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2016 (2) TMI 776 - HC - Indian LawsFixation of price - whether the impugned G.O.Ms. fixing price of Oil Palm FFBs is violative of Art.14 of the Constitution - Held that - Relevant considerations of OER of Oil Palm Processing Unit in the State of Andhra Pradesh for fixing price of FFBs of Oil Palm in the said State which is indicated by Section 11(2) and Section 12 of the Act, were not taken into account while issuing the impugned G.O. Also the advice of the Union of India contained in the letter F.No.12-22/2010 (TMOP) dt.13.08.2013 of the Under Secretary, Ministry of Agriculture, Department of Agriculture and Cooperation that the OER as per actual Oil Content extracted in the past by the Processing Industry established by the State Government concerned, was clearly ignored. It is of the opinion that the non-bifurcation of the APOILFED by the date G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015 was issued cannot be the reason for taking the OER of the Aswarraopet Unit in Telangana State as basis for price fixation of Oil Palm FFBs in State of Andhra Pradesh after the two states of Telangana and residuary State of Andhra Pradesh came into existence from 2.6.2014 with well defined boundaries. This is an irrelevant consideration and ought to have been eschewed by 1st respondent from consideration. Thus, the price fixation of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 based on the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana vide G.O.Ms No.2 Agriculture and Cooperation (Horti.& Seri) Department dt.18.2.2015 is based on the irrelevant considerations and is clearly arbitrary and violative of Article 14 of the Constitution of India. Therefore the contention of 1st respondent that petitioners are estopped by their alleged accpetance in the meeting of 6.1.2015 to adopt the OER of Aswarraopet Oil Palm Processing Unit and so they cannot challenge the G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015, cannot be countenanced. The contention of the 5th respondent that the Oil Palm Processing Unit at Aswaraopet had the latest equipment which is not there at Pedavegi also cannot be countenanced since this is not the reason assigned in the impugned G.O. or in the counter-affidavit filed by the 1st respondent. In this view of the matter, the Writ Petition is allowed and a Writ of Mandamus is issued declaring G.O.Ms.No.2, Agricultural & Cooperation (Horti & Seri.) Department, dt.18.02.2015 issued by the 1st respondent fixing the formula for the pricing of Oil Palm Fresh Fruit Bunches (FFBs) as arbitrary, illegal and violative of Art.14 of the Constitution of India. Consequently the 1st respondent is directed to fix the price of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 in accordance with the Act and keeping in mind the observations made in this Order within eight (08) weeks from the date of receipt of a copy of this order.
Issues Involved:
1. Legality of G.O.Ms.No.2 dated 18-02-2015. 2. Consideration of Oil Extraction Ratio (OER) for pricing Oil Palm Fresh Fruit Bunches (FFBs). 3. Applicability of recommendations of the Commission for Agricultural Costs and Prices (CACP). 4. Impact of state bifurcation on pricing formula. 5. Alleged arbitrariness and violation of Articles 14 and 19(1)(g) of the Constitution of India. Issue-wise Detailed Analysis: 1. Legality of G.O.Ms.No.2 dated 18-02-2015: The petitioners challenged the legality of G.O.Ms.No.2 issued by the Government of Andhra Pradesh, which fixed the pricing formula for oil palm FFBs for the oil year 2014-2015. The core issue was whether the OER from the AP Oil Fed unit at Aswaraopet, Telangana, could be used as the basis for fixing prices in the residuary State of Andhra Pradesh. The court found that the G.O. was arbitrary and illegal as it considered irrelevant factors and ignored the OER of the Pedavegi unit within Andhra Pradesh. 2. Consideration of Oil Extraction Ratio (OER) for pricing Oil Palm Fresh Fruit Bunches (FFBs): The court noted that the OER is a measure of the efficiency of the entire palm oil production process and varies from garden to garden based on several factors. The court held that the OER of the processing unit within the geographical boundaries of Andhra Pradesh should be considered for price fixation. The OER of the Aswaraopet unit in Telangana was deemed irrelevant post-bifurcation. 3. Applicability of recommendations of the Commission for Agricultural Costs and Prices (CACP): The CACP had recommended a formula for pricing FFBs based on specific percentages of net Crude Palm Oil (CPO) and palm kernel nuts. The court observed that the recommendations included determining the OER based on the actual oil content extracted by the processing industry within the state. The court found that the state government failed to adhere to these recommendations by considering the OER of a unit in another state. 4. Impact of state bifurcation on pricing formula: The bifurcation of Andhra Pradesh into Telangana and the residuary state led to the AP Oil Fed unit at Aswaraopet falling within Telangana. The court held that post-bifurcation, the OER of the Aswaraopet unit could not be used for fixing prices in Andhra Pradesh. The court emphasized that the relevant OER should be from a unit within the state's geographical boundaries. 5. Alleged arbitrariness and violation of Articles 14 and 19(1)(g) of the Constitution of India: The petitioners argued that the G.O. violated their rights under Articles 14 and 19(1)(g) by being arbitrary and ignoring relevant factors. The court agreed, stating that price fixation must be based on objective criteria and relevant material. The court found that the G.O. was arbitrary, as it considered the OER of a unit outside the state, and thus, violated Article 14. Conclusion: The court declared G.O.Ms.No.2 dated 18-02-2015 as arbitrary, illegal, and violative of Article 14 of the Constitution of India. The state government was directed to re-fix the price of oil palm FFBs for the oil year 2014-2015 based on the OER of the Pedavegi unit within Andhra Pradesh, in accordance with the Act and the court's observations, within eight weeks. The court also provided directions for adjusting any excess or less payment made based on the revised price fixation.
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