2004 (5) TMI 533 - SC - Indian Laws

What is the legal status and binding nature of State advised cane price ? What are the power of the State Government to fix sugarcane price under the provisions of U.P. Sugarcane (Regulation and Purchase) Act 1953 (hereinafter referred to as U.P. Act)? Whether the State law fixing the price becomes repugnant to the provisions of the Central Law, namely the Sugarcane Control Order of 1966 framed under E.C.Act? Held that - The State Advised Price has no statutory flavour. It is not fixed or purportedly fixed in exercise of any statutory power. It is only persuasive or recommendatory in nature. The sugar factories cannot be compelled or coerced to pay that price by taking any steps not sanctioned by law The U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 does not confer the power on the state government to fix the price of sugarcane. Such power cannot be spelt out from section 16. In view of conclusions (1) and (2) it is not necessary to express any opinion on the constitutional issue of repugnancy between the central and the state law. The finding recorded on this aspect by the Allahabad High Court in writ petition No. 36889 of 1996 is set aside. That question of law is left open. Although the State Advised Price has no sanction of law, the action of the State government in notifying the State Advised Price and advising the sugar factories to comply with the same is not per se illegal. The State Advised Price can serve as the framework within which the agreement as to price can be reached between the cane growers and the sugar producers. Therefore, the orders issued by the state government / Cane Commissioner communicating the fixation of State Advised Price need not be set aside.There is no legal taboo against the State government machinery playing a role in evolving an agreement between the cane growers and the sugar producers as to the price, without adopting any coercive methods. Once the occupier of sugar factory reaches an agreement with the cane grower may be on the persuasion of the state authorities, to pay the price equivalent to State Advised Price either by executing a formal agreement in this behalf or otherwise, the occupier of the factory is bound to pay such price and in case of default it can be recovered by the State authorities by coercive process laid down in the statute. In the absence of express agreement, it is not impermissible to look into other evidence, if there is a dispute on the question of the price agreed to be paid. The writ petitions and transferred cases shall be disposed of by the respective High Courts de novo in the light of the declaration of law and the observations made above.

Summary

Issues Involved:
1. Legal status and binding nature of 'State advised cane price'.
2. Power of the State Government to fix sugarcane price under the U.P. Sugarcane (Regulation and Purchase) Act, 1953.
3. Potential repugnancy between the State law fixing the price and the Central Law, namely the Sugarcane Control Order of 1966.

Detailed Analysis:

1. Legal Status and Binding Nature of 'State Advised Cane Price':
The judgment clarifies that the 'State advised cane price' lacks statutory basis and legal force. The term 'advised' inherently suggests that such a price is not legally binding. The communication from the Principal Secretary and the Cane Commissioner of U.P. indicates that the State advised price is merely a recommendation and not enforceable by law. The State Government's counter-affidavits in related writ petitions also affirm this position, emphasizing that the advised price is intended to ensure parity and fairness but is not compulsory. The judgment concludes that the State advised price can serve as a framework for voluntary agreements between sugar factories and cane growers, but it cannot be enforced against the will of the factory owners.

2. Power of the State Government to Fix Sugarcane Price Under the U.P. Act:
The judgment examines Section 16 of the U.P. Act, which pertains to the regulation of the purchase and supply of cane. It is determined that this section does not confer the power to fix the price of sugarcane. The judgment references the legislative history and the omission of specific provisions for price fixation in the U.P. Act, contrasting it with the repealed U.P. Act 1 of 1938, which had such provisions. The Constitution Bench's observations in Tika Ramji's case are cited, indicating that the U.P. Act does not empower the State Government to fix sugarcane prices. The judgment emphasizes that the regulatory power under Section 16 does not extend to price fixation, and any attempt to infer such power would be inconsistent with the legislative intent and historical context.

3. Potential Repugnancy Between State Law and Central Law:
Given the conclusions on the first two issues, the judgment finds it unnecessary to address the potential repugnancy between the State law and the Central Law. The question of repugnancy is left open, to be addressed if and when the State enacts legislation to fix sugarcane prices.

Additional Clarifications:
- The judgment clarifies that the existence of agreements incorporating the State advised price does not confer statutory authority on such prices. Agreements reached voluntarily, even if influenced by State recommendations, are valid and enforceable.
- The role of the State machinery in facilitating agreements between cane growers and sugar producers is acknowledged, provided no coercive methods are used.
- The judgment distinguishes previous cases, such as Jaora Sugar Mills and S.K.G. Sugars, which involved consensual agreements on prices, from the present case where the statutory authority to fix prices is in question.

Summary of Conclusions:
1. The State advised price is not legally binding and cannot be enforced by law.
2. The U.P. Act does not empower the State Government to fix sugarcane prices.
3. The constitutional issue of repugnancy is left open.
4. Directions to enforce the State advised price without the consent of sugar factories are illegal.
5. The notification of the State advised price is not illegal per se and can serve as a basis for voluntary agreements.
6. The State can facilitate agreements on price without coercion.
7. Agreements incorporating the State advised price are valid and enforceable.
8. The existence of an agreement on price is a factual question, and other evidence may be considered if there is a dispute.

The judgment concludes by directing the High Courts to dispose of the writ petitions and transferred cases in light of these conclusions. Specific interim orders and appeals related to recovery of agreed prices are dismissed.