Case: Saraswati Industrial Syndicate Limited Vs. Union of India

1. The appellants are manufacturers of sugar, who have come before us after certification of their cases as fit for appeal to this Court under Article 133 (1) (c) of the Constitution. They challenged the notification datedissued by the Central Government under Clause 7 of the Sugar (Control) Order, 1966, fixingprices for sugar factories specified in the notification. It appears that, in the Writ Petitions filed in the High Court for quashing the impugned notification and appropriate orders in the nature of Mandamus, the validity of Section 3 of the Essential Supplies Act 10 of 1955, as well as of the Sugar (Control) Order, 1966, issued under it were questioned.

Court's reasoning:
11. A perusal of the figures under the first set of tables shows that, as the number of working days is increased, the cost is, quite naturally, reduced. The 10 per cent recovery basis merely indicates the amount of sugar obtained from the total quantity of sugar-cane. But from both sets of schedules, we find that there is considerable freedom given to the Government in choosing what could properly determine the "fair price" to be fixed. Items to be taken into account are broadly stated. They are not tied down to the particulars which, according to the learned Counsel for the appellant, ought to have been taken into account. The criteria are elastic enough to either include or exclude some of the items put forward on behalf of the applicants as necessary to be taken into account. Some of the items which, according to the appellants, should be treated as items of cost may not even properly find a place there. For example, it was suggested that excise duty was wrongly left out as an item of cost. There is nothing in the first set of schedules to indicate that excise duty must be taken intro account in determining the cost of production. In the second set of schedules excise duty is mentioned apart from manufacturing and other items of cost. Excise duty is really imposed on goods when they have come into existence in the manufactured form. It could more properly be taken into consideration in determining net profits than in calculating cost of manufacture.12. One of the contentions on behalf of the petitioners was that prices should not have been determined on the basis of 22 zones but should have been determined either on an All India scale or for five zones as recommended by the Sugar Enquiry Commission.Costs of production, for purposes of price fixation, can only be determined on the basis of averages from data collected from each particular region and conditions which affect factories in general in that region. It may be that, on particular items, the Government may have reasons to regard data collected in one region to be unreliable. Other data collected in another region may be considered good enough for a more general use of it. The results of price fixation are actually given separately in an annexed table for each factory in each State and are not uniform. We cannot read into Clause 7 (2) an obligation to fix the price either on an All India basis or five region basis. It is enough if the basis adopted is not shown to be so patently unreasonable as to be in excess of the power to fix price. This power is confined to fixation for the purposes mentioned in Essential Commodities Act, 1955. In any case, the appellants objections could form the subject-matter of representations which could have been made to the Government by each of the parties affected.If their case had substance, they ought to have made a demand for a more just fixation on what they considered to be more appropriate and reasonable basis before going to Court. They had not done so.In both the cases mentioned above the question was assumed to be one Involving a determination of "fair price". In arriving at such an assessment, a reasonable margin of profits, judged by average standards of efficiency, could be provided for. In the cases before us, the appellants have not asserted that they incurred losses or did not make reasonable profits. In other words, they themselves ignore what appears to be an important aspect in all such price fixation so that one is left wondering whether their real complaint is not that they could not "profiteer".Although the passage set out above primarily refers to other matters which are to be taken into account in determining the ex-factory selling price of white sugar, yet, it is relied upon by Mr. Desai inasmuch as the terms "year to year in the same zone" and "determined annually" occur here. These passages only indicate a practice. Furthermore, they show that the Commission meant to lay down only guidelines in determining relevant criteria for maximum price fixation. What is most important to note, however, is the reference to the margin of profit which the schedules do not mention. It is evident that the schedules are not all embracing.All the cases before us relate to the season l966 to 1967 which was over long ago. No provision has been brought to our notice to indicate how the Government would be responsible to manufacturers for an erroneous fixation of price at which sugar may be sold during a particular season by manufacturers to dealers who can sell it to the consumers. Learned Counsel suggested that the appellants could sue those to whom sugar was supplied at lower rates than should have been fixed. We find it very difficult to understand how the manufacturers could claim anything, even by means of suits, from dealers with whom there were no agreements providing that any variation in price to be fixed by the Government will enable the manufacturers to recover the balance in case the fixation was too low. Indeed, if the fixation of price is found to be too high for any reason, such as the failure to consider the amount of profits made by the manufacturers in a particular season, the manufacturers may have become liable to pay something back to the dealers had there been any provision in contracts between manufacturers and dealers for recovery of balances due to either side on subsequent fixations. It is enough to mention here that no such provision in any agreement has been brought to our notice. No dealers whose rights may be affected are before us to enable us to pronounce on their alleged liabilities. In the Saraswati Industrial Syndicates case, there was an understanding given in the High Court by the Union of India that the Union will pay the syndicate the balance, on a redetermination of price; if the price fixed by the Government was found to be too low. We have no doubt that that undertaking exhausted itself with proceedings in the High Court when the Writ Petition in appeal before us now failed.As the appeals fail on merits we need not discuss the technical difficulty which an application for a writ of certiorari would encounter when no quasi-judicial proceeding was before the High Court.The powers of the High Court under Article 226 are not strictly confined to the limits to which proceedings for prerogative writs are subject in English practice. Nevertheless, the well-recognised rule that no writ or order in the nature of a Mandamus would issue when there is no failure to perform a mandatory duty applies in this country asare therefore, not concerned now with any question relating to the validity of clause 7 of the Sugar (Control) Order under which the notifications werewas difficult for tile High Court, as it is for us, to determine these questions of fact on the meagre material or bare assertions, not subjected towhich are available in writ proceedings decided primarily on affidavits. Nevertheless, assuming that these assertions rest on a factually correct basis, we think that a modern manufacturer of sugar, with more efficient methods of production, would gain by a fixation of price which was profitable even for less efficient manufacturers. Even if we assume that the wages of labourers were somewhat higher in Haryana than those in Madhya Pradesh, without sufficient material to be able to arrive at a definite conclusion on this matter, we think that the disadvantage to the Syndicate would beby the advantage it enjoys as a producer with a more modern and efficient manufacturing technique. It is a well known fact that rationalisation of industry, by the use of modern methods, reduces the amount of labour needed in more mechanised modes of manufacture. Therefore, we do not think that these assertions could prove any inequitable treatment meted out to the Haryana manufacturers of sugar. In any case, no breach of a mandatory duty, which could justify the issue of a writ of Mandamus, wasalready indicated above, the cost schedules given by the Commission were onlyto indicate the relevant data in fixing the price. They were not like clear mandatory statutory provisions which could be enforced without much difficulty.