Case: Welcome Hotel and Others Vs. State of Andhra Pradesh and Others

Hoteliers of Andhra Pradesh raised a hue and cry when the Government of Andhra Pradesh-the first respondent enacted and proclaimed in exercise of the powers conferred by Sec. 3 of the Essential Commodities Act, 1955 (1955 Act for short) read with the notification of the Ministry of Agriculture and Irrigation dated June 9, 1978, the Andhra Pradesh Catering Establishments (Fixation and Display of Prices of Foodstuffs) Order. 1978 (1978 Order for short) dated September 8, 1978 whereby it was made obligatory for the catering establishment s to display the prices of all foodstuffs served by the establishment and simultaneously fixed the maximum price of seven items of food comprising the poormans menu in the State of Andhra Pradesh. The seven items enumerated in the Schedule appended to the 1978 Order include idli, vada, upma, sada dosa, puree, coffee, tea and a rice plate (scheduled items for short). Cl. 3 of the Order prescribed maximum prices of the scheduled items of food and cl. 4 makes it obligatory to display in English and principal language of the area the weight or measure and price of every item of foodstuff offered for sale in the establishment. There were consequential provisions such as power to issue directions, power to call for information, power of entry, search &seizure and power to grant exemption as also power to amend the Schedule. A clarificatory notification was issued on October 3, 1978 giving certain directions.The Schedule and the rates set out therein were modified by the Amending Order dated December 11, 1980. The amendment catered to an upward revision of the prices. It seems some further negotiations took place between the Minister of Civil Supplies and Labour on the one hand and hotelier s on the other which led to a notification dated January 5, 1981 (1981 Order for short) giving further upward revision in maximum price of scheduled items and the scheduled items were reduced from 7 to 6 deleting rice place. Ignoring this latest order which replaced the earlier orders, the petitioners approached this Court and obtained an ex-parte stay of the implementation of Orders dated September 5, 1978 and December 11, 1980. In fact, but for the intervention by the Court staying t he operation of earlier orders, the order dated January 5, 1981 was not stayed yet effectively the petitioners succeeded in putting into cold storage the price fixation order leaving them free to charge any price unhampered and uninhibited by any governmental action.

Court's reasoning:
We declined to be involved in the vortex of this cost accountants exercise as we are neither experts of the subject nor we consider it necessary to undertake this exercise. The argument proceeded that the prices of inputs have escalated so high that the maximum prices determined by the impugned orders have become uneconomical. For this malaise, petitioners have to thank themselves because it was an integral part of their agreement with the Minister of Civil Supplies on December 31, 1980 that the maximum prices fixed by the impugned orders would be re-examined on the expiration of the three months from the date of the agreement. Instead of honoring this agreement, the petitioners within a span of 12 days rushed to this Court and obtained ex-parte stay order wholly suppressing the fact that the orders impugned in these petitions have already been replaced by the latest order dated January 5, 1981. Petitioners who have behaved in this manner are not entitled to any consideration at the hands of the Court.In order to illustrate how the Court is not the forum for scientifically structuring prices of commodities, it may be pointed out that the petitioners in their price structure tables have added in respect of each scheduled item 24% of wages. Totalling the wages for seven items the wage bill accumulates at 175%. And that is equally true of other overhead charges. Add to this numerous other items of food sold by petitioners in their establishments and the utter unsustainability of their claim becomeswould however, reject the contention about the mechanics of price fixation on the short ground that petitioners, ordinarily do not serve only the scheduled items, but they have large establishments catering to various tastes and delicacies. No price fixation order need guarantee profit to an establishment in respect of each unit of article served or sold. It is the over all picture in the trade or commerce that needs to be examined. Petitioners have not shown that in their over all turnover they have since the promulgation of impugned orders suffered losses. And this situation never fructified because the 1978 Order was kept in suspended animation for a period of two years and when the latest order dated January 5, 1981 was promulgated, it was still-born at the hands of the Court because of the ex-parte stay order obtained by the petitioners. And we reject this contention for the additional reason as laid down by a Constitution Bench of seven learned Judges of this Court in Prag Ic e &Oil Mills &Anr. etc. v. Union of India(1) where Chandrachud, C.J. observed asthe ultimate analysis, the mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted in the generality of cases asthe slightest case is made out for departure fro m the proposition laid down by this Court as extractedwe conclude, we would like to pin-point the unfair advantage which the petitioners have obtained by ex- parte stay suppressing the material fact that the later order had already replaced the earlier orders and the latest order was issued with their consent. In the Writ Petition No. 43/81 the prayer clause reads asa writ of mandamus or any other appropriate writ or order holding that G.O. Ms. No. 548 dated 8.9.1978 and G.O. Ms. No. 626 dated 11.12.1980 of the Government of Andhra Pradesh and the notification issued by the Collector, the second respondent herein dated 16.12.1980 in pursuance of the said impugned Orders as ultra vires, unconstitutional and void and quash thebone of contention was not the power exercised by the State Government but the maximum prices fixed in exercise of the power conferred on the State Government. The maximum prices were to be regulated as per the order dated January 5, 1981, and even though this Court was moved for ex-parte stay on January 12, 1981, the fact that the latest order dated January 5, 1981 has replaced the earlier orders was suppressed from the Court. And peculiarly the State Government did not pursue vigorously its latest notification dated January 5, 1981 because its operation was not stayed by the Court. However, the entire notification fixing the price of the menu of the poormen was put under suspended animation leaving the hoteliers to extort any price to suit their greed. Now that we are dismissing these petitions and vacate the stay orders, the notification fixing the maximum prices will revive and can be enforced. But in the meantime the poor of Andhra Pradesh were made to pay by their nose for their simplest menu and the difference between maximum price fixed by the impugned notification and the prices charged by the hoteliers would be unjust enrichment of the hoteliers undeservedly enjoyed with the assistance of the court by the exercise of the constitutional power under Art. 32 of the Constitution, and there is no way of depriving this unjust enrichment The Court set up for justice, including socio-economic justice, unfortunately lent its assistance to such unjust enrichment and yet we are helpless.