WEST U.P. SUGAR MILLS ASSOCIATION & Ors. v. THE STATE OF UTTAR PRADESH & Ors.

1.8 This Court took into consideration the effect, scope and impact of Section 16 under the Act. This Court considered in detail Section 16 of the Act – the provision to regulate purchase and supply of sugarcane in the reserved and assigned area, under which the State Government is vested with the power to regulate the distribution, sale or purchase of sugarcane in any reserved or assigned area and purchase of cane in any area other than a reserved or assigned area by issuing an order to that effect. Thereafter, this Court has held that the power to regulate includes the power to fix the SAP. This Court has also specifically observed and held that there was no repugnancy. This Court took into account the relevance, importance, purpose and object, its impact, implication and reasons for enacting Section 16 of the Act and after taking into account all the relevant considerations this Court has specifically held that the SAP is a price higher than that determined by the Central Government which is known as Statutory Minimum Price (SMP). Thus, in the case of U.P. Cooperative Cane Unions Federations, this Court has specifically upheld the power of the State Government to fix the SAP under Section 16 of the Act. [Paras 20.4.2, 20.4.3][585-D-G]

1.9 The following factors are the relevant facts for determination of SAP. (i) The cost of cultivation of sugarcane. (ii) The cost of transport of sugarcane by cane growers from the field to purchase center or to mill gate as the case may be. (iii) A reasonable return on the aforesaid amount of his produce to cane growers. (iv) Availability of the cane area, demand of sugarcane by industries, profitability of the industries by selling sugar, and other bye products etc. (v) The price of sugarcane paid by sugar factories in the proceeding year. (vi) The factors necessary to avoid diversion of sugarcane from sugar industries to other consumers like Kolhu and Khandsari Units. A B C D E F G H WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v. THE STATE OF UTTAR PRADESH & ORS. 537 It appears that determination and fixation of the SAP is a Cabinet decision which has been fixed after considering several factors, including the cost of cultivation/production of the sugarcane etc. and after taking into consideration the relevant factors as above and including increasing of national economic growth, cost of production of sugarcane, increase in the cost of seeds, fertilizers, labour charges, irrigation etc., including the profit earned by sugar factories from the produces from bye- products, power projects etc. Thus it appears that authority is guided by all relevant factors while determining such price – SAP. [Para 20.5][585-H; 586-A-E]

1.10 In the 1966 Order the word “the price” has been deleted and Clause 3 of 1966 Order provides that the Central Government may fix “the minimum price” of the sugarcane to be paid by the producer of sugar. There is a difference between “the price” and “the minimum price”. The aforesaid shall be apparent from the relevant Clauses of the 1966 Order. The provision of State advised price has been made to protect the interests of the sugarcane growers who are not in a position to negotiate. Clause 3(1) empowers the Central Government to fix the minimum price of sugarcane to be paid by the producers of sugar or their agents for the sugarcane purchased by them. Clause 3(2) provides that no person shall sell or agree to sell sugarcane to a producer of sugar or his agent, and no such producer or agent shall purchase or agree to purchase sugarcane, at a price lower than that fixed under sub-clause (1). As per Clause 3(3), where a producer of sugar purchases any sugarcane from a grower of sugarcane or from a Sugarcane-grower’s Co-operative Society, the producer shall, unless there is an agreement in writing to the contrary between the parties, pay within fourteen days from the date of delivery of the sugarcane to the seller or tender to him the price of the cane sold at the rate agreed to between the producer and the sugarcane- grower or Sugarcane- growers’ Co-operative Society or that fixed under sub-clause (1), as the case may be. Clause (3-A) provides that a producer of sugar or his agent shall pay, for the sugarcane purchased by him, to the sugarcane grower or the sugarcane growers’ coopearative society, either the minimum price of sugarcane fixed under Clause 3, or the price agreed to between the producer or his agent and the sugarcane grower or the sugarcane growers’ cooperative society, as the A B C D E F G H 538 SUPREME COURT REPORTS [2020] 9 S.C.R. case may be (agreed price). Agreed Price to be paid under the Agreement may be even SAP fixed and/or determined by the State Government. Clause (5-A) provides that where a producer of sugar purchases sugarcane, from a sugarcane-grower during each sugar year, he shall be liable to pay, in addition to the minimum sugarcane price fixed under Clause 3, an additional price. Sub- clause (2) of Clause 5-A authorizes the appropriate authority to determine the additional price. Sub-clause (5) further provides that no additional price determined under sub-clause (2) or sub- clause (3) is required to be paid by a producer of sugar who pays a price higher than the minimum price fixed under Clause 3 to the sugarcane-grower, provided that, “the price so paid is not less than the total price comprising the minimum sugarcane price fixed under Clause 3 and the additional price determined under sub-clause (2) or sub-clause (3).” [Paras 20.7, 20.7.1, 20.7.2][588- A-C; 589-E-H; 590-A-D] Sukhnandan Saran Dinesh Kumar & Ors. v. Union of India & Ors. (1982) 2 SCC 150 : [1982] 3 SCR 371 – relied on.

1.11 The State has the competence to determine and fix the State Advised Price fixed under section 16 and therefore fixation of SAP by the State Government cannot be said to be beyond the purview of legislative competence. Once the fixation of State Advised Price has been done, the Cane Commissioner can direct the parties to follow the same as held in U.P. Cooperative Cane Growers Federation. It cannot be said that fixation of price under the regulatory measure provided in section 16 suffers from arbitrariness, nor can it be termed to be uncanalised power. Considering the entire scheme of 1966 Order, it provides for “the minimum price” and “the additional price” or “the advised price”. Considering the aforesaid provisions under 1966 Order, there cannot be any sugarcane price (advised price) below “the minimum price”. As per the agreement entered into the “advised price” necessarily had to be higher than the “minimum price”. Thus, there is a difference between “the price” and the “the minimum price”. As per Clause 3 of 1966 Order, it empowers the Central Government to fix the “minimum price” and the State Government is authorized to fix the Advised Price A B C D E F G H WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v. THE STATE OF UTTAR PRADESH & ORS. 539 which as observed hereinabove is always higher than the “minimum price” fixed by the Central Government. [Paras 21, 22][590-E-H; 591-A]

1.12 Thus, it is held that the view taken by the Constitution Bench of this Court in the subsequent decision in the case of U.P. Coop. Cane Unions Federations is the correct law. There is no conflict between the two decisions of this Court in the case of Tika Ramji and in the case of U.P. Coop. Cane Unions Federations and therefore, there is no necessity to refer the matter to the larger Bench consisting of seven Judges. Final conclusions are as under: a. By virtue of Entries 33 and 34 List III of seventh Schedule, both the Central Government as well as the State Government have the power to fix the price of sugarcane. The Central Government having exercised the power and fixed the “minimum price”, the State Government cannot fix the “minimum price” of sugarcane. However, at the same time, it is always open for the State Government to fix the “advised price” which is always higher than the “minimum price”, in view of the relevant provisions of the Sugarcane (Control) Order, 1966, which has been issued in exercise of powers under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953; b. The Sugarcane (Control) Order, 1966 which has been issued under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 confers power upon the State Government to fix the remunerative/advised price at which sugarcane can be bought or sold which shall always be higher than the minimum price fixed by the Central Government; c. Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 is not repugnant to Section 3(2)(c) of the Essential Commodities Act, 1955 and Clause 3 of the Sugarcane (Control) Order, 1966 as, as observed hereinabove, the price which is fixed by the Central Government is the “minimum price” and the price which is fixed by the State Government is the “advised price” which is always higher than the “minimum price” fixed by the A B C D E F G H 540 SUPREME COURT REPORTS [2020] 9 S.C.R. Central Government and therefore, there is no conflict. It is only in a case where the “advised price” fixed by the State Government is lower than the “minimum price” fixed by the Central Government, the provisions of the Central enactments will prevail and the “minimum price” fixed by the Central Government would prevail. So long as the “advised price” fixed by the State Government is higher than the “minimum price” fixed by the Central Government, the same cannot be said to be void under Article 254 of the Constitution of India. d. The view taken by the Constitution Bench of this Court in the case of U.P. Cooperative Cane Unions Federations vs. West U.P. Sugar Mills Association and Others is the correct law. [Para 23][591-D-H; 592-A-F] U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association and Others (2004) 5 SCC 430: [2004] 2 Suppl. SCR 238 – held correct law.