1975 (11) TMI 181 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the Government should have given an opportunity to the respondent when granting exemption to the appellant from paying additional price.
2. Whether the High Court was correct in directing the Government to consider giving an opportunity to the respondent.

Detailed Analysis:

Issue 1: Opportunity to Respondent During Exemption Granting

The primary issue revolves around whether the Central Government should have provided an opportunity to the sugarcane growers (respondents) to be heard before granting exemptions to the sugar factory (appellant) from paying the additional price under Clause 5(3) of the Sugar Cane Control Order, 1966.

The 1966 Control Order regulates the use and supply of sugarcane under the Essential Commodities Act, 1955. Clause 5(3) allows the Central Government to exempt a sugar producer from paying the additional price if the factory has made no profit or inadequate profit. The appellant, a sugar factory, was exempted from paying the additional price for the seasons 1960-61 and 1961-62 based on inadequate profits.

The respondents, co-operative societies of sugarcane growers, challenged this exemption on the grounds of natural justice, asserting that they were not given an opportunity to be heard. The High Court upheld this contention, stating that the impugned order violated principles of natural justice.

The Supreme Court affirmed the High Court's judgment, emphasizing that the power to grant exemption is not independent but part of the procedure under Clause 5 of the 1966 Control Order. The Court noted that the objective of the Control Order is to ensure a fair balance between sugarcane growers and sugar producers, and the power conferred on the Government must consider both viewpoints. Therefore, it is necessary to provide an opportunity for the growers to be heard when the Government exercises its powers to determine additional price and grant exemptions.

Issue 2: High Court's Direction to Government

The second issue concerns whether the High Court was correct in directing the Government to consider giving an opportunity to the respondents.

The High Court directed the Government to consider the growers' viewpoints before granting exemptions. The appellant contended that the growers did not have a right to be heard in exemption matters, arguing that determining additional price and granting exemptions are separate and independent processes. Additionally, they claimed that the right to additional price does not vest in the growers until the manner of payment is decided by the Central Government under Clause 5(6).

The Supreme Court rejected these contentions, stating that the exemption process is inherently linked to the right of the growers to receive additional price. The Court highlighted that the Control Order's provisions aim to maintain harmony between growers and producers, ensuring both share profits reasonably. Therefore, the Government must invite objections from the growers and consider their viewpoints when deciding on exemption applications.

The Court concluded that the duty to act judicially arises when exercising a power that affects a person's legitimate interest or expectation. Given the purpose of the 1966 Control Order and the scheme of reserved sugarcane growing areas, it is imperative that growers are heard not only during the determination of additional price but also when exemptions are granted.

Conclusion:

The Supreme Court affirmed the High Court's judgment, dismissing the appeals. The Court held that the Government must provide an opportunity for sugarcane growers to be heard when granting exemptions from paying additional price under the 1966 Control Order. The decision ensures that the principles of natural justice are upheld, maintaining a fair balance between the interests of sugarcane growers and sugar producers. Each party was ordered to bear its own costs.