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

The appellant (Shri Janki Sugar Mills &Company) is a partnership firm carrying on the business of manufacturing sugar. By an order passed on November 1, 1954 under s. 15 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act 1953, the Cane Commissioner reserved certain sugarcane centres for the appellants sugar factory. On November 12, 1954 (i.e. within 14 days of the reservation of the sugarcane centres) the respondent No. 4 (Laskar Co-operative Cane Development Union Ltd.) made an offer for the 1954-55 crushing season for the supply of 6 lac maunds of sugarcane out of a total estimated yield of 12 lac maunds of sugarcane from certain centres. This offer was accepted by the appellant-firm on November 27, 1954 (i.e. within 14 days of the receipt of the offer) and an agreement in the prescribed Form C was duly executed on February 9, 1955. It contained the usual term that the appellant-firm will pay for the sugarcane supplied to it "at the minimum price notified by the Government subject to such deductions, if any, as may be notified by the Government from time to time". On March 22, 1955 the respondent No. 4 made another offer for supplying additional quantity of 2 lac maunds of sugarcane to the appellant-firm, which offer was also accepted on May 4, 1955 and a composite agreement in prescribed Form C was entered into on that very day for the supply of 8 lac maunds of sugarcane (inclusive of the initial 6 lac maunds). This agreement also contained the usual term with regard to the payment being made "at the minimum price subject to such deductions as may be notified by the Government from time to time". By a Press Note dated May 23, 1955 the Government of India notified its decision that certain deductions in the minimum cane price, on the basis of recovery of sugar fro m sugarcane, will be allowed to sugarcane factories in Uttar Pradesh on the cane supplied to them on and after May 1, 1955 but that the deductions will be allowed only on "unbonded cane" crushed by each factory and not on "bonded cane", the latte r of which shall have to be purchased by each factory at the minimum cane price already fixed for the season. In exercise of the powers under s. 3 ofthe Essential Commodities Act, 1955, (delegated to him by the Government of India under a Notification dated April 25, 1955), the Cane Commissioner, Uttar Pradesh issued a Notification on June 1, 1955 whereunder "the producers of sugar by vacuum pan process were allowed to make deductions as specified in the Schedule thereto from the minimum price of per maund of cane fixed for the season 1954-55 in respect of the unbonded sugarcane crushed on and after May 1, 1955". The appellant-firm taking advantage of this Notification granting concessions in the minimum price, mad e payments to Respondent No. 4 after making deductions in respect of the two lac maunds of sugarcane supplied to it, in respect whereof the offer had been made to it on March 22, 1955. However, a Recovery Certificate under ss. 17 and 1 8 of Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953 against the appellant firm for a sum of Rs. 53, 878/10/- being the amounts deducted by the appellant-firm while making payments to Respondent No. 4. The appellant-firm disputed the legality of the Recovery Certificate on the ground that it had the right to make the deductions in view of the Cane Commissioners Notification dated June 1, 1955. The said dispute was referred by the Cane Commissioner to the District Cane Officer, Bulandshahr as the sole arbitrator under Rule 108 of the U.P. Sugarcane (Regulation of Supply &Purchase) Rules, 1954. By his award dated May 30, 1962, the District Cane Officer held that the appellant-firm had wrongly made the deductions in respect of the supply of two lac maunds of sugarcane which was "bonded cane" and that the appellant-firm was liable to pay the minimum price therefore.Aggrieved by the award the appellant-firm preferred an appeal to the Divisional Commissioner, Meerut under Rule 118 of the said Rules, but the appeal was dismissed on March 30, 1963. The appellant-firm challenged the legality of the award of the District Cane Officer as also the appellate order of the Divisional Commissioner by means of a writ Petition in the Allahabad High Court being Civil Miscellaneous Writ No. 2003 of 1963. The learned Single Judge who heard the writ petition dismissed the same by his judgment and order dated October 24, 1967. A further Special Appeal No. 1068 of 1967 carried by the appellant-firm to the Division Bench of that Court also proved unsuccessful on December 5, 1967. The appellant-firm has come up in appeal to this Court.

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