Petition Nos.
464 & 617 of 1977.
(Under Article 32 of the Constitution of India. ) K. Parasaran, Attorney General, Shanti Bhushan, Ashwani Kumar, K.G. Bhagat, L.N. Sinha, Raja Ram Aggarwal, S.P. Gupta, H.K. Puri, V. Parthasarthy, T.C. Sharma, P.P. Singh, Ms. A. Subhashini, Mrs. Sushma Suri, G. Gopalakrishnan, O.P. Rana, A.V. Rangam and Shartha Raju for the appearing par ties.
F.S. Nariman, K.K. Venugopal, A.K. Verma, D.N. Mishra and section Kachawa for the intervener in W.P. No. 464/77.
The Judgment of the Court was delivered by THOMMEN, J.
The petitioners are owners of sugar mills operating in the State of Uttar Pradesh in areas classified for the purpose of determining the price of levy sugar as West and East Zones.
They challenge the validity of notifi cations dated 28th November, 1974 and 11th July, 1975 (Annexures 8 & 9) issued by the Central Government in exer cise of its power under sub section (3 C) of section 3 of the (Act No. 10 of 1955), as amended to date (hereinafter referred to as the 'Act ').
The petitioners do not, and cannot, challenge the validity of the subsection by reason of Article 3 lB of the Constitution of India.
By the impugned orders, the Central Government fixed the prices of levy sugar for 1974 75 production.
For the purpose of determining the prices, the country is divid ed into 16 zones, and the prices fixed for various grades of sugar in terms of section 3 (3 C) of the Act vary from ' zone to zone.
Prices are determined with reference to the geographical cum agro economic considerations and the aver age cost profiles of factories located in their respective zones.
Each State for this purpose constitutes a separate zone, while U.P. is divided into 3 zones and Bihar into 2 zones.
The petitioners contend that these orders are ultra vires the Act and violative of their fundamental fights as the prices of levy sugar have been determined arbitrarily with reference to the average cost profiles of factories grouped together in zones without regard to their individual capacity and cost characteristics.
Such prices do not re flect the actual manufacturing cost of sugar incurred by producers like the petitioners or secure to them reasonable returns on the capital employed by them.
Geographical zon ing, for the purpose of price fixation, they point out, is an irrational ' and discriminatory system of (1) Published in the Gazette of India Extraordinary dated 28.11.1974 and 11.7.1975.
919 averaging wide cost disparities amongst producers of widely varying capacity.
Cost of manufacture of sugar depends on a number of factors, such as recoveries from the sugarcanes, duration of the crushing season, crushing capacity of the plant, the sugarcane price paid and the capital employed in the manufacture of sugar.
These factors vary from factory to factory.
Fixation of the levy sugar prices on zonal basis without regard to these divergent factors and the compara tive cost profiles gives the owners of bigger factories an undue advantage over producers like the petitioners whose factories are comparatively of lower crushing capacity and whose manufacturing cost is consequently higher.
Clubbing of the petitioners ' factories with dissimilar factories in the same zones for the purpose of price fixation is discrimina tory, arbitrary and unreasonable.
The petitioners point out that the system of geographical zoning for the purpose of price determination has been severely criticised by the Bureau of Industrial Costs & Prices (The "BICP") who have strongly recommended the division of the sugar industry into groups of units having similar cost characteristics with particular reference to recovery, duration, size and age of the unit and capital cost per tonne of output, and irrespec tive of their location.
The respondents, on the other hand, contend that the classification of sugar industry into 15 zones (now 16) was upheld by a Constitution Bench of this Court in Anakapalle Co operative Agricultural & Industrial Society Ltd. etc.
vs Union of India & Ors.
, ; The conten tion that the zonal system was discriminatory and violative of constitutional principles was pointedly urged, but cate gorically rejected by this 'Court.
The method adopted by the Government in fixing the price of levy sugar is fully sup ported by the recommendations of various expert bodies.
The Tariff Commission in its 1973 Report recommended division of the country into 16 zones for this purpose.
The price of sugar is fixed with reference to the Cost Schedule recom mended by that body.
These recommendations are based on various factors such as cost and output of individual la bour, cane price (accounting for about 70 per cent of the cost of sugar production), quality of sugarcane, taxes on sugarcane, cost of other material, transport charges, cost of storing the sugar produced, cane development charges and other overhead expenses, selling expenses etc.
These factors are almost identical for the entire zone.
The cost of manufacturing sugar, the respondents con tend, depends not only on recovery from the sugarcane, duration of crushing season, crushing capacity of the plant, the sugarcane price paid and the capital employed, as stated by the petitioners, but also to a consider 920 able extent on the condition of the plant and machinery, quality of management, investment policy, relations with cane growers and labour, financial reputation etc.
They say: "It is evident from the Tariff Commission Report of 1959, as also the Official Directory of the Bombay Stock Exchange, that the petitioner Company has been consistently diverting huge amounts for investments running into several lakhs elsewhere instead of ploughing back the same into the peti tioner 's sugar industry in question.
Thus, the petitioner Company has been neglecting the sugar factory and for such neglect of their own they cannot blame the Zonal System." Mr. Shanti Bhushan, appearing for the petitioners, does not object to the factories being grouped together on the basis of factors common to them with a view to fixing the prices applicable to them as a class of producers.
He does not advocate fixation of price separately for each unit.
He says that the sugar factories must be grouped together, not on the basis of their geographical location, but similarity in cost characteristics.
He relies upon the 1976 Report of the BICP.
The present system of fixing prices according to the regions, where the factories are located, he says, is based on "averaging wide cost disparities" as a result of which manufacturers like the petitioners incurring a high cost of production and others incurring a low cost of pro duction are treated alike.
Such a system works to the disad vantage of the former and to the advantage of the latter.
This, Mr. Shanti Bhushan contends, is an unreasonable and invalid classification and violative of constitutional principles.
While this line of argument is supported by Mr. Raja Ram Agarwal, Mr. S.P. Gupta appearing for the interven er in Civil Writ Petition No. 464 of 1977 advocates aboli tion of zonal classification or grouping of any kind and supports fixation of price for each individual factory with reference to its cost and regardless of any other considera tion.
Such unit wise determination alone, according to him, satisfies the requirements of Section 3(3 C).
Any system of zoning or grouping for determination of price, he contends, will fail to meet the norms of that sub section.
Mr. M .M. Abdul Khader, on the other hand, submits that while averag ing and costing with reference to a representative cross section may ordinarily be an appropriate method for deter mining the fair price, such a method is inappropriate for a small zone like Kerala where there are only three manufac turing units.
In respect of such a zone, he says, unit wise fixation of price is the only just and proper method.
921 Mr. K.K. Venugopal, counsel for Indian Sugar Mills ' Association (ISMA), on the other hand, supports the zoning system.
He says that, except for a few producers like the petitioners, all the rest of them in the country have ac cepted the principle of zoning.
In his written submissions, Mr. Venugopal states as follows: "As was seen during the course of hearing only 2 or 3 per sons have come forward challenging zoning.
There are 389 sugar factories in the country and the present intervener has 166 members.
Besides there are 220 members with the cooperative sector.
Their Association being National Federa tion of Cooperative Sugar Factories Ltd., has also inter vened in these petitions and have adopted the arguments of ISMA.
Hence almost the entire industry has supported zoning and only a handful of people who also factually are not high cost units have opposed zoning." Mr. Venugopal submits that the present case is squarely covered by the decisions of this Court in Anakapalle Cooper ative Agricultural & Industrial Society Ltd. etc.
vs Union of India & Ors.
, ; and The Panipat Cooperative Sugar Mills vs The Union of India, [1973] 2 SCR 860.
He says that the petitioners have not made out a case for reconsideration of these two decisions.
He refers to T. Govindaraja Mudaliar etc.
vs The State of Tamil Nadu & Ors., ; at 228 to 230 and submits that this Court would not reexamine an earlier decision merely because certain aspects of the question had not been noticed in that decision.
Mr. Venugopal, however, advocates neutralisation of the high cost incurred by the old units having lower crushing capacity by giving them an incremental levy price as recommended by the High Level Committee in 1980.
Before we examine the provisions of section 3(3 C) in the context of the general scheme of the Act, we shall briefly refer to the observations of this Court in Anaka palle; , and Panipat, [1973] 2 SCR 860.
Grover, J. speaking for the Bench in Anakapalle (supra) states ': "The system of fixing the prices, according to certain regions or zones, is not a new one.
The Tariff Commission in 1959 favoured the formation of four zones.
In the report of the Sugar Enquiry Commission 1965 it was pointed out that the Government had actually fixed the prices for 22 922 zones which meant that from four zones the number had been increased to twenty two or more.
The Commission was of the view that there should be five zones only in addition to Assam.
The Tariff Commission, 1969 however recommended the constitution of fifteen zones largely on State wise basis with an exception only in case of Uttar Pradesh and Bihar.
Uttar Pradesh was divided into three zones and Bihar into two.
The Tariff Commission had been specifically requested to inquire into the working of the zonal system, the main point for inquiry being the zones into which the sugar producers should be grouped having regard to the basis of classification to be recommended by the Commission.
The view of the Commission was that on the whole the number of price zones should be fifteen which would reduce, though not eliminate, the inter se anomalies in the cost structure without resorting to the extreme of the fixation of price for each unit or a single or at the most two, one for the sub tropical and other for the tropical one.
The Tariff Commission hoped that in the course of time conditions would be created making the operation of the second alternative feasible." Rejecting the contention that it was the zonal system that caused the losses allegedly incurred by some of the sugar producers, Grover, J. says that ordinarily these units ought to have made profits.
The reasons for incurring losses can be many, such as inefficiency, failure to pursue the right policy, poor management and planning etc., but these reasons have no relation to the zonal system.
That system by and large has led to efficiency and provides an incentive to cut down the cost.
Healthy competition among the units in the same zone should in the normal.
course result in reduc tion of cost and greater efficiency in the operation of the units.
It is proper management and planning that would lead to the success of any commercial venture.
The contention of the producers that they have been incurring losses on ac count of the zonal system is opposed to the evidence pro duced by them.
The Court has rejected the extreme contention that prices should be fixed unitwise, i.e., on the basis of actual cost incurred by each unit.
Referring to this conten tion, this Court observes: "Apart from the impracticability of fixing the prices for each unit in the whole country, the entire object and pur pose of controlling prices would be defeated by the adoption of such a system.
" 923 Grover, J. states that, during the earlier period of price control, it was on an all India basis that the price was fixed.
That is still the objective.
If such an objective is achieved, it would undoubtedly be conducive to conferring proper benefit on the consumers.
The objective of the Tariff Commission is to have only two regions for the whole coun try, viz., sub tropical and tropical.
The Court has rejected as baseless the criticism against the principle of weighted average adopted in the fixation of price in each zone.
Such a principle is well recognised and acted upon by various Sugar Enquiry Commissions.
A proper cost study is intended to do justice to the weak and strong alike.
There is abundant justification for continuing and sustaining the zonal system.
The varying climatic conditions of each State have been taken into account.
For the same reason, Bihar is divided into 2 zones and U.P. into 3 zones, while, in the case of many other States, each State is treated as a single zone.
This system of zoning is thus adopted with special reference to climatic and agro economic conditions.
Rejecting the contention that the zonal system has resulted in discriminatory treatment, this Court states: "We are unable to hold that while classifying zones on geographical cum agro economic consideration, any discrimi nation was made or that the price fixation according to each zone taking into account all the relevant factors would give rise to such discrimination as would attract Article 14 of the Constitution.
" Even if there is no price control, the uneconomic units would be at a great disadvantage.
The Court states: "Even if there is no price control each unit will have to compete in the market and those units which are uneconomic and whose cost is unduly high will have to compete with others which are more efficient and the cost of which is much lower.
It may be that uneconomic units may suffer losses but what they cannot achieve in the open market they cannot insist on where price has to be fixed by the govern ment.
The Sugar Enquiry Commission in its 1965 report ex pressed the view that "cost plus" basis of price fixation perpetuates inefficiency in the industry and is, therefore, against the long term interest of the country.
" Considering the general principle involved in price fixa tion, the Court states: 924 "It is not therefore possible to say that the principles which the Tariff Commission followed in fixing the prices for different zones are either not recognised as valid principles for fixing prices or that simply because in case of some factories the actual cost was higher than the one fixed for the zone in which that factory was situate the fixation of price became illegal and was not in accordance with the provisions of sub section (3 C).
It has not been denied that the majority of sugar producers have made prof its on the whole and have not suffered losses.
It is only some of them which assert that their actual cost is far in excess of the price fixed.
That can hardly be a ground for striking down the price fixed for the entire zone provided it has been done in accordance with the accepted principles . . ".
The Court concludes: "When prices have to be fixed not for each unit but for a particular region or zone the method employed by the Commis sion was the only practical one and even if some units because of circumstances peculiar to them suffered a loss the price could not be so fixed as to cover their loss.
That cannot possibly be the intention of the Parliament while enacting sub section (3 C) of section 3 of the Act.
If that were so the price fixation on zonal or regional basis would have to be completely eliminated.
In other words, the entire system of price control which is contemplated wilt break down because fixation of price for each unit apart from being impractical would have no meaning whatsoever and would not be conducive to the interest of the consumer. ' ' This Court has thus in Anakapalle (supra) rejected the argument that the alleged loss incurred by certain sugar producers is attributable to fixation of price on a zonal basis; or the zonal system has led to inefficiency or lack of incentive, or it has resulted in unequal or unfair treat ment.
On the other hand, the zonal system has encouraged a healthy competition amongst the units in the same zone.
Unit wise fixation is impracticable.
The Tariff Commission is the best judge in selecting units for cost study to determine the average cost.
The fair price has to be deter mined with reference to the conditions of a representative cross section of the industry.
For all these reasons, there is ample justification in continuing and sustaining the zonal system for 925 the purpose of price fixation.
Price has to be fixed for each zone and necessarily it varies from zone to zone.
There is no discrimination in the classification of zones on a geographical cum agro economic consideration and any such classification is perfectly consistent with the principle of equality.
In Panipat, [1973] 2 SCR 860, Shelat, J. speaking for the same Constitution Bench that has decided Anakapalle; , , referes to the norms adopted in sub sec tion (3 C), viz., (a) determination by the Government of the "price of sugar", and (b) payment of "an amount" to the manufacturer, and states that the concept of fair price which is what is referred to in sub section (3 C) as "price of sugar" does not by any account mean the actual cost of production of every individual manufacturer.
Such price has to be arrived at by a process of costing with reference to a representative cross section of the manufacturing units.
He states: "The basis of a fair price would have to be built on a reasonably efficient and economic representative crosssec tion on whose workings cost schedules would have been worked out and the price to be determined by Government under sub section (3 C) would have to be built." So stating, Shelat, J. rejects the contention that such price has to be determined unit wise.
Any such fixation of price, he points out, would be contrary to the concept of partial control postulated by the subsection and would perpetuate inefficiency and mismanagement.
But, of course, any such price, he hastens to add, has to be fixed reasona bly and on relevant considerations.
Referring to the policy of partial control, Shelat, J. states: " . . the Central Government was confronted with two main problems (a) deterioration in the sugar industry, and (b) the conflicting interests of the manufacturer, the consumer and the cane grower.
The floor price of cane fixed by Government was intended to protect the farmer from ex ploitation, but that was found not to be an incentive enough to induce him to increase his acreage.
A device had to be found under which a price higher than the minimum could be paid by the manufacturer of sugar.
The consumer, on the other hand, had also to be protected against the spiralling of sugar price and his needs, growing as they were, had to be satisfied at some reasonable price.
" 926 Shelat, J. emphasises the need to modernise the factories which alone would yield a reasonable return.
This is what he states: 'Both these and a larger production of sugar would not be possible unless there was a reasonable return which would ensure expansion, which again would not be possible unless new machinery for such expansion was brought in and facto ries, particularly in U.P. and Bihar, were modernised and renovated.
A fair price for sugar, therefore, had to be such as would harmonise and satisfy at least to a reasonable extent these conflicting interests.
" Significantly, the BICP 's recommendation to group indi vidual units having homogenity in cost, irrespective of their location, was not accepted by the Central Government, particularly because the Tariff Commission itself had con sidered the question and reached the conclusion that geo graphical cum agro economic considerations demanded the grouping of factories with reference to State zones, or subzones as in the case of U.P. and Bihar.
To group them on the basis of their location in various regions of the coun try for the purpose of price fixation is a rational method reflecting economic realities.
This is particularly so as conditions generally vary from State to State as regards the availability and quality of sugarcane, labour conditions and other factors, whereas within the same region like facili ties are generally available to all factories.
If the cost structure varies from factory to factory, such variation is not necessarily caused by the non availability, or the poor quality of raw material, or the labour conditions, but probably for reasons unconnected with them, such as the age of the plant, availability of finance, management ability, etc.
There is great force in the submission of the respond ents that to group together factories having a high cost profile and to determine a price specially applicable to them is, as recognised by this Court in Panipat (supra) and Anakapalle (supra), to put a premium on incompetence, if not mismanagement.
The history of control over sugar has been set out at length in Panipat (supra) and we do not wish to burden this judgment with a narration of the circumstances which have led to the introduction of partial control under which 60% of the output of sugar is acquired and the balance left for free sale.
It is in implementation of this policy that sub section (3 C) of section 3 was inserted2 Before we examine the 2.
For an illuminating discussion of this aspect, See A.M. Khusro, Price Policy, Lancer International (1987), p. 62 63: 927 provisions of that sub section under which the impugned notification have been issued, we shall refer to the statu tory scheme.
The Act was, as stated in the preamble, enacted by Parliament "to provide, in the interest of the general public, for the control of the production, supply and dis tribution of, and trade and commerce in, certain commodi ties".
The entire Act is devoted to the cause of the general public with a view to achieving equitable distribution of essential commodities at fair prices.
Section 3 of the Act confers wide power upon the Central Government to control production, supply, distribution, etc., of essential commodities.
It reads: "3.
Powers to control production, supply, distribution, etc., of essential commodities (1) If the Central Govern ment is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for regu lating or prohibiting the production, supply and distribu tion thereof and trade and commerce therein.
" Sub section (2) of section 3 says that, without preju dice to the generality of the powers conferred by sub sec tion (1), an order made "After many years of adverse experience a new strategy of dual pricing was introduced in sugar.
The mills were asked to deliver to the public distribution system about 60 per cent of their output say at Rs.2 per Kg.
and were allowed to sell the balance of 40 per cent in the free market at say Rs.6 per kg.
The mills were delighted to do so as they got very much enhanced receipts from their flee market sales.
With larger receipts they offered in the following season a higher price to the farmer (the sugarcane grower) who, in turn, grew and offered more cane.
In other words, the law of supply which had been held captive, as it were, was freed from bondage.
With a higher price offer from the mills, the cane growers brought more land under sugar cane, diverted land from other crops to cane, used more inputs, produced and delivered to the mills more cane and in fact diverted cane deliveries from the open pan system to the mill system.
Having thus obtained much more cane, the mills produced much more sugar and sold 30 40 per cent of it in the free market.
Within a year or two, the free market price of sugar fell from Rs.6 to Rs.3 or even Rs.2.50.
At this rate consumers began to buy more in the free market, millions of ration cards remained unused and the demands on the public distribution declined substantially.
Prolonged shortages of sugar got converted into a relative abundance.
" 928 under that sub section may provide for the matters specified in subsection (2).
One of them is what is contained in clause (f) of sub . section (2) which empowers the Central Government to require any person dealing in any essential commodity to sell the whole or a specified part of such commodity to the Central Government or the State Government or to a nominee of such Government.
It reads: "(2) Without prejudice to the generality of the powers conferred by sub section (1), an order made thereunder may provide (a). . . . . . . . . . . . . . . . . . (f) for requiring any person holding in stock, or engaged in the production, or in the business of buying or selling of any essential commodity , (a) to sell the whole or a specified part of the quantity held in stock or produced or received by him, or (b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a speci fied part of such commodity when produced or received by him, to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order.
" The power contained in sub section (1) or sub section (2) is exercisable by an order.
An 'order ' is defined under section 2 to include a direction issued thereunder.
Any order made under section 3 by the Central Government or by an officer or authority of the Central Government is re quired by sub section (6) of section 3 to be laid before both Houses of Parliament, as soon as may be, after it is made.
Any order made under section 3 which is of a general nature or affecting a class of persons has to be notified in the official gazette.
[Subsection (5) of section 3].
929 Sub section (3) of section 3 provides that where any person has sold any essential commodity (sugar being such a commodity) in compliance with an order made with reference to clause (f) of sub section (2), he shall be paid the price of the goods purchased from him as provided under clauses (a), (b) and (c) of sub section (3).
This subsection oper ates only where an order has been made under sub section (1) with reference to clause (f) of sub section (2).
While clause (a) of the sub section postulates an agreed price, consistently with the controlled price, if any, clause (b) speaks of a price calculated with reference to the con trolled price, if any, when no agreement is reached.
Where neither clause (a) nor clause (b) applies, either because there is no agreement or because there is no controlled price, the seller has to be paid, as per clause (c), a price calculated at the market rate prevailing in the locality at the date of the sale.
Sub section (3 A) empowers the Central Government to regulate in accordance with the provisions of the sub sec tion the price of any foodstuff sold in a locality in com pliance with an order made with reference to clause (f) of sub section (2).
This power is exercisable by a direction which has to be duly notified in the official Gazette.
The power to issue the direction is notwithstanding anything contained in sub section (3).
Before issuing the notifica tion, the Central Government has to form an opinion that the price of any foodstuff (including sugar) has to be regulated for the purpose of cotrolling the rise in its prices or preventing its hoarding in any locality.
Any such notifica tion will remain in force for any specified period not exceeding 3 months.
The price payable in such cases is either the agreed price consistently with the controlled price, if any, or where no such agreement is possible, the price calculated with reference to the controlled price, if any, or where neither of these two methods is applicable, the price calculated with reference to the average market rate prevailing in the locality during the period of 3 months immediately prior to the date of the notification.
The average market rate will be determined by an officer authorised by the Central Government and the rate so deter mined by him is not liable to be questioned in any court.
Sub section (3 C) which is the crucial provision, was inserted in 1967.
It reads: "(3 C).
Where any producer is required by an order made with reference to clause (f) of sub section (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Govern 930 ment or to any other person or class of persons) and either no notification in respect of such sugar has been issued under sub section (3 A) or any such notification, having been issued, has ceased to remain in force by efflux ot time, then, notwithstanding, anything contained in sub section (3), there shall be paid to that producer an amount therefore which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to (a) the minimum price, if any, fixed for sugarcane by the Central Government under this section; (b) the manufacturing cost of sugar; (c) the duty or tax, if any, paid or payable thereon; and (d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar, and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar.
Explanation For the purposes of this sub section, "produc er" means a person carrying on the business of manufacturing sugar." (emphasis supplied) Sub Section (3 C) is attracted whenever any producer is required to sell sugar by an order made with reference to sub section (2)(f) and no notification has been issued under sub section (3 A) or any such notification, having been issued, has ceased to be in force.
Whenever sub section (3 C) is attracted, it operates notwithstanding anything con tained in sub section (3).
This means the compensation payable to the seller in the circumstances attracting sub section (3 C) is not the price postulated in sub section (3).
Nor is it the price mentioned under sub section (3A), for that sub section cannot be in operation when sub section (3 C) is attracted.
What is payable under sub sectin (3 C) is an "amount" calculated with reference to the "price of sugar" determined in the manner indicated in that sub sec tion.
931 Construing sub section (3 C), this Court in Panipat [1973] 2 SCR 860,870 says: "Sub section 3C, with which we are presently concerned was inserted in sec.
3 by sec.
3 of Act 36 of 1967.
The sub section lays down two conditions which must exist before it applies.
The first is that there must be an order made with reference to sub section 2 cl.
(f), and the second is that there is no notification under sub section 3A or if any such notification has been issued it is no longer in force owing to efflux of time.
Next, the words "notwithstanding anything contained in sub section" suggest that the amount payable to the person required to sell his stock of sugar would be with reference to the price fixed under the subsection and not the agreed price or the market price in the absence of any controlled price under sub sec.
The sub section then lays down two things; firstly, that where a producer is required by an order with reference to sub sec.
2(f) to sell any kind of sugar, there shall be paid to that producer ' an amount therefore, that is for such stock of sugar as is required to be sold, and secondly, that such amount shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to the four factors set out in cls.
(a), (b), (c) and (d).
Unlike the preceding three sub sections under which the amount payable is either the agreed price, or the controlled price, or where neither of these prices is applicable at the market or average market price, the amount in respect of sugar required to be sold is to be calculated at the price determined by th Central Government . " What is specially significant is that sub section (3 C) postulates payment of an amount to the producer who has been required to sell sugar in the circumstances mentioned there in.
What is required to be paid to him is not the price of sugar, but only an amount.
That amount has to be calculated with reference to the price of sugar.
The "price" is deter mined by the Central Government by means of an order which, as required by sub sections (5) and (6), has to be notified in the official gazette and laid before both Houses of Parliament.
The order notifying the "price of sugar" is of general application and it is the rate at which the actual "amount" payable to each seller is calculated.
The price of sugar must be determined by the Central Govern 932 ment having regard to the factors mentioned in clauses (a) to (d) of sub section (3~C).
This is done with reference to the industry as a whole and not with reference to any indi vidual seller.
In contradistinction to the "price of sugar", the "amount" is calculated with reference to the particular seller.
The Central Government is authorised to determine different prices for different areas or for different facto ries or for different kinds of sugar.
Whether factories are required to be grouped together for a rational determination of the prices according to their location or their size, age and capacity or by any other standard is a matter for deci sion by the Central Government on the basis of relevant material.
What is contemplated by the legislature in dele gating such wide discretion to the Central Government is that it must apply its mind to the manifold questions rele vant to the determination of prices and with due regard to the norms laid down in the sub section.
What is required by sub section (3 C) is the adoption of a valid classification of factories having a rational nexus to the object sought to be achieved, viz., determination of a fair price of sugar with reference to which the actual amounts payable to the producers, in the circumstances attracting the sub section, are calculated.
Referring to the legislative background of sub section (3 C), this Court in Panipat (supra) observes: "In order to appreciate the meaning of cls.
(a), (b), (c) and (d), it must be remembered that ever since control on sugar was imposed, Government had set up expert committees to work out cost schedules and fairprices.
Starting in the beginning with an All India cost schedule worked out on the basis of the total production of sugar, the factories were later grouped together into zones or regions and different cost schedules for different zones or regions were con structed on the basis of which fair prices were worked out at which sugar was distributed and sold.
The Tariff Commis sion in 1958 and the Sugar Enquiry Commission in 1965 had worked out the zonal cost schedules on the basis of averaged recovery and duration, the minimum and not the actual price of cane, the averaged conversion costs and recommended a reasonable return on the capital employed by the industry in the business of manufacturing sugar.
This experience was before the legislature at the time when subsec.
3C was inserted in the Act.
The legislature therefore incorporated the same formula in the new sub section as the basis for working out the price.
The purpose behind 933 enacting the new sub section was three fold, to provide an incentive to increase production of sugar, encourage expan sion of the industry, to devise a means by which the cane producer could get a share in the profits of the industry through prices for his cane higher than the minimum price fixed and secure to the consumer distribution of at least a reasonable quantity of sugar at a fair price. ' ' Clauses (a) to (d) of sub section (3 C) postulate that the price of sugar must be determined having regard to the minimum price, if any, fixed for sugarcane by the Central Government, the manufacturing cost of sugar, the duty or tax applicable in the zone, and the securing of a reasonable return on the capital employed in the business of manufac turing sugar.
Referring to clause (d) of sub section (3 C), this Court observes in Panipat (supra): "It is clear from the reports of the Tariff Commission that a reasonable return recommended by that body at a fixed amount of Rs. 10.50 per quintal which worked out in 196667 at 12.5% per annum was not in respect of levy sugar only but on the whole, so that even if such a return was not obtain able on levy sugar but was obtainable on the whole, it would meet the requirement of cl.
In this conclusion we derive a two fold support, firstly, from the language used in cl.
(d) itself, viz., a reasonable return on the capital employed in the business of manufacturing sugar, which must mean the business as a whole and not the business of manu facturing levy sugar only, and secondly, from the fact of the Commission having all along used the same phraseology while recommending Rs. 10.50 per quintal as an addition by way of a reasonable return on the capital employed in the industry.
The cost schedules prepared by these bodies were for determining a fair price in relation to the entire sugar produced by the industry and the return which should be granted to it on the capital employed in the industry and not with respect to that stock only required to be sold under sub sec.
This is clear from the heading of Ch.
9 of the Tariff Commission 's report, 1969, "Cost Structure and Price Fixation".
" The petitioners contend that although the Government has the discretion to fix different prices for different areas or for different 934 factories, or for different kinds of sugar, such wide dis cretion has to be reasonably exercised.
It is, of course, a well accepted principle that any discretion conferred on the executive has to be reasonably exercised.
Nevertheless, it is a discretion which the Court will not curtail unless the exercise of it is impeachable on well accepted grounds such as 'ultra vires ' or 'unreasonableness '.
The petitioners further contend that the Act requires the Government to have regard to clauses (a) to (d) and, therefore, it is mandatory on the part of the Government to act strictly in compliance with the provisions of those clauses in determining the prices.
According to them, "having regard to" is a mandatory requirement demanding strict compliance with the provisions to which reference is made by the legislature.
They say that the ingredients of clauses (a) to (d) must be examined with reference to each producer as a condition precedent to the determination of the price of sugar.
We may in this connection point out that the petitioners have not furnished any data to show that the prices deter mined by the Government would have been different had the ingredients of clauses (a) to (d) of the sub section been examined with reference to each individual producer instead of a representative cross section of manufacturing units.
Be that as it may, the expression "having regard to" must be understood in the context in which it is used in the stat ute.
See Union of India vs Kamlabhai Harjiwandas Parekh & Ors., ; at 471.
These words do not mean that the Government cannot, after taking into account the matters mentioned in clauses (a) to (d), consider any other matter which may be relevant.
The expression is not "having regard only to" but "having regard to".
These words are not a fetter; they are not words of limitation, but of general guidance to make an estimate.
The Government must, of course, address itself to the questions to which it must have regard, and, having done so, it is for the Government to determine what it is empowered to determine with refer ence to what it reasonably consider to be relevant for the purpose.
The Judicial Committee in Commissioner of Income Tax vs Williamson Diamonds Ltd., , 49 observed with reference to the expression "having regard to": "The form of words used no doubt lends itself to the sugges tion that regard should be paid only to the two matters mentioned, but it appears to their Lordships that it is impossible to arrive at a conclusion as to reasonableness by considering the two matters mentioned isolated from other 935 relevant factors.
Moreover, the statute does not say "having regard only" to losses previously incurred by the company and to the smallness of the profits made.
No answer, which can be said to be in any measure adequate, can be given to the question of "unreasonableness" by considering these two matters alone . " See Commissioner of Income tax, West Bengal, Calcutta vs Gungadhar Banerjee and Co. (P) Ltd., ; at 444 45.
See also Saraswati Industrial Syndicate Ltd. etc.
vs Union of India; , at 959.
In State of Karna taka and Anr. etc.
vs Shri Ranganatha Reddy & Anr.
; , at 657 58 this Court stated: "The content and purport of the expressions "having regard to" and "shall have regard to" have been the subject matter of consideration in various decisions of the Courts in England as also in this country.
We may refer only to a few.
In Illingworth vs Welmsley, it was held by the Court of Appeal, to quote a few words from the judgment of Romer C.J. at page 144: "All that clause 2 means is that the tribunal assessing the compensation is to bear in mind and have regard to the average weekly wages earned before and after the accident respectively.
Beating that in mind, a limit is placed on the amount of compensation that may be awarded . . "In another decision of the Court of Appeal in Perry vs Wright (etc. etc.), Cozens Hardy M.R. observed at page 451: "No mandatory words are there used; the phrase is simply "regard may be had".
The sentence is not grammatical, but I think the meaning is this: Where you cannot compute you must estimate, as best as you can, the rate per week at which the workman was being remunerated, and to assist you in making an estimate you may have regard to analogous cases.
" It is worthwhile to quote a few words from the judgment of Fletcher Moulton L.J. at page 458.
Under the phrase "Regard may be had to" the facts which the Court may thus take cognizance of are to be "a guide, and not a fetter".
This Court speaking through one of us (Beg, J., as he then was), has expressed the same opinion in the case of Saraswati Industrial Syndicate Ltd. etc.
vs Union of India; , Says the learned Judge at page 959: "The expression "having regard to" only obliges the Government to consider as relevant data material to which it must have regard".
" 936 In State of U.P. & Ors.
vs Renusagar Power Co., ; , one of us (Mukharji, J., as he then was) observed: "The expression "having regard to" only obliges the govern ment to consider as relevant data material to which it must have regard . . ".
In O 'May and Ors.
vs City of London Real Property Co. Ltd., at 665 (H.L.), Lord Hailsham stated: "A certain amount of discussion took place in argument as to the meaning of 'having regard to ' in section 35.
Despite the fact that the phrase has only just been used by the draftsman of section 34 in an almost mandatory sense, I do not in any way suggest that the court is intended or should in any way attempt to bind the parties to the terms of the current tenancy in any permanent form . . ".
The words "having regard to" in the sub section are the legislative instruction for the general guidance of the Government in determining the price of sugar.
They are not strictly mandatory, but in essence directory.
The reasona bleness of the order made by the Government in exercise of its power under sub section (3 C) will, of course, be tested by asking the question whether or not the matters mentioned in clauses (a) to (d) have been generally considered by the Government in making its estimate of the price, but the Court will not strictly scrutinise the extent to which those matters or any other matters have been taken into account.
There is sufficient compliance with the sub section, if the Government has addressed its mind to the factors mentioned in clauses (a) to (d), amongst other factors which the Government may reasonably consider to be relevant and has come to a conclusion, which any reasonable person, placed in the position of the Government, would have come to.
On such determination of the price of sugar, which, as stated in Panipat (supra) is the fair price, the sub section postu lates the calculation of an amount, with reference to such price, for payment to each producer who has complied with an order made with reference to sub section (2)(f).
The "price of sugar", unlike the "amount" is arrived at by a process of costing in respect of a representative cross section of manufacturing units, beating, of course, in mind the legis lative instruction contained in clauses (a) to (d).
The Attorney General submits that orders determining the 937 prices of sugar in terms of the sub section are of general application and, therefore, legislative in character.
Omis sion, if any, to consider the peculiar problems of individu al producers is not a ground for judicial review.
The peti tioners ' counsel as well as Mr. Venugopal appearing for the intervener (ISMA), do not agree.
They submit that the sub section contemplates only administrative or quasi judicial orders of particular application and the impugned orders are not legislative.
They rely upon a certain observation of this Court in Union of India & Anr.
vs Cynamide India Ltd. & Anr., [1987] 2 SCC 720.
Mr. Venugopal, however, hastens to add that his client does not seek personal heating before prices are determined.
Mr. B.R.L. Iyengar, supporting the contentions of the petitioners, points out that the expres sion 'determine ' used in sub section (3 C) indicates that the order to which that expression refers is quasi judicial.
Judicial decisions are made according to law while administrative decisions emanate from administrative policy.
Quasi judicial decisions are also administrative decisions, but they are subject to some measure of judicial procedure, such as rules of natural justice.
To distinguish clearly legislative and administrative functions is "difficult in theory and impossible in practice".3 Referring to these two functions, Wade says: 'They are easy enough to distinguish at the extremities of the .spectrum: an Act of Parliament is legislative and a deportation order is administrative.
But in between is a wide area where either label could be used according to taste, for example where ministers make orders or regula tions affecting large numbers of people . . ,, .4
Wade points out that legislative power is the power to prescribe the law for people in general, while administra tive power is the power to prescribe the law for them, or apply the law to them, in particular situations.
A scheme for centralising the electricity supply undertakings may be called administrative, but it might be just as well legisla tive.
Same is the case with ministerial orders establishing new towns or airports etc.
He asks: "And what of 'directions of a general character ' given by a minister to a nationa lised industry? Are these various orders legislative or administrative?" Wade says that the correct (3) Comd. 4060 (1932), p. 73; see H.W.R. Wade Adminis trative Law, 6th ed., p. 47 (4) Ibid p. 848.
938 answer would be that they are both.
He says:" . . there is an infinite series of gradations, with a large area of overlap, between what is plainly legislation and what is plainly administration".5 Courts, nevertheless, for practi cal reasons, have distinguished legislative orders from the rest of the orders by reference to the principle that the former is of general application.
They are made formally by publication and for general guidance with reference to which individual decisions are taken in particular situations.
According to Griffith and Street, an instruction may be treated as legislative even when they are not issued formal ly),, but by a circular or a letter or the like.
What mat ters is the substance and not the form, or the name.
The learned authors say: ".
. where a Minister (or other authority) is given power in a statute or an instrument to exercise executive, as opposed to legislative, powers as, for example, to requisition property or to issue a licence and delegates those powers generally, then any instructions which he gives to his delegates may be legisla tive".6 Where an authority to whom power is delegated is entitled to sub delegate his power, be it legislative, executive or judicial, then such authority may also give instructions to his delegates and these instructions may be regarded as legislative.
However, as pointed out by Denning, L.J., (as he then was) a judicial tribunal cannot delegate its functions except when it is authorised to do so express ly or by necessary implication ' see Bernard and Ors.
vs National Dock Labour Board and Ors., ; at 40.
Kenneth Culp Davis says: "What distinguishes legislation from adjudication is that the former affects the rights of individuals in the abstract and must be applied in a further proceeding before the legal position of any particular individual will be definitely touched by it; while adjudica tion operates concretely upon individuals in their individu al capacity".7 Justice Holmes ' definition, which is what is called the "time test" and which Davis describes as one which has produced many unsatisfactory practical results, reads: "A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist.
That is its purpose and end.
Legislation, on the other hand, looks to the future and (5) Ibid.
(6) Principles of Administrative Law, 5th ed.
, p. 65 (7) Administrative Law Text, 3rd ed., p. 123 24.
939 changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power.
The establishment of a rate is the making of a rule for the future, and therefore is an act legislative, not judicial .
Prentis vs Atlantic Cost Line Co., ; ,226.
The element of general application is often cited as a distinct feature of legislative activity.
In the words of Chief Justice Burger, "rule making is normally directed toward the formulation of requirements having a general application to all members of a broadly identifiable class"? Bernard Schwarts says: "an adjudication, on the other hand, applies to specific individuals or situations.
Rule making affects the fights of individuals in the abstract and must be applied in a further proceeding before the legal position of any particular individual will be definitely affected; adjudication operates concretely upon individuals in their individual capacity ' '9 According to Schwartz, the "time test" and the "applicability test" are workable in most cases although in certain situations distinctions are indeed difficult to draw.
A statutory instrument (such as a rule, order or regula tion) emanates from the exercise of delegated legislative power which is the part of the administrative process resem bling enactment of law by the legislature.
A quasi judicial order emanates from adjudication which is the part of the administrative process resembling a judicial decision by a court of law.
This analogy is imperfect and perhaps unhelp ful in classifying borderline or mixed cases which are better left unclassified .10
If a particular function is termed legislative rather than judicial, practical results may follow as far as the parties are concerned.
When the function is treated as legislative, a party affected by the order has no fight to notice and heating, unless, of course, the statute so re quires.
It being of general application engulfing a wide sweep of powers, applicable to all persons and situations of a broadly identifiable class, the legislative order may not be vulnerable to challenge merely by reason of its omission to take into account individual peculiarities and differ ences amongst those falling within the class.
(8) Quoted by Bernard Schwartz in 'Administrative Law ' (1976), p. 144.
(9) Ibid (10) See Davis, Administrative Law Text, p. 123 940 In Union of India & Anr.
vs Cynamide India Ltd. & Anr., [1987] 2 SCC 720 at 734 35, Chinnappa Reddy, J. referring to the earlier decisions of this Court states: " . . legislative action, plenary or subordinate, is not subject to .rules of natural justice.
In the case of Parlia mentary legislation, the proposition is self evident.
In the case of subordinate legislation, it may happen that Parlia ment may itself provide for a notice and for a hearing . .
But where the legislature has not chosen to provide for any notice or hearing, no one can insist upon it and it will not be permissible to read natural justice into such legislative activity . .
It is true that, with the proliferation of delegated legislation, there is a tendency for the line between legislation and administration to vanish into an illusion.
Administrative, quasi judicial decisions tend to merge in legislative activity and, con versely, legislative activity tends to fade into and present an appearance of an administrative or quasi judicial activi ty".
Stating that rule making is of general application to all members of a broadly identifiable class while adjudication is applicable to specific individuals or situations, the learned Judge observes: "A price fixation measure does not concern itself with the interests of an individual manufacturer or producer.
It is generally in relation to a particular commodity or class of commodities or transactions.
It is a direction of a general character, not directed against a particular situation.
It is intended to operate in the future.
It is conceived in the interests of the general consumer public.
The right of the citizen to obtain essential articles at fair prices and the duty of the State to so provide them are transformed into the power of the State to fix prices and the obligations of the producer to charge no more than the price fixed.
Viewed from whatever angle, the angle of general application, the prospectiveness of its effect, the public interest served, and the rights and obligations flowing therefrom, there can be no question that price fixation is ordinarily a legisla tive activity".
The learned Judge emphasises: 941 "Price fixation may occasionally assume an administrative or quasi judicial character when it relates to acquisition or requisition of goods or property from individuals and it becomes necessary to fix the price separately in relation to such individuals.
Such situations may arise when the owner of property or goods is compelled to sell his property or goods to the government or its nominee and the price to be paid is directed by the legislature to be determined accord ing to the statutory guidelines laid down by it.
In such situations the determination of price may acquire a quasiju dicial character".
These observations have been cited with approval by one of uS (Sabyasachi Mukharji, J., as he then was) in Renusagar (supra).
In Saraswati Industrial Syndicate Ltd. etc.
vs Union of India; , at 961, this Court states: "Price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material.
It could not, there fore, give rise to a complaint that a rule of natural jus tice has not been followed in fixing the price".
In Prag Ice & Oil Mills & Anr. etc.
vs Union of India; , at 317, Chandrachud, J., as he then was, speaks for the majority: "We think that unless, by the terms of a particular statute, or order.
price fixation is made a quasi judicial function for specified purposes or cases, it is really legislative in character in the type of control order which is now before us because it satisfies the tests of legislation.
A legisla tive measure does not concern itself with the facts of an individual case.
It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind or class".
See also the observation of Megarry, J., as he then was, in Bates vs Lord Hailsham of St. Marylebone & Ors., at 1024.
The impugned orders, duly published in the official gazettes notifying the prices determined for sugar of var ious grades and pro 942 duced in various zones, and applicable to all producers of such sugar, can, in our view, be legitimately characterised as legislative.
These orders are required by Sub section (6) to be laid before both Houses of Parliament.
The notified prices are applicable without exception to all persons falling within well defined groups.
The prices are deter mined in accordance with the norms postulated in the sub section.
It is with reference to such predetermined prices of sugar that the "amount" payable to each producer, who has sold sugar in compliance with an order made with reference to clause (f) of sub section (2), is calculated.
The calcu lation of such amount is, in contradistinction to the deter mination of "price of sugar", a non legislative act.
Thus, while individual consideration is relevant to the calculation of the "amount", it is not so for the determina tion of the "price of sugar" which is the rate at which the amount is calculated.
That price, as stated in Panipat (supra) is to be arrived at by a process of costing with reference to a reasonably efficient and economic representa tive cross section of manufacturing units.
In this connection, we must point out that at first blush a certain observation of Chinnappa Reddy, J. in Cyna mide, [1987] 2 SCC 720 at 741, on which much reliance is placed by the petitioners ' counsel, appears to be inconsist ent with what we have now stated.
The learned Judge says: "The Order made under Section 3(2)(c), which is not in respect of a single transaction, nor directed to a particu lar individual is clearly a legislative act, while an Order made under Section 3(3 C) which is in respect of a particu lar transaction of compulsory sale from a specific individu al is a non legislative act".
It would appear that what the learned Judge had in mind was an order by which the "amount" was calculated in terms of sub section (3 C) in respect of each individual producer and not an order determining the "price of sugar".
While the former is non legislative, the latter, by the very test adopted by the learned Judge, is legislative in character.
We, therefore, understand the observation of the learned Judge on this point as applicable only to the individual order fixing the "amount" in terms of the sub section and not to orders determining the "price of sugar" which are what the impugned orders are.
Any other construction of the sub section would conflict with what was adopted by the Constitution Bench in Panipat (supra) and would, therefore, be unsustainable.
943 The individual orders, calculating the "amounts" payable to the individual producers, being administrative, orders rounded on the machanics of price fixation, they must be left to the better instructed judgment of the executive, and in regard to them the principle of audi alteram partem is not applicable.
All that is required is reasonableness and fair play which are in essence emanations from the doctrine of natural justice as explained by this Court in A.K. Krai pak & Ors. etc.
vs Union of India & Ors., See also the observation of Mukharji, J., as he then was, in Renusagar, , 105.
Price fixation is in the nature of a legislative action even when it is based on objective criteria rounded on relevant material.
No rule at natural justice is applicable to any such order.
It is nevertheless imperative that the action of the authority should be inspired by reason.
Saras wati Industrial Syndicate Ltd.; , , 961, 962.
The Government cannot fix any arbitrary price.
It cannot fix prices on extraneous considerations: Renusagar, (supra).
Any arbitrary action, whether in the nature of a legis lative or administrative or quasi judicial exercise of power, is liable to attract the prohibition of Article 14 of the Constitution.
As stated in E.P. Royappa vs State of Tamil Nadu & Anr., ; , "equality and arbi trariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch.
" Unguided and unrestricted power is af fected by the vice of discrimination: Mrs. Maneka Gandhi vs Union of India & Anr., [1978] 1 SCC 248 at 293 294.
The principle of equality enshrined in Article 14 must guide every state action, whether it be legislative, executive, or quasi judicial: Ramana Dayaram 'Shetty vs The International Airport Authority of India & Ors., ; at 1042; Ajay Hasia & Ors.
vs Khalid Mujib Sehravardi & Ors. ; and D.S. Nakara & Ors.
vs Union of India, ; Power delegated by statute is limited by its terms and subordinate to its objects.
The delegate must act in good faith, reasonably, intra vires the power granted, and on relevant consideration of material facts.
All his decisions, whether characterised as legislative or administrative or quasi judicial, must be in harmony with the Constitution and other laws of the land.
They must be "reasonably related to the purposes of the enabling legislation".
See Leila Mourn ing vs Family Publications Service; , , If they are manifestly unjust or oppressive or outra geous or directed to an unauthorised end or do not tend in some degree to the accomplishment of 944 the objects of delegation, courts might well say, "Parlia ment never intended to give authority to make such rules; they are unreasonable and ultra vires".
per Lord Russel of Killowen, C.J. in Kruse vs Johnson, [1988] 2 Q.B. 91, 99.
The doctrine of judicial review implies that the reposi tory of power acts within the bounds of the power delegated and he does not abuse his power.
He must act reasonably and in good faith.
It is not only sufficient that an instrument is intra vires the parent Act, but it must also be consist ent with the constitutional principles: Maneka Gandhi vs Union of India, [1978] 1 SCC 248, 314 315.
Where a question of law is at issue, the Court may determine the rightness of the impugned decision on its own independent judgment.
If the decision of the authority does not agree with that which the Court considers to be the right one, the finding of law by the authority is liable to be upset.
Where it is a finding of fact, the Court examines only the reasonableness of the finding.
When that finding is found to be rational and reasonably based on evidence, in the sense that all relevant material has been taken into account and no irrelevant material has influenced the deci sion, and the decision is one which any reasonably minded person acting on such evidence, would have come to, then judicial review is exhausted even though the finding may not necessarily be what the Court would have come to as a trier of fact.
Whether an order is characterised as legislative or administrative or quasi judicial, or, whether it is a deter mination or law or fact, the judgment of the expert body, entrusted with power, is generally treated as final and the judicial function is exhausted when it is found to have "wanant in the record" and a rational basis in law: See Rochester Tel.
Corp. vs United States, ; , See also Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, ; As stated by Lord Hailsham of St. Marylebone L.C., (H.L.) in Chief Constable of the North Wales Police vs Evans; , at 1160 61: "The function of the court is to see that lawful authority is not abused by unfair treatment and not tO attempt itself the task entrusted to that authority by the law . .
The purpose of judicial review is to ensure that the indi vidual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter 945 which it is authorised by law to decide for itself a conclu sion which is correct in the eyes of the court".
In the same case Lord Brightman says: "Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made".
A repository of power acts ultra vires either when he acts in excess of his power in the narrow sense or when he abuses his power by acting in bad faith or for an inadmissi ble purpose or on irrelevant grounds or without regard to relevant considerations or with gross unreasonableness.
See Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, ; In the words of Lord Mac naghten in Westminster Corporation vs London and North Western ' Railway, , 430: " . .
It is well settled that a public body invested with statutory powers such as those conferred upon the Corporation must take care not to exceed or abuse its pow ers.
It must keep within the limits of the authority commit ted to it.
It must act in good faith.
And it must act rea sonably.
The last proposition is involved in the second, if not in the first. .".
In The Barium Chemicals Ltd. & Anr.
vs The Company Law Board & Ors., [1966] Supp.
SCR 311, this Court states: " . .
Even if (the statutory order) is passed in good faith and with the best of intention to further the purpose of the legislation which confers the powers, since the Authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extra neous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation.
In any one of these situations it can well be said that the authority did not honestly form its opinion or that in forming it, it did not apply its mind to the relevant facts".
In Renusagar; , , 104, Mukharji, J., as he then was, states: 946 "The exercise of power whether legislative or administrative will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary.
Similarly, if the power has been exercised on a non consideration or non application of mind to relevant factors the exercise of power will be regarded as manifestly erroneous.
If a power (whether legislative or administra tive) is exercised on the oasis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated".
The true position, therefore, is that any act of the repository of power, whether legislative or administrative or quasi judicial, is open to challenge if it is in conflict with the Constitution or the governing Act or the general principles of the law of the land or it is so arbitrary or unreasonable that no fair minded authority could ever have made it The impugned orders are undoubtedly based on an exhaus tive study by experts.
They are fully supported by the recommendations of the Tariff Commission in 1969 and 1973.
It is true that these recommendations in some respects were the subject matter of criticism by a subsequently appointed expert body, viz., the BICP.
Apart from the fact that the BICP 's criticism has not been accepted by the Government, that criticism is not relevant in so far as the impugned orders are concerned because the latter are in regard to an earlier period.
These orders are fully supported by the relevant material on record.
The conclusions reached by the Central Government in exercise of its statutory power are expert conclusions which are not shown to be either discrim inatory or unreasonable or arbitrary or ultra vires.
The (11) See the observation of Lord Russel in Kruse vs Johnson, and that of Lord Greene, M.R. in Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, ; ; See also Mixnam Properties Ltd. vs Chertsey U.D.C., ; Commissioners of Customs and Excise vs Cure and DeeIcy Ltd. [1962] 1 Q.B. 340; McEldowney vs Forde, [1971] AC 632 (H.L.); Carltona Ltd. vs Commissioners of Works, , 564; Point of Ayr.
Collieries Ltd. vs Lloyd George, ; Scott vs Glasgow Corporation, , 492; Robert Baird L.D.v.
City of Glasgow, , 42; Manhattan General Equipment Co. vs Commissioner, ; , 134; Yates (Arthur) & Co. Pty. Ltd. vs Vegetable Seeds Committee, ; ; Bailey vs Conole, ; ; Boyd Builders Ltd. vs City of Ottawa, ; Re Burns and Township of Haldimand, 14 and Lynch vs Tilden Produce Co. 15,320 322.
947 material brought to our notice by the petitioners does not support the arguments at the bar that the Central Government has not applied its mind to the relevant questions to which they are expected to have regard in terms of the statute.
That the sugar factories for the purpose of determining the price of sugar in terms of sub section (3 C) should be grouped on the basis of their geographical location is a policy decision based on exhaustive expert conclusions.
Factories are classified with due regard to geographi cal cumagro economic considerations.
Fair prices for differ ent grades of sugar are determined for each zone with refer ence to a reasonably efficient and economic representative cross section of the manufacturing units.
Such classifica tion, as held in Panipat (supra) and Anakapalle (supra) cannot, in the absence of evidence to the contrary, be characterised as arbitrary or unreasonable or not rounded on an intelligible differentia having a rational nexus with the object sought to be achieved by subsection (3 C).
The person assailing such classification "carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences" Federal Power Commission vs Hope Gas Co., ; , 602 (1944).
If the petitioners nevertheless incur losses, such losses need not necessarily have arisen by reason of geographical zoning, but for reasons totally unconnected with it, such as the condition of the plant and machinery, quality of management, investment policy, labour relations, etc.
These are matters on which the petitioners have not furnished data, and, in any event judicial review is hardly appropriate for their consideration.
In this connection we would recall the observations of Chinnappa Reddy, J. in Union of India and Anr.
vs Cynamide India Ltd. andAnr., [1987] 2 SCC 720 at p. 736: "We do not agree with the basic premises that price fixation primarily affects manufacturers and producers.
Those who are most vitally affected are the consumer public.
It is for their protection that price fixation is resorted to and any increase in price affects them as seriously as any decrease does a manufacturer, if not more." In M/s. Gupta Sugar Works vs State of U.P. and Ors., [1987] Supp.
SCC 476 at p. 48 1 one of us (Jagannatha Shetty, J .) stated: "In this view of the matter, the primary consideration in the fixation of price would be the interest of consumers 948 rather than that of the producers." The Court has neither the means nor the knowledge to reevaluate the factual basis of the impugned orders.
The Court, in exercise of judicial review, is not concerned with the correctness of the findings of fact on the basis of which the orders are made so long as those findings are reasonably supported by evidence.
In the words of Justice Frankfurter of the U.S. Supreme Court in Railroad Commission of Texas vs Rowan & Nichols Oil Company, 311 US 570 577, 85 L. ed.
358,362: "Nothing in the Constitution warrants a rejection of these expert conclusions.
Nor, on the basis of intrinsic skills and equipment, are the federal courts qualified to set their independent judgment on such matters against that of the chosen state authorities . .
When we consider the limit ing conditions of litigation the adaptability of the judi cial process only to issues definitely circumscribed and susceptible of being judged by the techniques and criteria within the special competence of lawyers it is clear that the Due Process Clause does not require the feel of the expert to be supplanted by an independent view of judges on the conflicting testimony and prophecies and impressions of expert witnesses".
This observation is of even greater significance in the absence of a Due Process Clause.
Judicial review is not concerned with matters of econom ic policy.
The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either.
The Court does not supplant the "feel of the expert" by its own views.
When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonable~ ness.
In all such cases, judicial in quiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land.
As rated by Jagannatha Shetty, J. in M/s. Gupta Sugar Works, (supra): "the court does not act like a chartered accountant nor acts like an income tax officer.
The court is not concerned with any individual case or any particular problem.
The court 949 only examines whether the price determined was with due regard to considerations provided by the statute.
And wheth er extraneous matters have been excluded from determination." Price fixation is not within the province of the courts.
Judicial function in respect of such matters is exhausted when there is found to be a rational basis for the conclu sions reached by the concerned authority.
As stated by Justice Cardozo in Mississippi Valley Barge Line Company vs United States of America; , 292 US 282 290, , 1265: "The structure of a rate schedule calls in peculiar measure for the use of that enlightened judgment which the Commis sion by training and experience is qualified to form . .
It is not the province of a court to absorb this function to itself . .
The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body".
It is a matter of policy and planning for the Central Government to decide whether it would be on adoption of a system of partial control, in the best economic interest of the sugar industry and the general public that the sugar factories are grouped together with reference to geographi cal cum agro economic factors for the purpose of determining the price of levy sugar.
Sufficient power has been delegated to the Central Government to formulate and implement its policy decision by means of statutory instruments and execu tive orders.
Whether the policy should be altered to divide the sugar industry into groups of units with similar cost characteristics with particular reference to recovery, duration, size and age of the units and capital cost per tonne of output, without regard to their location, as recom mended by the BICP, is again a matter for the Central Gov ernment to decide.
What is best for the sugar industry and in what manner the policy should be formulated and imple mented, bearing in mind the fundamental object of the stat ute, viz., supply and equitable distribution of essential commodity at fair prices in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government.
Such matters do not ordinarily attract the power of judicial review.
We would, in this connection, recall the words of Jus tice Frankfurter in Secretary of Agriculture, etc.
vs Cen tral Roig Refining Com 950 pany, etc.
, , "Congress was . . confronted with the formula tion of policy peculiarly with its wide swath of discretion.
It would be a singular intrusion of the judiciary into the legislative process to extrapolate restrictions upon the formulation of such an economic policy from those deeply rooted notions of justice which the Due Process Clause expresses . . ".
"Suffice it to say that since Congress fixed the quotas on a historical basis it is not for this Court to reweigh the relevant factors and, perchance, substitute its notion of expediency and fairness for that of Congress.
This is so even though the quotas thus fixed may demonstrably be disadvantageous to certain areas or persons.
This Court is not a tribunal for relief from the crudities and inequities of complicated experimental economic legislation".
It is important to remember that the division of the industry on a zonal basis for the purpose of price determi nation has been accepted without question by almost all the producers with the exception of a few like the petitioners.
Even if it is true that the petitioners as individuals are at a disadvantage and have suffered losses on account of the present system an assertion which has not been established and which by its very nature is incapable of determination by judicial review that is not sufficient ground for inter ference with the impugned orders.
We are not satisfied that the decisions of this Court in Anakapalle; , and Panipat, [1973] 2 SCR 860 require reconsideration in any respect.
We see no merit in the challenge against the im pugned orders.
The civil writ petitions are, in the circum stances, dismissed.
However, we do not make any order as to costs.
P.S.S. Petitions dismissed.


Summary:
Clause (f) of sub section
(2) of the empowers the Central Government to require any person dealing in any essential commodity to sell the whole or specified part of such commodity to it or the State Government or to a nominee of such Government.
Sub section (3) provides for payment to such a seller (a) the price agreed upon consistently with the controlled price, if any, fixed under the section; (b) the price calculated with reference to the controlled price, if any; and (c) where none of these applies, a price calculated at 910 the market rate prevailing in the locality at the date of the sale.
Subsection (3 A) deals with orders made with a view to controlling the rise in prices or preventing the hoarding of any foodstuff in any locality and determination of price for payment to the seller, notwithstanding anything contained in sub s.(3).
Sub section (3 C) lays down that where any producer is required by an order made with refer ence to cl.
(f) of sub section
(2) to sell any kind of sugar and either no notification in respect of such sugar has been issued under sub section
(3 A) or any such notification having been issued has ceased to remain in force by efflux of time, then notwithstanding anything contained in sub section
(3), there shall be paid to that producer an amount therefore which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine having regard to (a) the minimum price, if any, fixed for sugarcane by Central Government under this section; (b) the manufac turing cost of sugar; (c) the duty or tax, if any, paid or payable thereon; and (d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar, and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar.
The Central Government by notifications dated 28th November, 1974 and 11th July, 1975 issued in exercise of the power under sub section
(3 C) of section 3 of the Act fixed the prices of levy sugar for 1974 75 production.
The petitioners, owners of sugar mills operating in the State of Uttar Pradesh in areas classified for the purpose of determining the price of levy sugar as West and East zones, challenged the validity of the said orders on the grounds that they were ultra vires the Act and violative of their fundamental rights as the prices of levy sugar had been determined arbitrarily with reference to the average cost profiles of factories grouped together in zones without regard to their individual capacity and cost characteris tics; that although the Government has the discretion to fix different prices for different areas or for different facto ries, or for different kinds of sugar, such wide discretion has to be reasonably exercised, that the words 'having regard to ' occurring in sub section
(3 C) is a mandatory require ment demanding strict compliance with clauses (a) to (d); that the ingredients of the said clauses should, therefore, have been examined with reference to each producer as a condition precedent to the determination of the price of sugar; that the Central Government had not applied its mind to the relevant questions to which they were expected to have regard to in terms of thesub section; and that the expression 'determine ' used in sub section (3 C) indicates 911 that the order to which that expression referred to is quasi judicial amenable to judicial review.
For the inter veners it was contended that the cost incurred by units having lower crushing capacity should be neutralised by giving them an incremental levy price.
For the respondents it was contended that the division of the country into zones and the method adopted by the Government in fixing price of levy sugar was fully supported by the recommendations of various expert bodies and the Tariff Commission and was upheld in Anakapalle Co op.
Agri cultural & Industrial Society Ltd. Etc.
vs Union of India & Ors.
, ; and the Panipat Co op.
Sugar Mills".
The Union of India, [1973] 2 SCR 860; that the cost of manufacturing sugar depends not only on recovery from the sugarcane, duration of crushing season, crushing capacity of the plant, the sugarcane price paid and the capital em ployed, but also to a considerable extent on the conditions of the plant and machinery, quality of management, invest ment policy, relations with cane growers and labour, finan cial reputation etc.; that to group together factories having a high cost profile and to determine a price special ly applicable to them is to put a premium on incompetence, if not mismanagement; and that the orders determining the price of sugar in terms of sub section (3 C) were of general application and, therefore, legislative in character and the omission, if any, to consider the peculiar problems of individual producers was not a ground of judicial review.
Dismissing the writ petitions, the Court HELD: 1.
The notifications dated 28th November, 1974 and 11th July, 1975 issued under sub section
(3 C) of section 3 of the are intra rites the Act.
There is no merit in the challenge.
[950F, 918F G] 2.1 Sub section (3 C) is attracted whenever any producer is required to sell sugar by an order made with reference to sub section
(2)(f) and no notification has been issued under sub section
(3 A) or any such notification, having been issued, has ceased to be in force.
It operates notwithstanding anything contained in sub section
This means the compensa tion payable to the seller in the circumstances attracting sub section
(3 C) is not the price postulated in sub section
Nor is it the price mentioned under sub section
(3 A), for that sub section cannot be in operation when sub section
(3 C) is attract ed.
What is payable under sub section
(3 C) is an amount calcu lated with reference to the price of sugar.
[930F H] 912 The Panipat Cooperative Sugar Mills vs The Union of India, [1973] 2 SCR 860, referred to.
2.2 The price of sugar is determined by the Central Government having regard to the factors mentioned in cls.
(a) to (d) of sub section
(3 C).
This is done with reference to the industry as a whole by a process of costing in respect of a representative cross section of manufacturing units and not with reference to any individual seller.
The order notifying the price is required by sub sections
(5) and (6), to be notified in official gazette and laid before both Houses of Parliament.
[931H, 932A, 936G, 931G] 3.
The words 'having regard to ' in sub section
(3 C) are the legislative instruction for the general guidance of the Government in determining the price of sugar.
They are not strictly mandatory, but in essence directory.
They do not mean that the Government cannot, after taking into account the matters mentioned in cls.
(a) to (d), consider any other matter which may be relevant.
The expression is not "having regard only to" but "having regard to".
These words are not a fetter, they are not words of limitation.
[936D, 934E] Union of India vs Kamlabhai Harjiwandas Parekh & Ors., ; ; Commissioner of Income Tax vs Williamson Diamonds Ltd., ; Commissioner of Income Tax, West Bengal, Calcutta vs Gungadhar Banerjee & Co. (P) Ltd., ; ; Saraswati Industrial Syndicate Ltd. etc '.
vs Union of India; , ; State of Karnata ka & Anr. etc.
vs Shri Ranganatha Reddy & Anr.
; , ; State of U. P. & Ors.
vs Renusagar Power Co., ; and O 'May & Ors.
vs City of London Real Property Co. Ltd., , referred to.
4.1 In considering the reasonableness of the order made by the Government ' in exercise of its power under sub section
(3 C) the Court will not strictly scrutinise the extent to which matters mentioned in cls.
(a) to (d), or any other matters have been taken into account by the Government in making its estimate of the price.
There is sufficient com pliance with the sub section if the Government has addressed its mind to the factors which it may reasonably consider to be relevant, and has come to a conclusion, which any reason able person placed in the position of the Government, would have come to.
[936E F] 4.2 In the instant case, the material brought to the notice of the Court does not support the arguments at the bar that the Central Government had not applied its mind to the relevant questions to which 913 they were expected to have regard in terms of the statute.
Nor any data has been furnished to show that the prices determined by the Government would have been different had the ingredients of cls.
(a) to (d) of the sub section been examined with reference to each individual producer instead of a representative cross section of manufacturing units.
[947A, 934D] 5.1 Judicial decisions are made according to law while administrative decisions emanate from administrative policy.
Quasi judicial decisions are also administrative decisions emanating from adjudication but they are subject to some measure of judicial procedure, such as rules of natural justice.
Legislative orders can be distinguished from rest of orders by reference to the principle that the former are of general application.
They are made formally by publica tion and for general guidance with reference to which indi vidual decisions are taken in particular situations, [937C, 939E, 938A B] H.W.R. Wade. ' Administrative Law, 6th ed., 47, referred to.
5.2 An instruction may be treated as legislative even when it is not issued formally but by circular or a letter or the like.
What matters is the substance and not the form, or the name.
Where an authority to whom power is delegated is entitled to sub delegate his power, be it legislative, executive or judicial, then such authority may also give instructions to his delegates and these instructions may be regarded as legislative.
However, a judicial tribunal cannot delegate its functions except when it is authorised to do so expressly or by necessary implication.
[938B C, D E] Griffith and Street. ' Principles of Administrative Law, 5th ed., p. 65 and Bernard & Ors.
vs National Dock Labour Board & Ors., ; at 40, referred to.
5.3 What distinguishes legislation from adjudication is that the former affects the rights of individuals in the abstract and must be applied in a further proceeding before the legal position of any particular individual will be definitely touched by it; while adjudication operates con cretely upon individuals in their individual capacity.
[938F] Davis. ' Administrative Law Text, 3rd ed., p. 123, referred to.
5.4 A statutory instrument such as a rule, order or regulation emanates from the exercise of delegated legisla tive power which is a 914 part of the administrative process resembling enactment of law by the legislature.
It affects the rights of individuals in the abstract.
[939D E, C] Bernard Schwartz. ' Administrative Law [1976] p. 144 and Davis: Administrative Law Text, p. 123, referred to.
5.5 When the function is treated as legislative, a party affected by the order has no right to notice and bearing unless, of course, the statute so requires.
It is neverthe less imperative that the action of the authority should be inspired by reason.
It being of general application engulf ing a wide sweep of powers, applicable to all persons and situations of a broadly identifiable class, the legislative order may not be vulnerable to challenge merely by reasons of its omission to take into account individual peculiari ties and differences amongst those failing within the class.
[939F, 943C, 939F G] Union of India & Anr.
vs Cynamide India Ltd. & Ant., [1987] 2 SCC 720 and Saraswati Industrial Syndicate Ltd., vs Union of India; , , referred to.
5.6 The orders in the instant case, duly published in the official gazettes notifying the prices determined for sugar of various grades and produced in various zones, and applicable without exception to all producers failing within well defined groups can be legitimately characterised as legislative.
No rule of natural justice is applicable to any such order.
[941H, 942A, 943B C] Union of India & Anr.
vs Cynamide India Ltd. & Anr., [1987] 2 SCC 720; State of U.P. & Ors.
vs Renusagar Power Co., ; ; Saraswati Industrial Syndicate Ltd. etc.
vs Union of India; , ; Prag Ice & Oil Mills & Anr. etc.
vs Union of India; , and Bates vs Lord Hailsham of St. Marylebone & Ors., , referred to.
It is with reference to predetermined prices of sugar that subsection (3 C) postulates the calculation of the amount payable to each producer who has sold sugar in compliance with an order made with reference to cl.
(f) of sub section
The calculation of such amount is in contradis tinction to the determination of price of sugar, a non legislative act.
The individual orders to that effect being administrative orders rounded on the mechanics of price fixation, they must be left to the better instructed judg ment of the executive, and in regard to them the principle of audi alteram partem is not applicable All that is 915 required is reasonableness and fair play which are in es sence emanations from the doctrine of natural justice.
[942B, 936F G, 943A B] The Panipat Cooperative Sugar Mills vs The Union of India, [1973] 2 SCR 860; A.K. Kraipak & Ors.
vs Union of India & Ors., and State of U.P. & Ors.
vs Renusagar Power Co.; , , referred to.
Union of India & Anr.
vs Cynamide India Ltd. & Anr., [1987] 2 SCC 720, distinguished.
7.1 Any Act of the repository of power, whether legisla tive or administrative or quasi judicial, is open to chal lenge if it is in conflict with the Constitution or the governing Act or the general principles of the law of the land or it is so arbitrary or unreasonable that no fair minded authority could ever have made it.
[946C] E.P. Royappa vs State of TamilNadu & Anr.
, ; ; State of U.P. & Ors.
vs Renusagar Power Co., ; ; Saraswati Industrial Syndicate Ltd. vs Union of India, ; ; Mrs. Maneka Gandhi vs Union of India & Anr., [1978] 1 SCC 248; Ramana Dayaram Shetry vs The International Airport Authority of India & Ors., ; ; Ajay Hasia & Ors.
vs Khalid Mujib Sehravardi & Ors., ; ; D.S. Nakara & Ors.
vs Union of India, ; ; The Barium Chemicals Ltd. & Ant.
vs The Company Law Board & Ors., [1966] Supp.
SCR 311; Leila Mourning vs Family Publications Service, ; , 36 L. Ed.
2d 318; Kruse vs Johnson, [1988] 2 Q.B. 91; Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, ; ; Westminster Corporation vs London and North Western Railway, ; Mixnam Properties Ltd. vs Chertsey U.D.C., ; Commissioners of Customs ney vs Forde, [1971] AC 632 (H.L.); Carltona Ltd. vs Commis sioners of Works, ; Point of Ayr.
Col lieries Ltd. vs Lloyd George, ; Scott vs Glasgow Corporation, ; Robert Baird L.D.v.
City of Glasgow, ; Manhattan General Equipment Co. vs Commissioner, ; ; Yates (Arthur) & Co. Pty Ltd. vs Vegetable Seeds Committee, ; ; Bailey vs Conole, ; ; Boyd Builders Ltd. vs City of Ottawa, ; Re Burns & Township of Haldimand, and Lynch vs Tilden Produce Co., ; , referred to.
916 7.2 Where a question of law is at issue, the Court may determine the rightness of the decision of the authority on its own independent judgment.
If the decision does not agree with that which the Court considers to be the right one, the finding of law by the authority is liable to be upset.
Where it is a finding of fact, the Court examines only the reason ableness of the findings.
When the finding is found to be rational and reasonably based on evidence then judicial review is exhausted even though the finding may not neces sarily be what the Court would have come to as a trier of fact.
[944C E] 7.3 Whether an order is characterised as legislative or administrative or quasi judicial, or, whether it is a deter mination of law or fact, the judgment of the expert body, entrusted with power, is generally treated as final and the judicial function is exhausted when it is found to have warrant in the record and a rational basis in law.
[944E F] Rochester Tel. Corp. vs United States, [1939] 307 U.S. 125, ; Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation, ; and Chief Constable of the North Wales Police vs Evans, ; at 1160, referred to.
7.4 The orders, in the instant case, are undoubtedly based on an exhaustive study by experts.
They are fully supported by the recommendations of the Tariff Commission in 1969 and 1973 and are not shown to be either discriminatory or unreasonable or arbitrary or ultra vires.
[946D E] 8.1 Judicial review is not concerned with matters of economic policy.
Nor is price fixation within the province of the Courts.
The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either.
The Court does not supplant the "feel of the experts" by its own views.
When the legis lature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness and are consistent with the laws of the land.
[948F, 949B, 948F G] M/s. Gupta Sugar Works vs State of U.P. & Ors., [1987] Supp.
SCC 476; Railroad Commission of Texas vs Rowan & Nichols Oil Company, 311 US 570 577, 85 L. ed.
358 and Mississippi Valley Barge Line Company vs United States of America, 2.92 US 282 290; , , referred to.
917 8.2 In the instant case, sufficient power has been delegated to the Central Government by sub section
(3 C) to formulate and implement its policy decisions by means of statutory instruments and executive orders.
Classification of sugar factories with due regard to geographical cum agro economic considerations for the purpose of determining the price of sugar in terms of the said sub section is a policy decision based on exhaustive expert conclusions.
Such clas sification, cannot, in the absence of evidence to the con trary, be characterised as arbitrary or unreasonable or not rounded on an intelligible differentia having a rational nexus with the object sought to be achieved by sub section (3 C).
[949E, 947B D] The Panipat Cooperative Sugar Mills vs The Union of India, [1973] 2 SCR 860 and T. Govindaraja Mudaliar etc.
vs The State of TamilNadu & Ors., ; , applied.
Federal Power Commission vs Hope Gas Co., ; ; Union of India & Anr.
vs Cynamide India Ltd. &Anr., [1987] 2 SCC 720 and M/s. Gupta Sugar Works vs State of U.P. & Ors., [1987] Supp.
SCC 476, referred to.
8.3 If the petitioners nevertheless incur losses, such losses need not necessarily have arisen by reason of geo graphical zoning, but for reasons totally unconnected with it, such as the condition of the plant and machinery, quali ty of management, investment policy, labour relations, etc.
These are matters on which they have not furnished data.
The decisions in Anakapalle; , and Panipat, [1973] 2 SCR 860 do not require reconsideration.
[947D E, 950E F] 8.4 Whether the policy should be altered to divide the sugar industry into groups of units with similar cost char acteristics with particular reference to recovery from sugarcane, duration of the crushing season, size and age of units and capital cost per tonne of output, without regard to their location, is a matter for the Central Government to decide.
What is best for the sugar industry and in what manner the policy should be formulated and implemented, bearing in mind the fundamental object of the statute, is again a matter for decision exclusively within the province of the Central Government.
Such matters do not ordinarily attract the power of judicial review.
[949E G] Secretary of Agriculture, etc.
vs Central Roig Refining Company etc., , 94 L. ed.
391 392, referred to.