by vacuum pan process. An
Act for similar purposes, by name, Bihar Sugar Factories
Control Act 7 of 1937 came to be enacted in the State of
Bihar. As a result of the recommendations of the Khaitan
Committee, the report of the Indian Tariff Board in the year
1938 and the U.P. Sugar Industry Enquiry Committee,
1951
[Swaminathan Committee], it was desired that the U.P. Act
I of 1938 should be amended in order to make regulation of
the supply of sugarcane possible.
g.
The Industries (Development and Regulation Act, 1951
[Act 65 of 1951] was brought into effect from 8th May
1952. In view of this Act coming into force, certain
provisions of the U.P. Act I of 1938 became inoperative.
The U.P. Legislature passed on 29th June, 1952, the U.P.
Sugar Factories Control (Amendment) Act, 1952, deleting
those provisions and putting the amended Act permanently
on the Statute Book. The U.P. Act I of 1938, thus amended,
continued in force till it was repealed by the U.P. Sugarcane
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Act, 1953. The object of the enactment of the 1953 Act is
stated thus:
“With the promulgation of the Industries (Development
and Regulation Act, 1951 with effect from 8th May 1952,
the regulation of the sugar industry has become
exclusively a Central subject. The State Governments
are now only concerned with the supply of sugarcane to
the sugar factories. The Bill is being introduced in order
to provide for a rational distribution of sugarcane to
factories, for its development on organised scientific lines,
to protect the interests of the cane-growers and of the
industry and to put the new Act permanently on the
Statute Book”
In exercise of the rule making power conferred by Section
28 of the Act, the U.P. Government made the U.P. Sugarcane
Rules, 1954 and also in exercise of the powers conferred
by Section 16 of the Act, promulgated the U.P. Sugarcane
Order, 1954.
h.
On 1st April 1955, Parliament enacted the Essential
Commodities Act, 1955 [Act 10 of 1955] to provide in the
interests of the general public “for the control of production,
supply and distribution of, and trade and commerce in,
certain commodities”. This Act defines “essential
commodity” in Section 2(a)(v) to be any “foodstuffs,
including edible oilseeds and oils”. By clause (b), “food-
crops” is defined to include crops of sugarcane. By clause
(a)(xi), the definition of “essential commodity” extends to
any other class of commodity which the Central Government
may declare to be an essential
commodity for the purpose
of the Act, being a commodity with respect to which
Parliament has power to make laws by virtue of Entry 33
in List III in the Seventh Schedule to the Constitution.
i.
Section 3(1) empowers the Central Government, if
necessary or expedient to do so “for maintaining or
increasing the supplies of any essential commodity or for
securing their equitable distribution and availability at fair
prices”, by an order to provide “for regulating or prohibiting
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the production, supply and distribution thereof and trade
and commerce therein.” Under clause (c) of sub-section
(2) of Section 3, such an order may provide for controlling
the price at which essential commodity may be bought or
sold.
j.
In exercise of the powers conferred by Section 3 of the
Essential Commodities Act, the Central Government
promulgated on 27th August 1955, the Sugar Control Order,
1955 and the Sugarcane Control Order, 1955. Clause 3(a)
of the Sugarcane Control Order, 1955 empowers the Central
Government, after consultation with appropriate authorities,
to fix in respect of any area ‘the price or the minimum
price’ to be paid by a producer of sugar for sugarcane
purchased by him in that area. It also empowers fixation of
different prices for different areas or different qualities of
sugarcane or on the basis of recovery of sugar from
sugarcane having regard to various factors enumerated
therein. Clause 3(2) provides that no person shall sell or
agree to sell sugarcane to a producer of sugar or factory
and no producer or factory shall purchase or agree to
purchase sugarcane at a price lower than that notified under
this clause. Clause (4) empowers the Central Government
to prohibit or restrict or otherwise regulate the export of
sugarcane from any area for supply to different factories
and also to direct that no gur or sugar shall be manufactured
from sugarcane except under and in accordance with the
conditions specified in a licence issued in this behalf. Clause
(5) requires every producer or factory to comply with the
directions made under the order. By clause (7) of this order,
the Sugar and Gur Control Order, 1950 was repealed.
k.
On 16th July, 1966, the Central Government notified the
Sugarcane (Control) Order, 1966. Clause 2(g) defines
“price” to mean the price or the minimum price fixed by
the Central Government, from time to time, for sugarcane
delivered, inter alia, to a sugar factory. Clauses 3 and 3-A
bear reproduction and read thus :-
“3: Minimum price of sugarcane payable by
producer of sugar- (1) The Central Government may,
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after consultation with such authorities, bodies or
associations as it may deem fit, by notification in the
official Gazette, from time to time, fix the minimum price
of sugarcane to be paid by producers of sugar or their
agents for the sugarcane purchased by them, having
regard to -
(a) the cost of production of sugarcane;
(b) the return to the grower from alternative crops and
the general trend of prices of agricultural commodities;
(c) the availability of sugar to the consumer at a fair
price;
(d) the price at which sugar produced from sugarcane
is sold by producers of sugar; and
(e) the recovery of sugar from sugarcane :
Provided that the Central Government or, with the
approval of the Central Government, the State Government,
may, in such circumstances and subject to such conditions as
specified in Clause 3-A, allow a suitable rebate in the price so
fixed.]
Explanation - (1) Different prices may be fixed for different
areas or different qualities or varieties of sugarcane. (2) No
person shall sell or agree to sell sugarcane to a producer of
sugar or his agent, and no such producer or agent shall purchase
or agree to purchase sugarcane, at a price lower than that
fixed under sub-clause (1). (3) Where a producer of sugar
purchases any sugarcane from a grower of sugarcane or from
a Sugarcane-grower’s Co-operative Society, the producer shall,
unless there is an agreement in writing to the contrary between
the parties, pay within fourteen days from the
date of delivery
of the sugarcane to the seller or tender to him the price of the
cane sold at the rate agreed to between the producer and the
sugarcane- grower or Sugarcane- growers’ Co-operative
Society or that fixed under sub-clause (1), as the case may be,
either at the gate of the factory or at the cane collection centre
or transfer or deposit the necessary amount in the bank account
of the seller or the co-operative society, as the case may be.
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[Subs. by G.S.R. 945, dated 18.5.1968] (3-A). Where a
producer of sugar or his agent fails to make payment for the
sugarcane purchased within 14 days of the date of delivery, he
shall pay interest on the amount due at the rate of 15 per cent
per annum for the period of such delay beyond 14 days. Where
payment of interest on delayed payment is made to a cane-
growers’ society, the society shall pass on the interest to the
cane-growers concerned after deducting administrative
charges, if any, permitted by the rules of the said society. [Ins.
by G.S.R. 62(E) dated 2.2.1978].
(4) Where sugarcane is purchased through an agent, the
producer or the agent shall pay or tender payment of such
price within the period and in the manner aforesaid and if neither
of them has so paid or tendered payment, each of them shall
be deemed to have contravened the provisions of this clause.
(5) At the time of payment at the gate of the factory or at the
cane collection centre, receipts, if any, given by the purchaser,
shall be surrendered by the cane-grower or co-operative
society. (6) Where payment has been made by transfer or
deposit of the amount to the bank account of the seller or the
co-operative society as the case may be, the receipt given by
the purchaser, if any, to the grower or the co- operative society
if not returned to the purchaser, shall become invalid. (7) In
case, the price of the sugarcane remains unpaid on the last
day
of the sugar year in which cane supply was made to the
factory on account of the suppliers of cane not coming forward
with their claims therefore or for any other reason, it shall be
deposited by the producer of sugar with the Collector of the
district in which the factory is situated, within three months of
the close of the sugar year. The Collector shall pay, out of the
amount so deposited, all claims, considered payable by him
and preferred before him within three years of the close of the
sugar year in which the cane was supplied to the factory. The
amount still remaining undisbursed with the Collector, after
meeting the claims from the suppliers, shall be credited by him
to the Consolidated Fund of the State, immediately after the
expiry of the time limit of 3 years within which claims therefore
could be preferred by the suppliers. The State Government
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shall, as far as possible, utilise such amounts, for development
of sugarcane in the State.
3-A. Rebate that can be deducted from the price paid for
sugarcane - A producer of sugar or his agent shall pay, for the
sugarcane purchased by him, to the sugarcane-grower or the
sugarcane- growers’ co-operative society, either the minimum
price of sugarcane fixed under Clause 3, or the price agreed to
between the producer or his agent and the sugarcane-grower
or the sugarcane-growers’ co-operative society, as the case
may be (hereinafter referred to as the agreed price)*** [Ins.
by G.S.R. 815(E) dated 24.9.1976]”
Clause 4 empowers the Central Government “or a State
Government, with the concurrence of the Central
Government”, to fix the minimum price or the price of sugarcane
to be paid by producers of the khandsari sugar for the
sugarcane purchased by them with the proviso that the
minimum price or the price of sugarcane so fixed shall not
exceed the minimum price of sugarcane fixed by producers of
sugar in the region with a further proviso that no person shall
sell or agree to sell sugarcane to a producer of khandsari sugar
or his agent, and no such producer or his agent shall purchase
or agree to purchase sugarcane, “at a price lower than that
fixed under clause (4)”.
Clause 5-A provides that where a producer of sugar purchases
sugarcane, from a sugarcane-grower during each sugar year,
he shall be liable to pay, in addition to the minimum sugarcane
price fixed
under Clause 3, an additional price, if found due in
accordance with the formula enumerated in Second Schedule
to the Order.
Under sub-clause (2) of Clause 5-A, an appropriate authority
may be authorised to determine the additional price payable
under sub- clause (1) who shall intimate the same in writing to
the producer of sugar and the sugarcane-grower.
Under sub-clause (4), the manner of payment of the additional
price may be prescribed as directed by the Central Government
or the State Government, from time to time.
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Under sub-clause (5), no additional price determined under
sub- clause (2) or sub-clause (3) is required to be paid by a
producer of sugar who pays a price higher than the minimum
price fixed under Clause 3 to the sugarcane-grower, provided
that, “the price so paid is not less than the total price comprising
the minimum sugarcane price fixed under Clause 3 and the
additional price determined under sub-clause (2) or sub-clause
(3).”
Under sub-clause (6), it is provided that any extra price paid
by the producer of sugar to the sugarcane-grower over and
above the minimum sugarcane price fixed under Clause 3, shall
be adjusted against the additional sugarcane price determined
under sub-clause (2) or sub-clause (3) and the balance, if any,
shall be paid to the sugarcane- grower.
Sub-clause (7) provides that, additional price shall be payable
to the sugarcane-grower if he, in performance of his agreement
with a producer of sugar, has supplied not less than 85% of the
sugarcane so agreed.
Clause 6 empowers the Central Government to: (i) reserve
areas where sugarcane is grown to determine the quantity of
sugarcane which a factory will require for crushing during any
year; (ii) to fix, with respect to any specified sugarcane-grower
or sugarcane-growers generally in a reserved area, the quantity
or percentage of sugarcane which he by himself or as a member
of a co-operative society of sugarcane-growers operating in
such area,
shall supply to the factory concerned; (iii) direct a
sugarcane-grower or a sugarcane-growers’ co- operative
society, supplying sugarcane to a factory, and the factory
concerned, to enter into an agreement to supply or purchase
the quantity of sugarcane fixed; (iv) direct that no gur or
khandsari sugar shall be manufactured from sugarcane except
in accordance with the conditions specified in the licence; and
(v) “prohibit or restrict or otherwise regulate” the export of
sugarcane from any area (including a reserved area) except
under and in accordance with a permit issued in his behalf.
Sub-clause (2) makes it obligatory on every sugarcane- grower,
Sugarcane-growers’ Co-operative Society and factory, to whom
an order is issued under sub-clause (1), to supply or purchase
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the quantity of sugarcane covered by the agreement entered
into. Any wilful failure on the part of the sugarcane-grower,
sugarcane-growers’ co- operative society and factory to do
so, is constituted a breach of the provisions of the Order.
Under Clause 11, the powers under the Order shall, subject to
specified conditions, be exercisable also by an officer or
authority of the Central Government and the State Government
or any officer or authority of the State Government.
8.1 The provisions of Section 16 of the Act of 1953 read as under:
16. Regulation of purchase and supply of cane in the reserved
and assigned areas –(1) The State Government may, for maintaining
supplies, by order, regulate-
(a) the distribution, sale or purchase of any case in any reserved
or assigned area; and
(b) purchase of cane in any area other than a reserved or assigned
area.
(2) Without prejudice to the generality of the foregoing powers
such order may provide for-
(a) the quantity of cane to be supplied by each Cane-grower or
Cane-growers’ Co-operative Society in such area to the factory
for which the area has so been reserved or assigned;
(b) the manner in which cane grown in the reserved area or the
assigned area, shall be purchased by the factory for which the
area has been so reserved or assigned and the circumstance in
which the cane grown by a cane-grower shall not be purchased
except through a Cane-growers’ Co-operative Society;
(c) the form and the terms and conditions of
the agreement to be
executed by the occupier or manager of the factory for which an
area is reserved or assigned for the purchase of cane offered for
sale;
(d) the circumstances under which permission may be granted-
(i) for the purchase of cane grown in reserved or assigned
area by a [Gur, Rab or Khandsari Manufacturing Unit or any
person or factory](Substituted by UP ACT IV of 1964) other
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than the factory for which area has been reserved or assigned;
and
(ii) for the sale of cane grown in a reserved or assigned area
to a [Gur, Rab or Khandsari Manufacturing Unit or any person
or factory] (Substituted by UP ACT IV of 1964) other than
the factory for which the area is reserved or assigned;
(e) such incidental and consequential matters as may appear to
be necessary or desirable for this purpose.
9. Thus, from the legislative history and the relevant provisions of
Essential Commodities Act, 1953 U.P. Act, 1954 U.P. Order, 1955 Order,
1966 Order which fell for consideration by this Court in the case of Tika
Ramji (Supra) and U.P. Coop. Cane Unions Federations (Supra), it
appears that as such there has been a sea change in the law and the
relevant provisions which can be summarized as under:
a. That, the Central Government repealed and substituted the 1955
Order by 1966 Order;
b. That, in the 1966 Order issued under Section 3 of the Essential
Commodities Act, from the word “price and the minimum
price”, word “price” came to be deleted and the power to fix
“minimum price” came to be retained;
c. Clause 3 of the 1955 Order empowered the Central Government
to fix “price” or “minimum price” to be paid by the producer of
sugar for sugarcane purchased by him. However, 1955 Order
came to be repealed by the 1966 Order and Clause 3 of 1966
Order provides that the Central Government may fix the
“minimum price” of
sugarcane to be paid by the producers of
the sugar;
d. That, 1966 Order came to be further amended in 1976 and
1978 and Clauses 3(3) and 3-A came to be introduced which
now contemplates “agreed price”;
9.1 Considering the Clause 3 of the 1955 Order by which the
Central Government was empowered to fix “price” or the “minimum
price” which fell for consideration by this Court in the case of Tika
Ramji (Supra) and as even the time when the matter was decided by
this Court in the case of Tika Ramji (Supra), no price was determined
and/or fixed by the State and therefore, having felt there is no repugnancy
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and/or conflict, this Court in the case of Tika Ramji (Supra) did not as
such enter into the question of repugnancy. Therefore, as such in the
case of Tika Ramji (Supra), this Court considered Clause 3 of 1955
Order which specifically empowered the Central Government to fix the
“price or minimum price” and also considered that the State Government
has not exercised the power by fixing the price and therefore, the question
of conflict does not arise. However, in the case of U.P. Coop. Cane
Unions Federations (Supra), this Court was considering the subsequent
change in law more particularly the 1966 Order and Clause 3 of the
1966 Order and other relevant Clauses of 1966 Order.
10. The relevant observations and findings recorded by this Court
in the case of Tika Ramji (Supra) and in the case of U.P. Coop. Cane
Unions Federations (Supra) are as under:
10.1
RELEVANT EXTRACTS AND OBSERVATIONS IN
THE CASE OF TIKA RAMJI
“..…It is clear, therefore, that all the Acts and the
notifications issued thereunder by the Centre in
regard to sugar and sugarcane were enacted in
exercise of the concurrent jurisdiction. The exercise
of such concurrent jurisdiction would not deprive the
Provincial Legislatures of similar powers which they had
under the Provincial Legislative List and there would,
therefore, be no question of legislative incompetence qua
the Provincial Legislatures in regard to similar pieces of
legislation enacted by the latter. The Provincial
Legislatures as
well as the Central Legislature would
be competent to enact such pieces of legislation and
no question of legislative competence would arise. It
also follows as a necessary corollary that, even though
sugar industry was a controlled industry, none of these Acts
enacted by the Centre was in exercise of its jurisdiction
under Entry 52 of List I. Industry in the wide sense of the
term would be capable of comprising three different aspects:
(1) raw materials which are an integral part of the industrial
process, (2) the process of manufacture or production, and
(3) the distribution of the products of the industry. The raw
materials would be goods which would be comprised in
Entry 27 of List II. The process of manufacture or
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production would be comprised in Entry 24 of List II except
where the industry was a controlled industry when it would
fall within Entry 52 of List I and the products of the industry
would also be comprised in Entry 27 of List II except where
they were the products of the controlled industries when
they would fall within Entry 33 of List III. This being the
position, it cannot be said that the legislation which
was enacted by the Centre in regard to sugar and
sugarcane could fall within Entry 52 of List I. Before
sugar industry became a controlled industry, both sugar and
sugarcane fell within Entry 27 of List II but, after a
declaration was made by Parliament in 1951 by Act LXV
of 1951, sugar industry became a controlled industry and
the product of that industry, viz., sugar was comprised in
Entry 33 of List III taking it out of Entry 27 of List II. Even
so, the Centre as well as the Provincial Legislatures had
concurrent jurisdiction in regard to the same. In no event
could the legislation in regard to sugar and sugarcane
be thus included within Entry 52 of List 1. The pith
and substance argument also cannot be imported here
for the simple reason that, when both the Centre as
well as the State Legislatures were operating in the
concurrent field, there was no question of any
trespass upon the exclusive jurisdiction vested in the
Centre under Entry 52 of List 1, the only question
which survived being whether, putting
both the pieces
of legislation enacted by the Centre and the State
Legislature together, there was any repugnancy, a
contention which will be dealt with hereafter.
“…..A more effective answer is furnished by
comparison of the terms of the U.P. Act I of 1938 with
those of the impugned Act. Whereas the U.P. Act I of 1938
covered both sugarcane and sugar within its compass, the
impugned Act was confined only to sugarcane, thus
relegating sugar to the exclusive jurisdiction of the Centre
thereby eliminating all argument with regard to the
encroachment by the U.P. State Legislature on the field
occupied by the Centre. The U.P. Act I of 1938 provided
for the establishment of a Sugar Control Board, the Sugar
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Commissioner, the Sugar Commission and the Cane
Commissioner. The impugned Act provided for the
establishment of a Sugarcane Board. The Sugar
Commissioner was named as such but his functions under
rules 106 and 107 were confined to getting information
which would lead to the regulation of the supply and
purchase of sugarcane required for use in sugar factories
and had nothing to do with the production or the disposal of
sugar produced in the factories. The Sugar Commission
was not provided for but the Cane Commissioner was the
authority invested with all the powers in regard to the supply
and purchase of sugarcane. The Inspectors appointed under
the U.P. Act I of 1938 had no doubt powers to examine
records maintained at the factories showing the amount of
sugarcane purchased and crushed but they were there with
a view to check the production or manufacture of sugar
whereas the Inspectors appointed under the impugned Act
were, by rule 20, to confine their activities to the regulation
of the supply and purchase of sugarcane without having
anything to do with the further process of the manufacture
or production of sugar. Chapter 3 of U.P. Act I of 1938,
dealing with the construction and extension of sugar
factories, licensing of factories for crushing sugarcane, fixing
of the price of sugar, etc., was deleted from the impugned
Act. The power of licensing new industrial undertakings
was thereafter exercised by the Centre under Act LXV of
1951 as amended by
Act XXVI of 1953, vide sections 11(a),
12 and 13, and the power of fixation of price of sugar
was exercised by the Centre under section 3 of Act
XXIV of 1946 by issuing the Sugar Control Order,
1950. Even the power reserved to the State Government
to fix minimum prices of sugarcane under Chapter V of
U.P. Act I of 1938 was deleted from the impugned Act the
same being exercised by the Centre under clause 3 of Sugar
and Gur Control Order, 1950, issued by it in exercise of the
powers conferred under section 3 of Act XXIV of 1946.
The prices fixed by the Centre were adopted by the State
Government and the only thing which the State Government
required under rule 94 was that the occupier of a factory or
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the purchasing agent should cause to be put up at each
purchasing centre a notice showing the minimum price of
cane fixed by the Government meaning thereby the centre.
The State Government also incorporated these prices which
were notified by the Centre from time to time in the forms
of the agreements which were to be entered between the
cane growers, the cane growers co-operative societies, the
factories and their purchasing agents for the supply and
purchase of sugarcane as provided in the U.P. Sugarcane
Supply and Purchase Order, 1954. The only provision which
was retained by the State Government in the impugned Act
for the protection of the sugarcane growers was that
contained in section 17 which provided for the payment of
price of sugarcane by the occupier of a factory to the
sugarcane growers. It could be recovered from such
occupier as if it were an arrear of land revenue. This
comparison goes to show that the impugned Act merely
confined itself to the regulation of the supply and purchase
of sugarcane required for use in sugar factories and did not
concern itself at all with the controlling or licensing of the
sugar factories, with the production or manufacture of sugar
or with the trade and commerce in, and the production,
supply and distribution of, sugar. If that was so, there was
no question whatever of its trenching upon the jurisdiction
of the Centre in regard to sugar industry which was a
controlled
industry within Entry 52 of List I and the U.P.
Legislature had jurisdiction to enact the law with regard to
sugarcane and had legislative competence to enact the
impugned Act.”
“..…It was next contended that the provisions of the
impugned Act were repugnant to the provisions of Act LXV
of 1951 and Act X of 1955 which were enacted by
Parliament and, therefore, the law made by Parliament
should prevail and the impugned Act should, to the extent
of the repugnancy, be void. Before dealing with this
contention it is necessary to clear the ground by defining
the exact connotation of the term “repugnancy”.
Repugnancy falls to be considered when the law made by
Parliament and the law made by the State Legislature
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occupy the same field because, if both these pieces of
legislation deal with separate and distinct matters though of
a cognate and allied character, repugnancy does not arise.”
“…..We are concerned here with the repugnancy, if any,
arising by reason of both Parliament and the State
Legislature having operated in the same field in respect of
a matter enumerated in the Concurrent List, i.e., foodstuffs
comprised in Entry 33 of List III.”
“…..The Calcutta High Court in G. P. Stewart v. B. K. Roy
Chaudhury had occasion to consider the meaning of
repugnancy and B. N. Rau, J. who delivered the judgment
of the Court observed at page 632:
“It is sometimes said that two laws cannot be said to be
properly repugnant unless there is a direct conflict
between them, as when one says ‘do” and the other
“don’t”, there is no true repugnancy, according to this
view, if it is possible to obey both the laws. For reasons
which we shall set forth presently, we think that this is
too narrow a test: there may well be cases of repugnancy
where both laws say “don’t” but in different ways. For
example, one law may say, “No person shall sell liquor
by retail, that is, in quantities of less than five gallons at
a time” and another law may say, “No person shall sell
liquor by retail, that is, in quantities of less than ten gallons
at a time”. Here, it is obviously possible to obey both
laws, by obeying the more stringent of the two, namely
the second one; yet it is equally obvious
that the two
laws are repugnant, for to the extent to which a citizen
is compelled to obey one of them, the other, though not
actually disobeyed, is nullified”.
The learned Judge then discussed the various authorities which
laid down the test of repugnancy in Australia, Canada, and England and
concluded at page 634:
“The principle deducible from the English cases, as from
the Canadian cases, seems therefore to be the same as
that enunciated by Isaacs, J. in the Australian 44 hour
case (37 C.L.R. 466) if the dominant law has expressly
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or impliedly evinced its intention to cover the whole field,
then a subordinate law in the same field is repugnant
and therefore inoperative. Whether and to what extent
in a given case, the dominant law evinces such an
intention must necessarily depend on the language of
the particular law”.
“…..In the instant case, there is no question of any inconsistency
in the actual terms of the Acts enacted by Parliament and the
impugned Act. The only questions that arise are whether
Parliament and the State Legislature sought to exercise their
powers over the same subject-matter or whether the laws enacted
by Parliament were intended to be a complete exhaustive code
or, in other words, expressly or impliedly evinced an intention to
cover the whole field.”
“…..Act X of 1955 included within the definition of essential
commodity food stuffs which we have seen above would include
sugar as well as sugarcane. This Act was enacted by Parliament
in exercise of the concurrent legislative power under Entry 33 of
List III as amended by the Constitution Third Amendment Act,
1954. Foodcrops were there defined as including crops of
sugarcane and section 3(1) gave the Central Government powers
to control the production, supply and distribution of essential
commodities and trade and commerce therein for maintaining or
increasing the supplies thereof or for securing their equitable
distribution and availability at fair prices. Section 3(2)(b)
empowered the Central Government to provide inter alia for
bringing under cultivation any waste or arable land whether
appurtenant to a building or not for growing thereon of foodcrops
generally or specified foodcrops and section 3(2)(c) gave the
Central Government power for controlling the price at which any
essential commodity may be bought or sold. These provisions would
certainly bring within the scope of Central legislation the regulation
of the production of sugarcane as also the controlling of the price
at which sugarcane may be bought or sold, and in addition to the
Sugar Control Order, 1955 which was issued by the Central
Government on 27th August, 1955, it also issued the Sugarcane
Control Order, 1955, on the same date investing it with the power
to fix the price of sugarcane and direct payment thereof as also
the power to regulate the movement of sugarcane.”
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“…..Parliament was well within its powers in legislating in
regard to sugarcane and the Central Government was also
well within its powers in issuing the Sugarcane Control
Order, 1955 in the manner it did because all this was in
exercise of the concurrent power of legislation under Entry
33 of List III. That, however, did not affect the legislative
competence of the U. P. State Legislature to enact the law
in regard to sugarcane and the only question which
remained to be considered was whether there was any
repugnancy between the provisions of the Central
legislation and the U. P. State legislation in this behalf. As
we have noted above, the U. P. State Government. did not
at all provide for the fixation of minimum prices for
sugarcane nor did it provide for the regulation of movement
of sugarcane as was done by the Central Government in
clauses (3) and (4) of the Sugarcane Control Order, 1955.
The impugned Act did not make any provision for the same
and the only provision in regard to the price of sugarcane
which was to be found in the U. P. Sugarcane Rules, 1954,
was contained in Rule 94 which provided that a notice of
suitable size in clear bold lines showing the minimum price
of cane fixed by the Government and the rates at which the
cane is being purchased by the centre was to be put up by
an occupier of a factory or the purchasing agent as the case
may be at each purchasing centre. The price of cane fixed
by Government here only meant the price
fixed by the
appropriate Government which would be the Central
Government, under clause 3 of the Sugarcane Control
Order, 1955, because in fact the U. P. State Government
never fixed the price of sugarcane to be purchased by the
factories. Even the provisions in behalf of the agreements
contained in clauses 3 and 4 of the U. P. Sugarcane
Regulation of Supply and Purchase Order, 1954, provided
that the price was to be the minimum price to be notified
by the Government subject to such deductions, if any, as
may be notified by the Government from time to time
meaning thereby the Central Government, the State
Government not having made any provision in that behalf
at any time whatever. The provisions thus made by the
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Sugarcane Control Order, 1955, did not find their place
either in the impugned Act or the Rules made thereunder
or the U.P. Sugarcane Regulation of Supply and Purchase
Order, 1954, and the provision contained in section 17 of
the impugned Act in regard to the payment of sugarcane
price and recovery thereof as if it was an arrear of land
revenue did not find its place in the Sugarcane Control
Order, 1955. These provisions, therefore, were mutually
exclusive and did not impinge upon each other there being
thus no trenching upon the field of one Legislature by the
other. Our attention was drawn to the several provisions
contained in the Sugarcane Control Order, 1955 and the
U.P. Sugarcane Regulation of Supply and Purchase Order,
1954 and the agreements annexed thereto and it was pointed
out that they differed in material particulars, the provisions
of the latter being more stringent than those of the former.
It is not necessary to refer to these provisions in any detail.
Suffice it to say that none of these provisions do overlap,
the Centre being silent with regard to some of the provisions
which have been enacted by the State and the State being
silent with regard to some of the Provisions which have
been enacted by the Centre. There is no repugnancy
whatever between these provisions and the impugned Act
and the Rules framed thereunder as also the U.P. Sugarcane
Regulation of Supply and Purchase Order, 1954 do not
trench upon the field covered by Act X of 1955. There being
no repugnancy at all, therefore, no question arises of the
operation of article 254(2) of the Constitution and no
provision of the impugned Act and the Rules made
thereunder is invalidated by any provision contained in Act
LXV of 1951 as amended by Act XXVI of 1953 or Act X of
1955 and the Sugarcane Control Order, 1955 issued
thereunder.”
11.
RELEVANT EXTRACTS AND OBSERVATIONS IN
THE CASE OF U.P. COOPERATIVE CANE UNIONS
FEDERATIONS:
“27. It has been urged by learned counsel for the
respondents that the expression “at the minimum price notified by
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Government” used in the proforma of the agreement which is to
be executed between a cane-grower and the occupier of the
factory as given in Form B and that which is to be executed
between a cane-growers’ cooperative society and the occupier
of the factory as given in Form C in the appendix to the 1954
Order indicates that it is only the minimum price fixed by the
Central Government which can be the consideration or price for
the sale of sugarcane to the sugar factory. Strong reliance in support
of this submission has been placed upon certain observations made
by this Court in Tika Ramji v. State of U.P. The proforma of
agreement viz. Forms B and C are contained in the appendix to
U.P. Sugarcane Supply and Purchase Order, 1954. This Order
has been made by U.P. Government in exercise of the power
conferred by Section 16 of the 1953 Act, which provides that the
State Government may for maintaining supplies by Order regulate
the distribution, sale or purchase of cane in any reserved or
assigned area, etc. The Order having been made by the State
Government in exercise of a power conferred by an Act made by
U.P. legislature, the only logical inference which can be drawn is
that the word “Government” refers to State Government. There
is no indication in the proforma of the agreement or in the 1954
Order that the word “Government” would refer to Central
Government. If the State Government is prescribing a proforma
of an agreement which is to be executed by a
cane-grower or a
cane-growers’ cooperative society and the occupier of the factory
regarding sale and purchase of sugarcane wherein the word
“Government” is used, it can only mean the State Government
and not the Central Government unless there is clear indication to
the contrary.
28. The observations made in Tika Ramji, strong reliance
on which is placed by learned counsel for the respondents, have
to be understood in the context in which they were made. It may
be noted that the writ petitions in the said case were filed in this
Court in the year 1954 and the judgment was delivered on 24-4-
1956. At the relevant time, it was the Sugarcane (Control) Order,
1955 which was in operation. Clause 3 of this Order empowered
the Central Government to fix the price or the minimum price to
be paid by a producer of sugar for sugarcane purchased by him.
The 1955 Order has been repealed by Sugarcane (Control) Order,
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1966 and Clause 3 of this Order provides that the Central
Government may fix the minimum price of sugarcane to be paid
by producers of sugar. There is a difference between “the price”
which is a fixed amount and “the minimum price” which only
indicates the lowest-permissible rate. The 1966 Order which itself
was made by the Central Government more than a decade after
the judgment was rendered in Tika Ramji was amended in 1978
and Clauses 3(3) and 3-A thereof contemplate an “agreed price”
which in view of the mandate of Clause 3(2) is bound to be higher
than the “minimum price” fixed under Clause 3(1). Naturally it is
this “agreed price” which is to be mentioned in the agreements
for sale and purchase of sugarcane in Forms B and C otherwise
the very purpose of entering into agreements would be defeated.
The State Government had not fixed any price for the sugarcane
under its regulatory power by the time Tika Ramji was decided
by this Court in April, 1956 and only the Central Government had
taken a step for fixing the price. It was in these circumstances
that it was observed that the “price fixed by the Government”
would mean “the Central Government”. The observations relied
upon by the learned counsel for the respondents were made while
considering the question whether there was any repugnancy
between the provisions of the Sugarcane Control Order 1955 and
the 1953 Act, the Rules and 1954 Order and they should be
understood in that context. The relevant portion of the judgment
on SCR p.434 is being reproduced below:
(AIR p.704, para 36)
“The price of cane fixed by Government here only meant
the price fixed by the appropriate Government which would
be the Central Government, under clause 3 of the Sugarcane
Control Order, 1955, because in fact the U.P. State
Government never fixed the price of sugarcane to be
purchased by the factories. Even the provisions in behalf of
the agreements contained in clauses 3 and 4 of the U.P.
Sugarcane Regulation of Supply and Purchase Order, 1954,
provided that the price was to be the minimum price to be
notified by the Government subject to such deductions, if any,
as may be notified by the Government from time to time
meaning thereby the Central Government, the State
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Government not having made any provision in that behalf
at any time whatever.
The provisions thus made by the Sugarcane Control
Order, 1955, did not find their place either in the impugned Act
or the Rules made thereunder or the U.P. Sugarcane Regulation
of Supply and Purchase Order, 1954; and the provision contained
in Section 17 of the impugned Act in regard to the payment of
sugarcane price and recovery thereof as if it was an arrear of
land revenue did not find its place in the Sugarcane Control
Order, 1955.”
“28.1 Having regard to the factual situation then existing
that U.P. Government had not fixed the price of the sugarcane, it
was held that the price of the cane fixed by the Government could
only mean “Central Government”. It has not been laid down as a
principle of law that the words “minimum price notified by
Government” must necessarily mean the minimum price fixed by
the Central Government or that under no circumstances it can
mean the price fixed by the State Government.
“34. Learned Senior Counsel for the respondents has
strenuously urged that the Central Government having made the
1966 Order which contains a specific provision for fixation of
price of sugarcane, under Clause 3(1) thereof, the regulatory
power under the 1953 Act cannot embrace within its fold the
same power of fixation of price as this will be clearly repugnant
to a law made by the Parliament and would be void in view of
Article 254(1) of the Constitution. In Tika Ramji it
has been held
that the EC Act under which the Central Government made the
1966 Order and the 1953 Act made by U.P. Legislature have
been enacted with reference to Entry 33 of List III of the Seventh
Schedule. The constitutional validity of the 1953 Act was upheld
by the Constitution Bench in the said decision. On p. 437 of the
Reports (SCR) the Court quoted with approval the following
passage from the judgment of Sulaiman J. in Shyamakant Lal v.
Rambhajan Singh (FCR at p. 212 : AIR at p. 83) for the principle
of construction in regard to repugnancy : (AIR p. 700, para 32)
“When the question is whether a Provincial legislation
is repugnant to an existing Indian law, the onus of showing its
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repugnancy and the extent to which it is repugnant should be
on the party attacking its validity. There ought to be a
presumption in favour of its validity, and every effort should be
made to reconcile them and construe both so as to avoid their
being repugnant to each other; and care should be taken to see
whether the two do not really operate in different fields without
encroachment. Further, repugnancy must exist in fact, and
not depend merely on a possibility:”
 (Emphasis supplied)
     And then went to hold : (AIR p. 700, para 33)
“33. In the instant case, there is no question of any
inconsistency in the actual terms of the Acts enacted by
Parliament and the impugned Act. The only questions that arise
are whether Parliament and the State Legislature sought to
exercise their powers over the same subject-matter or whether
the laws enacted by Parliament were intended to be a complete
exhaustive code or, in other words, expressly or impliedly
evinced an intention to cover the whole field.”
35.  In M. Karunanidhi v. Union of India, the principles
to be applied for determining repugnancy between a law made by
Parliament and law made by State legislature were considered by
a Constitution Bench. In pursuance of an FIR lodged against Shri
M. Karunanidhi the CBI after investigation had submitted
chargesheet against him under Section 161, 468 and 471 IPC and
Section 5(2) read with Section 5(1)(d) of the Prevention of
Corruption Act. The Madras Legislature had passed an Act known
as Tamil Nadu Public Men (Criminal Misconduct) Act, 1973 which
had received the assent of the President. It was contended that
by virtue of Article 254(2) of the Constitution, the provisions of
Indian Penal Code, Prevention of Corruption Act and Criminal
Law Amendment Act stood repealed. After review of all the earlier
authorities Court laid down the following tests : (SCC pp.448-49,
para 35)
“35. 1. That in order to decide the question of
repugnancy it must be shown that the two enactments contain
inconsistent and irreconcilable provisions, so that they cannot
stand together or operate in the same field.
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2. That there can be no repeal by implication unless the
inconsistency appears on the face of the two statutes.
3. That where the two statutes occupy a particular field, but there
is room or possibility of both the statutes operating in the same
field without coming into collision with each other, no repugnancy
results.
4. That where there is no inconsistency but a statute occupying
the same field seeks to create distinct and separate offences, no
question of repugnancy arises and both the statutes continue to
operate in the same field.”
“37. Under Sub-section (1) of Clause 3 of the 1966 Order,
the Central Government can only fix a minimum price of
sugarcane. This clause should be read along with Sub-clause (2)
which creates an embargo or prohibition that no person shall sell
or agree to sell sugarcane to a producer of sugar and no such
producer shall purchase or agree to purchase sugarcane at a price
lower than that fixed under Sub-clause (1). The inconsistency or
repugnancy will arise if the State Government fixed a price which
is lower than that fixed by the Central Government. But, if the
price fixed by the State Government is higher than that fixed by
the Central Government, there will be no occasion for any
inconsistency or repugnancy as it is possible for both the orders to
operate simultaneously and to comply with both of them. A higher
price fixed by the State Government would automatically comply
with the provisions of Sub-clause (2) of Clause 3
of 1966 Order.
Therefore, any price fixed by the State Government which is higher
than that fixed by the Central Government cannot lead to any
kind of repugnancy.”
“39.
…..that under the 1966 Order the Central
Government only fixes the minimum price and it is always open to
the State Government to fix a higher price. Under the enactments
made by the State Legislatures areas are reserved for the sugar
factories and the cane-growers therein are compelled to supply
sugarcane to them and therefore the State Government has
incidental power to fix the price of sugarcane which will also be
statutory price. They further lay down that the Cane Commissioner
can direct the cane-growers and the sugar factories to enter into
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agreements for purchase of sugarcane at a price fixed by the
State Government and such agreements cannot be branded as
having been obtained by force or compulsion.”
“43. One of the main reasons given by the High Court for
allowing the writ petition and quashing the order of fixation of
State Advised Price is that power to fix sugarcane price had been
given to the State Government under the Sugarcane Act, 1934
and hence it would be redundancy to say that the same power to
fix cane price also flows from Section 16 of the 1953 Act. The
High Court has also held that when the 1953 Act was enacted
there was already a law, viz., the Sugarcane Act, 1934, which
enabled the State Government to fix the minimum cane price and
hence, it could not have been the intention of the U.P. Legislature
while enacting 1953 Act that Section 16 thereof would include the
power to fix the minimum cane price as such a power was already
there with the State Government under Section 3(2) of the
Sugarcane Act, 1934. The High Court, therefore, concluded that
Section 16 of the 1953 Act only gave power to the State
Government to regulate the supply and purchase of sugarcane in
the narrower sense and not in the wider sense so as to include the
power to fix the minimum price. This reasoning of the High Court
proceeds on the footing that the Sugarcane Act, 1934 was in
existence and was in operation when the 1953 Act was enacted
by U.P. Legislature. It
appears that the correct legal position was
not brought to the notice of the learned judges. The Sugarcane
Act, 1934 was repealed by U.P. Sugar Factories Control Act,
1938 (UP Act 1 of 1938). Section 26 of U.P. Sugarcane (Regulation
of Supply & Purchase) Act, 1953 repealed the U.P. Sugar
Factories Control Act, 1938. With the enforcement of the
Government of India Act, 1935, there was distribution of legislative
powers between the Dominion Legislature and the Provincial
Legislature and the entire subject matter of Sugarcane Act, 1934
fell within the Provincial Legislative list. It was in these
circumstances that the U.P. Legislature enacted the U.P. Sugar
Factories Control Act, 1938 which repealed the Sugarcane Act,
1934 in its application in the State of U.P. This position has been
noticed in Tika Ramji v. State of U.P., SCR at pp. 400, 401 and
417. Therefore, the aforesaid reasoning given by the High Court
has no legal basis.”
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“44. The second reasoning given by the High Court is that
even if the State Government had the power to fix the minimum
cane price under Section 16 of the 1953 Act, this power came to
an end in view of Article 254(1) of the Constitution on the
enactment of the EC Act and the promulgation of the Sugarcane
Control Order, 1955 (later replaced by the 1966 Order), which
now gives exclusive power to the Central Government to fix the
minimum price. As discussed earlier we are not in agreement
with the aforesaid reasoning as the question of repugnancy does
not arise. The High Court has also held that the Central
Government, while fixing the price of the sugar under Section
3(3-C) of the EC Act, takes into consideration the minimum price
of sugarcane fixed under 1966 Order and if the sugar mills are
compelled to pay a higher price than that fixed by the Central
Government, it will disturb the price of the levy sugar and such an
eventuality could not have been contemplated by the legislature.
Over a period of time, the quota of levy sugar has gone down
from 40 per cent to 10 per cent of the total production of sugar
and the sugar mills are now free to sell 90 per cent of their
production in open market. Under Section 3(3-C) of the EC Act,
the Central Government has to determine the price of the levy
sugar having regard to several factors enumerated in the sub-
section and the minimum price fixed under 1966 Order is only one
of the factors. The manufacturing cost of
sugar and securing of
reasonable return on the capital employed in the business of
manufacturing sugar are also relevant factors under Clauses (b)
and (d) of Section 3(3-) EC Act and, therefore, the fixation of
higher price for sugarcane by the State Government by itself cannot
have any major or substantial impact on the fixation of the price
of the levy sugar by the Central Government.”
12. The question involved in Ch. Tika Ramji & Ors., etc. v. The
State of Uttar Pradesh & Ors. AIR 1956 SC 676 was concerning the
validity of the Uttar Pradesh Sugarcane (Regulation of Supply and
Purchase) Act, 1953 (for short, “Act of 1953”) and notifications dated
27.9.1954 and 9.11.1955 issued by the Government of Uttar Pradesh
thereunder. The notification dated 27.9.1954 was issued in exercise of
the powers/ conferred under sub-section 1(a) read with sub-section 2(b)
of Section 16 of the Act of 1953 which provided that not less than 3/4 of
the cane growers of the area of operation of a Cane Growers Cooperative
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Society to be members of the society. The occupier of the factory for
which the area is assigned shall not purchase or enter into an agreement
to purchase cane grown by a cane grower except through such Cane
Growers Co-operative Society.
13. The notification dated 9.11.1955 which was issued in exercise
of the powers conferred by section 15 of the Act of 1953, reserved or
assigned to the sugar factories mentioned in column 2 of the Schedule
annexed to it, the cane purchasing centers, with the authorities attached
to them, specified against them in column 3 for the supply of sugarcane
during the crushing season 1955-56. Thus, it is apparent that the
notification dated 27.9.1954 related to the agency of supply of sugar
cane to the factories and the notification dated 9.11.1955 related to the
creation of the zones for particular factories were questioned.  Various
submissions were raised to assail the validity of the Act and the
notification.
14. Firstly, it was urged that the State of Uttar Pradesh had no
power to enact the Act of 1953 as it relates to the subject of industries,
the control of which by the Union is declared by Parliament by law to be
expedient in the public interest within the meaning of Entry 52 of List I.
The Act of 1953 was repugnant to Essential Commodities Act, 1955 and
the Industries Development Regulation Act, 1951. The Act of 1953
infringes the fundamental right carved out under Article 14 as
vast powers
were given to the Cane Commissioner, which could be used in a
discriminatory manner. The notification dated 27.9.1954 violated the
fundamental right guaranteed under Article 19(1)(c).  The cane growers
were compelled to become a member of the society before they could
sell sugarcane to a factory. The Act of 1953 and the notifications infringe
the fundamental right guaranteed by Article 19(1)(f) and (g) and Article
31 of the Constitution.
15. This Court held that the State of Uttar Pradesh had the
legislative competence to enact the Act, and there was no repugnancy
of the Act of 1953 with the Act of 1951 or the Essential Commodities
Act, 1955. This Court upheld the validity of the Act and notifications and
also held that there was no unreasonable restriction imposed. There
was no violation of fundamental right under Article 19(1)(f) and (g) and
Article 31 of the Constitution.
16. The question of fixation of price by the State Government
under the Act of 1953 did not fall for consideration in Ch. Tika Ram
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(supra). This Court noted that the Uttar Pradesh Government had never
fixed the price of sugarcane to be purchased by the factories by the time
the decision was rendered. While examining the repugnancy, passing
reference has been made to the provisions contained in the Act of 1954.
17. During the pendency of petitions, the Sugar Control Order,
1955, was issued on 27.8.1955, which was referred to in the judgment.
It was not even submission raised or considered that the power of
regulation under Section 16 of the Act would include the power to fix the
advised price of sugarcane. The concept of fixation of minimum price
by Central Government vis a vis to State Advised Price to be fixed by
State Government, never fell for consideration of this Court in the said
decision. The ratio of decision has to be considered in the light of questions
considered and answered. In Tika Ramji (supra), it was held that there
was no repugnancy in the Act of 1953 with Act of 1955 or with the Act
of 1951, and notifications which were impugned did not infringe the
fundamental rights.
18. Thus, from the above, it is clear that the factual matrix and the
relevant provisions which fell for consideration before this Court in the
case of Tika Ramji (supra) and which fell for consideration by this
Court in the case of U.P. Coop. Cane Unions Federations (supra)
were altogether different. As observed hereinabove, Clause 3 of 1955
Order empowered the Central Government to fix “the price
or the
minimum price”. The aforesaid Clause 3 of 1955 Order was under
consideration by this Court in the case of Tika Ramji (supra). However,
subsequently, 1955 Order has been repealed by 1966 Order and Clause
3 of 1966 Order provides that the Central Government may fix “the
minimum price” of the sugarcane. Therefore, when the legislature
consciously deleted the word “the price” and retained the power with
the Central Government to fix “the minimum price”, some meaning has
to be given to such a deletion. The intention of the legislature is also
required to be considered when certain words in the provisions of a
statute are deleted or added and/or substituted. In the case of Tika
Ramji(supra), this Court though specifically observed and held that in
the field of sugar and sugarcane, both, the Parliament and the State
legislature would have the concurrent Jurisdiction as the same will fall
under Entry 33 in the Concurrent List of seventh Schedule. Considering
the fact that the State Government did not exercise the power of fixing
the price, though the powers were available and the Central Government
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fixed the price/minimum price which came to be adopted by the State
Government, this Court in Tika Ramji’s case(supra) held that in such a
situation there is no conflict and the question of repugnancy does not
arise. Therefore, we are of the opinion that as such there is no apparent
conflict between the decisions in Tika Ramji’s case and U.P. Coop.
Cane Unions Federations, which require to be referred to a larger
Bench of seven Judges.
19. Under clause 3 of the 1966 order, the minimum price can be
fixed. Under clause 3A of the said order, as amended in 1978, the agreed
price is to be mentioned in the agreement, which can be higher than the
minimum price and not less than that. Under clause 3(2), no person shall
sell or agree to sell sugarcane to a producer of sugar or his agent, and no
such producer or agent shall purchase or agree to purchase sugarcane
at a price lower than that fixed under sub-clause (1). Thus, the price
fixed under clause 3(1) has to be treated as a minimum price. Under
clause 3(A), as inserted on 2.2.1978, agreement in writing is required,
and the price has to be paid as agreed to within 14 days.
20. Even otherwise and on merits and for the reasons stated
hereinbelow, we are in complete agreement with the view taken by this
Court in the case of U.P. Coop. Cane Unions Federations, which lays
down that the inconsistency or repugnancy will arise if the State
Government fixed a price which is lower
than that fixed by the
Central Government. But, if the price fixed by the State
Government is higher than that fixed by the Central Government,
there will be no occasion for any inconsistency or repugnancy as
it is possible for both the orders to operate simultaneously and
to comply with both of them. A higher price fixed by the State
Government would automatically comply with the provisions of
Sub-clause (2) of Clause 3 of 1966 Order. Therefore, any price
fixed by the State Government which is higher than that fixed by
the Central Government cannot lead to any kind of repugnancy.
20.1 Question of repugnancy under Article 254 of the Constitution:
Concerning laws in List III of the Seventh Schedule of the
Constitution of India, where both the Union and the States have the
power to enact a law, the question of repugnancy arises only in a case
where there is an actual irreconcilable conflict between the two laws.
Inconsistency between the two laws is irreconcilable, then the question
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of repugnancy arises. It is necessary to find the dominant intention of
both the legislatures, partial or incidental coverage of the same area in a
different context, and to achieve a different purpose, does not attract
the doctrine of repugnancy. In Rajiv Sarin v. State of Uttarakhand, (2011)
8 SCC 708, the Court held :
“33. It is trite law that the plea of repugnancy would be
attracted only if both the legislations fall under the Concurrent
List of the Seventh Schedule to the Constitution. Under Article
254 of the Constitution, a State law passed in respect of a subject-
matter comprised in List III i.e., the Concurrent List of the Seventh
Schedule to the Constitution would be invalid if its provisions are
repugnant to a law passed on the same subject by Parliament and
that too only in a situation if both the laws i.e., one made by the
State Legislature and another made by Parliament cannot exist
together. In other words, the question of repugnancy under Article
254 of the Constitution arises when the provisions of both laws
are completely inconsistent with each other or when the provisions
of both laws are absolutely irreconcilable with each other, and it is
impossible without disturbing the other provision, or conflicting
interpretations resulted into when both the statutes covering the
same field are applied to a given set of facts. That is to say, in
simple words, repugnancy between the two statutes would arise
if there is a direct conflict between
the two provisions and the law
made by Parliament and the law made by the State Legislature
occupies the same field. Hence, whenever the issue of repugnancy
between the law passed by Parliament and of State Legislature
are raised, it becomes quite necessary to examine as to whether
the two legislations cover or relate to the same subject-matter or
different.
 x x x
45. For repugnancy under Article 254 of the Constitution,
there is a twin requirement, which is to be fulfilled: firstly, there
has to be a “repugnancy” between a Central and State Act; and
secondly, the Presidential assent has to be held as being non-
existent. The test for determining such repugnancy is indeed to
find out the dominant intention of both the legislations and whether
such dominant intentions of both the legislations are alike or
different. To put it simply, a provision in one legislation in order to
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give effect to its dominant purpose may incidentally be on the
same subject as covered by the provision of the other legislation,
but such partial or incidental coverage of the same area in a
different context and to achieve a different purpose does not
attract the doctrine of repugnancy. In a nutshell, in order to attract
the doctrine of repugnancy, both the legislations must be
substantially on the same subject.”
20.2 In M. Karunanidhi v. Union of India & Anr., (1979) 3 SCC
431, the Court opined that where there is a direct collision between the
law made by the State and the law made by the Parliament, State law
would be void to the extent of repugnancy. It is only when the provisions
are irreconcilable. The Court held:
“8. It would be seen that so far as clause (1) of Article 254
is concerned it clearly lays down that where there is a direct
collision between a provision of a law made by the State and that
made by Parliament with respect to one of the matters enumerated
in the Concurrent List, then, subject to the provisions of clause
(2), the State law would be void to the extent of the repugnancy.
This naturally means that where both the State and Parliament
occupy the field contemplated by the Concurrent List then the
Act passed by Parliament being prior in point of time will prevail,
and consequently, the State Act will have to yield to the Central
Act. In fact, the scheme of the Constitution is a scientific
and
equitable distribution of legislative powers between Parliament
and the State Legislatures. First, regarding the matters contained
in List I, i.e., the Union List to the Seventh Schedule, Parliament
alone is empowered to legislate, and the State Legislatures have
no authority to make any law in respect of the Entries contained
in List I. Secondly, so far as the Concurrent List is concerned,
both Parliament and the State Legislatures are entitled to legislate
in regard to any of the Entries appearing therein, but that is subject
to the condition laid down by Article 254(1) discussed above.
Thirdly, so far as the matters in List II, i.e., the State List are
concerned, the State Legislatures alone are competent to legislate
on them, and only under certain conditions, Parliament can do so.
It is, therefore, obvious that in such matters, repugnancy may
result from the following circumstances:
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1. Where the provisions of a Central Act and a State Act in
the Concurrent List are fully inconsistent and are absolutely
irreconcilable, the Central Act will prevail, and the State Act will
become void in view of the repugnancy.
2. Where however a law passed by the State comes into
collision with a law passed by Parliament on an Entry in the
Concurrent List, the State Act shall prevail to the extent of the
repugnancy and the provisions of the Central Act would become
void provided the State Act has been passed in accordance with
clause (2) of Article 254.
3. Where a law passed by the State Legislature while being
substantially within the scope of the entries in the State List
entrenches upon any of the Entries in the Central List the
constitutionality of the law may be upheld by invoking the doctrine
of pith and substance if on an analysis of the provisions of the Act
it appears that by and large the law falls within the four corners of
the State List and entrenchment, if any, is purely incidental or
inconsequential.
4. Where, however, a law made by the State Legislature
on a subject covered by the Concurrent List is inconsistent with
and repugnant to a previous law made by Parliament, then such a
law can be protected by obtaining the assent of the President
under Article 254(2) of the Constitution. The result of obtaining
the assent of the President would be that so far as the State Act
is concerned, it will prevail in the State and overrule the
provisions
of the Central Act in their applicability to the State only. Such a
state of affairs will exist only until Parliament may at any time
make a law adding to, or amending, varying or repealing the law
made by the State Legislature under the proviso to Article 254.
So far as the present State Act is concerned, we are called upon
to consider the various shades of the constitutional validity of the
same under Article 254(2) of the Constitution.
x x x
24. It is well settled that the presumption is always in favour
of the constitutionality of a statute and the onus lies on the person
assailing the Act to prove that it is unconstitutional. Prima facie,
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there does not appear to us to be any inconsistency between the
State Act and the Central Acts. Before any repugnancy can arise,
the following conditions must be satisfied:
1. That there is a clear and direct inconsistency between
the Central Act and the State Act.
2. That such an inconsistency is absolutely irreconcilable.
3. That the inconsistency between the provisions of the two
Acts is of such nature as to bring the two Acts into direct collision
with each other and a situation is reached where it is impossible
to obey the one without disobeying the other.”
20.3 Clause (1) of Article 254 of the Constitution gives primacy to
central legislations in case of conflict with State laws whether enacted
before or after. The central law operates only in case of repugnancy
and not in a case of mere possibility when such an order might be issued
under state law, as opined in Belsund Sugar Co. Ltd. v. State of Bihar &
Ors., (1999) 9 SCC 620; Punjab Dairy Development Board & Anr. v.
Cepham Milk Specialities Ltd. & Ors, (2004) 8 SCC 621; Southern
Petrochemicals Industries Ltd. v. Electricity Inspector and ETIO & Ors.,
(2007) 5 SCC 447 and Bharat Hydro Power Corporation Ltd. & Ors. v.
State of Assam & Anr. (2004) 2 SCC 553.
20.4 It is apparent that in U.P. Cooperative Cane Unions
Federations (supra), a Constitution Bench has rightly opined that under
section 16 of the Act of 1953, there is the power to fix a price with State,
which is State advised price. It cannot be said that the Central legislation
occupies the field, the Essential Commodities Act, 1955, and the Order
of 1966 issued thereunder deals with minimum price. The Central
Government has the power to fix the minimum price in clause 3. The
State Government is not denuded of the power under the Act of 1953 to
fix the “State Advised Price” under section 16 as held in U.P. Cooperative
Cane Unions Federations (supra). The power to regulate includes the
power to fix the price. But State advised price has to be higher than the
minimum price fixed by Central Government. But the exercise of the
power under section 16 of the Act of 1953 to fix State Advised Price,
cannot be said to be irreconcilable with the minimum price fixation under
section 3(2)(c) of the Essential Commodities Act, 1955 and clause 3 of
the Sugarcane (Control) Order, 1966. The power of fixation of State
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advised price under section 16 of the Act of 1953 cannot be said to be
arbitrary or illegal in any manner.
20.4.1 In the case of U.P. Cooperative Cane Unions Federations
(supra), this Court had an occasion to consider the ambit, scope and
import of Section 16 of the Act.  The question involved was as to whether
the State Government had the power to fix SAP for sugarcane or it was
only the Central Government, which could fix the minimum price or so
to say, whether the fixation of SAP was covered by the Central
Legislation or was it open to the State to fix the price different than the
price fixed by the Central Government and whether there was repugnancy
in view of Article 254 of the Constitution.
20.4.2 From the close scrutiny of the judgment passed by this
Court in the case of U.P. Cooperative Cane Unions Federations
(supra), it did appear that this Court took into consideration the effect,
scope and impact of Section 16 under the Act. This Court considered in
detail Section 16 of the Act – the provision to regulate purchase and
supply of sugarcane in the reserved and assigned area, under which the
State Government is vested with the power to regulate the distribution,
sale or purchase of sugarcane in any reserved or assigned area and
purchase of cane in any area other than a reserved or assigned area by
issuing an order to that effect. Thereafter, this Court has held that the
power to regulate includes the power to fix the SAP. This Court has also
specifically observed and held that there was no repugnancy.
20.4.3 From the judgment of the Constitution Bench in the case
of U.P. Cooperative Cane Unions Federations (supra), it further
appears that this Court took into account the relevance, importance,
purpose and object, its impact, implication and reasons for enacting Section
16 of the Act and after taking into account all the relevant considerations
this Court has specifically held that the SAP is a price higher than that
determined by the Central Government which is known as Statutory
Minimum Price (SMP). Thus, in the case of U.P. Cooperative Cane
Unions Federations (supra), this Court has specifically upheld the power
of the State Government to fix the SAP under Section 16 of the Act.
20.5 Now, so far as the fixation of the SAP by the State
Government is concerned, from the counter affidavit before the High
Court filed in Writ Petition No. 8548 (MB) of 2007 it appears that as per
the State Government, the following factors are the relevant facts for
determination of SAP.
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(i)
The cost of cultivation of sugarcane.
(ii)
The cost of transport of sugarcane by cane growers from
the field to purchase center or to mill gate as the case may
be.
(iii)
A reasonable return on the aforesaid amount of his produce
to cane growers.
(iv)
Availability of the cane area, demand of sugarcane by
industries, profitability of the industries by selling sugar, and
other bye products etc.
(v)
The price of sugarcane paid by sugar factories in the
proceeding year.
(vi)
The factors necessary to avoid diversion of sugarcane from
sugar industries to other consumers like Kolhu and
Khandsari Units.
It also appears that determination and fixation of the SAP is a
Cabinet decision which has been fixed after considering several factors,
including the cost of cultivation/production of the sugarcane etc. and
after taking into consideration the relevant factors as above and including
increasing of national economic growth, cost of production of sugarcane,
increase in the cost of seeds, fertilizers, labour charges, irrigation etc.,
including the profit earned by sugar factories from the produces from
bye-products, power projects etc.  Thus it appears that that authority is
guided by all relevant factors while determining such price – SAP.
20.5.1 In the case of U.P. Cooperative Cane Unions Federations
(supra), the Constitution Bench has upheld the power and authority of
the State Government to fix the SAP after precisely
observing that the
Act of 1953 has been enacted to regulate the SAP and purchase of
sugarcane required by the sugar factories and that the word ‘regulate’
would also include the right to fix the price. It has also declared that the
SAP fixed by the State Government has to be higher than the minimum
price fixed by the Central Government. In a given case, the SAP price
may be an agreed price.
20.6 At this stage, is required to be noted that in the case of U.P.
Cooperative Cane Unions Federations (supra), this Court specifically
negatived the submission on behalf of the sugar factories that they cannot
be compelled to enter into agreements with the cane growers and cane-
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growers’ cooperative society in forms B and C, wherein the State-advised
price is mentioned. This Court also negatived the submission on behalf
of the sugar factories that as the consent cannot be said to be a voluntary
consent and as the consent was obtained under compulsion or duress
and, therefore, the sugar factories cannot be compelled to pay such
State-advised price even though it may have been mentioned in the forms
or in the purchase and therefore it cannot be said to be a sale.
Negativating the aforesaid submission and after considering the entire
scheme, this Court in paragraph 33 observed and held as under:
“33. As discussed earlier, the reservation or assignment of
area is made for the benefit of a sugar factory. The agreements
executed by the cane-growers or cane-growers’ cooperative
society in favour of occupier of a factory are also for the benefit
of the sugar factory as by such agreements it gets an assurance
of a continuous supply of freshly harvested sugarcane on the days
indicated in the requisition slips issued by it so that there may not
be any problem in getting optimum quantity of raw material
throughout the crushing season. In absence of the agreements
the sugar factory will also be a loser as it may face great problem
in getting the supply of sugarcane according to its requirement.
The occupiers of the factory are themselves keen for execution
of the agreements but their only objection is to the mention of
State Advised Price.
The agreement is one composite transaction
and it is not open to them to contend that the terms thereof which
are to their advantage should be enforced but the term relating to
price notified by the State Government should not be enforced as
their consent in that regard was not a voluntary act. In our opinion,
having regard to the advantages derived by the sugar factories,
they are fully bound by the agreement wherein the State Advised
Price may be mentioned and it is not open to them to assail the
clause relating to price of the sugarcane on the ground that their
consent was not voluntary or was obtained under some kind of
duress.
It further lays down the proposition that having regard to the
advantages derived from the sugar factories, they are fully bound by the
agreement, wherein the State-advised price may be mentioned and it is
not open to them to assail the clause relating to price of the sugar cane
on the ground that their consent was not voluntary or was obtained under
some kind of duress.
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20.7 As observed herein above, in the 1966 Order the word “the
price” has been deleted and Clause 3 of 1966 Order provides that the
Central Government may fix “the minimum price” of the sugarcane to
be paid by the producer of sugar. As rightly submitted by the learned
Counsel on behalf of the State, there is a difference between “the price”
and “the minimum price”. The aforesaid shall be apparent from the
relevant Clauses of the 1966 Order.
20.7.1 The provision of State advised price has been made to
protect the interests of the sugarcane growers who are not in a position
to negotiate. In Sukhnandan Saran Dinesh Kumar & Ors. v. Union of
India & Ors., (1982) 2 SCC 150, this Court opined:
“22. The statutory prescription of quantum of rebate for binding
material has been prescribed for the benefit of sugarcane growers.
Producers of sugar and khandsari sugar constitute a powerful
trade lobby, the fact of which one can take judicial notice. Sugar
being an essential commodity occasionally kept in short supply
and being a commodity needed for consumption by almost the
entire population, the powerful industry magnates in this field are
in a position to dominate both the growers of sugarcane as also
the consumers of the essential commodity. Number of regulations
have been enacted almost since the dawn of independence to
regulate this powerful combination of manufacturers of sugar and
khandsari sugar all over the country for
the ultimate benefit of
consumers on the one hand and on the other hand the farmers
and the growers of sugarcane with their small holdings and raising
a perishable food crop. The marginal farmers are unable to stand
up against the organised industry. It does not require long argument
in this predominantly agricultural society that the farmers having
small holdings need protection for selling at fair price their meagre
agricultural produce. As far back as 1953, the U.P. Legislature
enacted U.P. Sugarcane (Regulation of Supply and Purchase)
Act, 1953, for rational distribution of sugarcane to factories, for
its development on the organised scientific line, to protect the
interest of cane growers and of the industry, etc. Constitutionality
of this Act was challenged on various grounds including one under
Article 19(1)(g). In Ch. Tika Ramji v. State of U.P. this Court
repelled the challenge under Article 19(1)(g) holding that the
restriction which is imposed upon the cane growers in regard to
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sale of their sugarcane to the occupiers of factories in areas where
the membership of the cane growers’ cooperative society is not
less than 75 per cent of the total cane growers within the area, is
a reasonable restriction in the public interest designed for
safeguarding the interest of the large majority of growers of
sugarcane in the area and works for the greatest good of the
greatest number. The proposition is now beyond the pale of
controversy that the State can impose a restriction in the interest
of general public on the right of a party to contract where in the
opinion of the Government the contracting parties are unable to
negotiate on the footing of equality. Constitutional validity of
statutes prescribing minimum wages has been founded on this
proposition. The principle can be effectively extended to the
powerful sugar industry and the cane growers because the cane
growers admittedly are at a comparative disadvantage to the
producers of sugar and khandsari sugar who were described in
the course of arguments as sugar barons. It does not require an
elaborate discussion to reach an affirmative conclusion that
sugarcane growers who are farmers cannot negotiate on the
footing of the equality with the producers of sugar and khandsari
sugar. The State action for the protection of the weaker sections
is not only justified but absolutely necessary unless the restriction
imposed is excessive.”
20.7.2 Clause 3(1) empowers the Central Government to fix
the
minimum price of sugarcane to be paid by the producers of sugar or
their agents for the sugarcane purchased by them. Clause 3(2) provides
that no person shall sell or agree to sell sugarcane to a producer of sugar
or his agent, and no such producer or agent shall purchase or agree to
purchase sugarcane, at a price lower than that fixed under sub-clause
(1). As per Clause 3(3), where a producer of sugar purchases any
sugarcane from a grower of sugarcane or from a Sugarcane-grower’s
Co-operative Society, the producer shall, unless there is an agreement
in writing to the contrary between the parties, pay within fourteen
days from the date of delivery of the sugarcane to the seller or tender to
him the price of the cane sold at the rate agreed to between the
producer and the sugarcane- grower or Sugarcane- growers’ Co-
operative Society or that fixed under sub-clause (1), as the case
may be. Clause (3-A) provides that a producer of sugar or his agent
shall pay, for the sugarcane purchased by him, to the sugarcane grower
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or the sugarcane growers’ coopearative society, either the minimum
price of sugarcane fixed under Clause 3, or the price agreed to
between the producer or his agent and the sugarcane grower or
the sugarcane growers’ cooperative society, as the case may be
(agreed price). Agreed Price to be paid under the Agreement may be
even SAP fixed and/or determined by the State Government. Clause
(5-A) provides that where a producer of sugar purchases sugarcane,
from a sugarcane-grower during each sugar year, he shall be liable to
pay, in addition to the minimum sugarcane price fixed under Clause
3, an additional price. Sub-clause (2) of Clause 5-A authorizes the
appropriate authority to determine the additional price. Sub-clause (5)
further provides that no additional price determined under sub-clause
(2) or sub-clause (3) is required to be paid by a producer of sugar who
pays a price higher than the minimum price fixed under Clause 3 to the
sugarcane-grower, provided that, “the price so paid is not less than
the total price comprising the minimum sugarcane price fixed
under Clause 3 and the additional price determined under sub-
clause (2) or sub-clause (3).”
21. As held by this Court in the case of U.P. Cooperative Cane
Unions Federations (supra), the State has the competence to determine
and fix the State Advised Price fixed under section 16 and therefore
fixation of SAP by the State Government cannot be said to be beyond
the
purview of legislative competence. Once the fixation of State Advised
Price has been done, the Cane Commissioner can direct the parties to
follow the same as held in U.P. Cooperative Cane Growers Federation
(supra). It cannot be said that fixation of price under the regulatory
measure provided in section 16 suffers from arbitrariness, nor can it be
termed to be uncanalised power. Thus, we are of the considered opinion
that the decision in Tika Ramji (supra) is not in conflict with the decision
in U.P. Cooperative Cane Unions Federations (supra) and the decision
in the latter case is not required to be revisited by a larger Bench of
seven Judges.
22. Thus, considering the entire scheme of 1966 Order, it provides
for “the minimum price” and “the additional price” or “the advised price”.
Considering the aforesaid provisions under 1966 Order, there cannot be
any sugarcane price (advised price) below “the minimum price”. As per
the agreement entered into the “advised price” necessarily had to be
higher than the “minimum price”. Thus, there is a difference between
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“the price” and the “the minimum price”. As per Clause 3 of 1966 Order,
it empowers the Central Government to fix the “minimum price” and the
State Government is authorized to fix the Advised Price which as observed
hereinabove is always higher than the “minimum price” fixed by the
Central Government. Therefore, as rightly observed by this Court in the
case of U.P. Coop. Cane Unions Federations, there is no conflict in
exercise of powers by the Central Government in fixing the “minimum
price” and in fixing the “advised price” by the State Government which
is higher than the “minimum price” fixed by the Central Government.
Therefore, as rightly observed by this Court in the case of U.P. Coop.
Cane Unions Federations, there is no inconsistency or repugnancy in
fixing the “advised price” or “remunerative price” by the State
Government and the “minimum price” fixed by the Central Government.
As rightly held, if the price fixed by the State Government is higher than
that fixed by the Central Government, there will be no occasion for any
inconsistency or repugnancy as it is possible for both the orders to operate
simultaneously and to comply with both of them.
23. Thus, it is held that the view taken by the Constitution Bench
of this Court in the subsequent decision in the case of U.P. Coop. Cane
Unions Federations (supra) is the correct law. There is no conflict
between the two decisions of this Court in the case of Tika Ramji and
in the case of U.P. Coop.
Cane Unions Federations and therefore,
there is no necessity to refer the matter to the larger Bench consisting of
seven Judges. Therefore, our final conclusions are as under:
a.
By virtue of Entries 33 and 34 List III of seventh Schedule,
both the Central Government as well as the State
Government have the power to fix the price of sugarcane.
The Central Government having exercised the power and
fixed the “minimum price”, the State Government cannot
fix the “minimum price” of sugarcane. However, at the same
time, it is always open for the State Government to fix the
“advised price” which is always higher than the “minimum
price”, in view of the relevant provisions of the Sugarcane
(Control) Order, 1966, which has been issued in exercise
of powers under Section 16 of the U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953;
b.
The Sugarcane (Control) Order, 1966 which has been issued
under Section 16 of the U.P. Sugarcane (Regulation of Supply
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592
SUPREME COURT REPORTS
[2020] 9 S.C.R.
and Purchase) Act, 1953 confers power upon the State
Government to fix the remunerative/advised price at which
sugarcane can be bought or sold which shall always be
higher than the minimum price fixed by the Central
Government;
c.
Section 16 of the U.P. Sugarcane (Regulation of Supply
and Purchase) Act, 1953 is not repugnant to Section 3(2)(c)
of the Essential Commodities Act, 1955 and Clause 3 of
the Sugarcane (Control) Order, 1966 as, as observed
hereinabove, the price which is fixed by the Central
Government is the “minimum price” and the price which is
fixed by the State Government is the “advised price” which
is always higher than the “minimum price” fixed by the
Central Government and therefore, there is no conflict. It
is only in a case where the “advised price” fixed by the
State Government is lower than the “minimum price” fixed
by the Central Government, the provisions of the Central
enactments will prevail and the “minimum price” fixed by
the Central Government would prevail. So long as the
“advised price” fixed by the State Government is higher
than the “minimum price” fixed by the Central Government,
the same cannot be said to be void under Article 254 of the
Constitution of India.
d.
The view taken by the Constitution Bench of this Court in
the case of U.P. Cooperative Cane Unions Federations vs.
West U.P. Sugar Mills Association and Others is the correct
law.
24. The Reference is answered accordingly.
Now the Registry to
notify all these matters before the Court taking up such matters forthwith,
for disposal.
Divya Pandey
Reference answered.