9911796707
TMI Blog1982 (12) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... ALCO carried and still carries on the business of producing and/or manufacturing aluminium. It owns and operates an aluminium plant at Renukoot, in the district of Mirzapur, within the State of Uttar Pradesh. It produces and/or manufactures the following: (a) aluminium and alloy ingots, billets and wire bars, (b) aluminium wire rods known as 'properzi' rods, (c) aluminium rolled products in various shapes, (d) aluminium extrusions in various shapes and types of sections. 3. Besides HINDALCO, there are three other companies which produce and/or manufacture aluminium and its products. These companies are Bharat Aluminium Company Limited, which is a Central Government company the Madras Aluminium Company Ltd., and Indian Aluminium Company Ltd., here inafter referred to as BALCO, MALCO and INDALCO respectively. 4. The production of aluminium in India is of vital importance and it is essential for the growth, development and maintenance of the economy. The Central Government by virtue of its power under Clause (xi) of Section 2 of the Essential Commodities Act, 1955 declared aluminium to be an essential commodity by a notification dated June 29, 1957. 5. The demand for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e retained by the producer concerned, As the cost of production of HINDALCO and INDALCO were lower than that of BALCO and MALCO, the retention prices of HINDALCO and INDALCO were lower than the sale price, whereas the retention prices of BALCO and MALCO were higher than the sale price. If BALCO and MALCO were to sell aluminium, they would undoubtedly suffer loss and their industries will go on perpetually at a loss. In order to obviate this difficulty, the Control Order provides a method for fixation of the sale price. If the retention price of any producer is lower than the sale price, he has to pay the difference between the sale price and retention price to the Aluminium Regulation Account maintained by the Controller of Aluminium as provided in the Control Order. On the other hand, if thr., retention price of any producer is higher than the sale price, he would be paid the corresponding difference from the Aluminium Regulation Account. Under this method, the sale price is obtained by dividing the weighted average of the retention prices of aluminium by the total production of aluminium by the four producers. The mechanism of sale price as illustrated by the appellants in para 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n increased by ₹ 655/- per tonne. It is complained by HINDALCO that the said amount of ₹ 655/- per tonne is wholly inadequate having regard to the enormous increase in the cost of production that had taken place since October 1978. If is alleged that in making the impugned orders, the appellants have completely ignored the cost of production of aluminium, and that the said amount of ₹ 655/- does not even cover the increase in the cost of electrical power that has taken place since the prices of aluminium were last fixed in Oct. 1975. If has also been complained by HINDALCO that even the entire increase in the cost of power consumed by HINDALCO has not been taken into consideration by the Government in fixing the retention prices. Renusagar Power Co. Ltd. (hereinafter referred to as Renusagar) is the wholly owned subsidiary of HINDALCO. Renusagar owns and operates a coal-fired thermal power plant which generates approximately 135 MW of power. The whole of the said power generated by Renusagar (excluding the power consumed by the auxiliary plant of Renusagar) is supplied to HINDALCO for the manufacture of aluminium. It is alleged that as a result of the increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that HINDALCO feels aggrieved by the fixation of the retention prices of aluminium. According to HINDALCO, in fixing the retention prices of aluminium, the Central Government has not taken into account the increase in the cost of production since the fixation of retention prices in Oct. 1978. It has not also taken into consideration the increase in the cost of power which is supplied to it by Renusagar, a subsidiary of HINDALCO. 16. On Oct. 5, 1979, that is, on the day following, the impugned orders were passed, HINDALCO preferred an appeal against the impugned orders to the Central Government under Clause 11 of the Control Order. During the pendency of the said appeal, on Oct. 24, 1979, HINDALCO filed a writ petition before a learned single Judge of this Court whereupon the Rule Nisi out of which this appeal arises was issued. 17. At the hearing of the Rule Nisi, it was contended inter alia on behalf of HINDALCO as follows: (1) Clauses 4A and 4B of the Control Order were ultra vires Section 3 of the Essential Commodities Act. (2) The sale and renten-tion prices of aluminium were not fixed in accordance with Clauses 4 and 4A of the Control Order and. as such, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned, it was observed by the learned Judge that although Clause 11 of the Control Order provided for an appeal, no rules or procedure had been laid down for hearing or disposal of such appeals and no particular Tribunal or Authority had been expressly empowered to hear such appeals. During the pendency of the proceeding, the Government had nominated two officers to hear the appeal which seemed to the learned Judge to be an ad hoc arrangement. Further, HINDALCO had challenged the vires of Clauses 4A and 4B of the Control Order, and the same could not be decided by the appellate authority. In that view of the matter, the learned Judge held that, the alternative remedy was not a bar to the maintainability of the writ petition. 20. As regards the contention of HINDALCO, the learned Judge overruled all of them except one which will be stated presently. The learned Judge came to the finding that since 1978 there had been a steady increase in the prices of raw materials required for the production of aluminium, and that in fixing the prices under the impugned orders, the Government had taken into account only the rise in the rate of electricity charges and nothing more. It was obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court. It is pointed out by him that HINDALCO has its principal office wherefrom it carries on its business at Birla Building in Calcutta, Substantial quantity of goods manufactured by HINDALCO are sold in West Bengal and in particular at Calcutta and the said sales are dealt with, inter alia, by the said office of HINDALCO at Calcutta. HINDALCO holds large stocks of aluminium manufactured by it in or around Calcutta through different Consigning Agents. The sub-stantial amount of sale proceeds out of which HINDALCO is compelled to pay into the Aluminium Regulation Account by virtue of the impugned orders was received in Calcutta. It is submitted thai in view of the impugned orders, HINDALCO has been suffering lass in Calcutta also. Accordingly, it is submitted that as the impugned orders have affected the business of HINDALCO in Calcutta, a part of the cause of action arose in Calcutta and this Court had jurisdiction to entertain the writ petition. 24. Under Article 226(2) of the Constitution, the High Court may exercise its power conferred by Clause (1) of Article 226 to issue, directions, orders or writs if the cause of action, wholly or in part, arises within the territ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of tea by the petitioners took place in the State of Assam. The levy and collection of duties of excise also took place in the State of Assam. It was, however, contended on behalf of the petitioners that by reason of the said levy the financial position of the petitioners was adversely affected and such adverse effect was felt by them in Calcutta. The question was whether a part of the cause--of-action had arisen in Calcutta. In support of the contention that a part of the cause-of-action arose in Calcutta, it was contended on behalf of the petitioners that as they had to deposit money in the Reserve Bank of India at its Calcutta office for the payment of excise duty, it should be held that a part of the cause-of-action had arisen in Calcutta and, accordingly, this Court had jurisdiction to entertain the writ petition. It was held that such deposit was not payment of excise duty so long as it was not appropriated by the Collector of Customs and such appropriation took place at Assam by the Collector of Customs by debiting the current account maintained by the assessee in Assam. Accordingly, the said contention of the petitioners was not accepted by the learned Judge. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government constituted a bench consisting of two Joint Secretaries for hearing the appeal preferred by HINDALCO under Clause 11 of the Control Order. 27. It is now well settled that where there is an adequate and efficacious alternative remedy, the High Court will not normally entertain a writ petition. This principle of law has come into existence by virtue of judicial decisions imposing self restriction on the exercise of power under Article 226 of the Constitution where there is an adequate and efficacious alternative remedy. The question of an alternative remedy being a bar is, however, a question of discretion and not of jurisdiction. Clause 11 of the Control Order provides for an alternative remedy by way of an appeal. The appeal has to be preferred to the Central Government and it is the Central Government that will dispose of the appeal. The impugned orders have all been passed by the Central Government and, although Clause 11 provides an appeal to the Central Government in our opinion, it serves no purpose. The authority which has passed an order cannot constitute itself the appellate authority against such an order. If there had been a provision for review, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is, commercial grade was left free from price control and the producers were expected to realise the cost elements of financing charges, depreciation and profits by the sale thereof. The dual pricing policy resulted a sharp increase in the price of non-levy aluminium affecting particularly, the weaker sections of the community who are large number of users of aluminium utensils. In view of this and other considerations, the Government decided to abolish the dual pricing system for aluminium and in its place introduced a uniform price for primary metal, that is, electrical conductor grade and commercial grade ingots and wire rods, wire bars/billets made from electrical conductor grade metal. The revised prices, on a uniform basis, were introduced on Oct. 18, 1978: The retention price fixed for each aluminium producer under this policy covered the full cost of production. By virtue of the notification No. S. O. 357 (E) dated July 15, 1975 read with the notification being S. O. 600 (E) dated Oct. 16, 1975. the Government would be entitled to direct each producer to supply aluminium to the extent of 50% of his monthly production in the form of aluminium ingets, wire bars or bille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred by him to his auxiliary plant for further processing and sale as indigenous aluminium of different specifications. (2) The Central Government or the Controller may, having regard to the price of imported aluminium, the estimated cost of a production of indigenous aluminium, and the provisions of Clause 4-B fix from time to time, by notification in the Official Gazette, the sale price of imported aluminium. and different sale prices of imported aluminium may be fixed, in respect of different sizes or specifications of imported aluminium. 4A. Fixation of retention price of indigenous aluminium : The Central Government may, having regard to all relevant factors, including the estimated cost of production of indigenous aluminium produced by a producer, by order, fix from time to time, the retention price in respect of indigenous aluminium produced and sold by such producer and different retention prices may be fixed in respect of indigenous aluminium of different specifications produced by such producer. Such retention prices may also be fixed per tonne of unwrought indigenous aluminium produced and transferred by a producer to his auxiliary plant for further processing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us aluminium and the number of tonnes of indigenous aluminium, sold by such producer and for which no sale price has been fixed. (4) Where the retention price fixed under Clause 4A, in respect of indigenous aluminium ingot or of any other specification produced by any producer is higher than the sale price in respect of indigenous aluminium ingot or of such specification, fixed under Clause 4, such producer shall be paid from the money standing to the credit of the Aluminium Regulation Account, an amount equivalent to the difference between the retention price and sale price in respect of each tonne of indigenous aluminium sold by him. Provided that where the retention prie of unwrought indigenous aluminium produced and transferred by a producer to his auxiliary plant for further processing and sale as indigenous aluminium of different specifications, is higher than the sale price, such producer shall be paid from the money standing to the credit of Aluminium Regulation Account, an amount equivalent to the product of the difference between the retention price and sale price in respect of each tonne of unwrought indigenous aluminium and the number of tonnes of indigenous alumi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Government should not only take into consideration the estimated cost off production but also ensure the cost of production in the retention price that may be fixed by the Government. It is submitted that far from reflecting the increases in the prices of inputs required for production and manufacture of aluminium, the Government has not at all taken into consideration such increase in the fixation of retention prices. Before considering whether the Government is bound to reflect in the retention price of indigenous aluminium the estimated cost of production or the increase in the prices of various items of inputs, we may first of all consider whether the Government has taken into consideration such increases in the cost of production. 31. It appears that during the year 1978 till October, 1978, there was little or no increase in the purchase cost of main raw materials and inputs required for the production of aluminium. The Central Government had taken into account the prices of inputs on May 1, 1978 and the power tariff rate as revised subsequently in July 1978, and prices fixed in October 1978 reflected the entire cost of production. In para. 22 (i) of the affidavit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 46 (e) has been dealt with by the appellants in para 34 (ii) of the affidavit-in-opposition in which it has been submitted inter alia that in the light of the provision of Section 3 of the Essential Commodities Act, the cost of pro-duction itself is of no relevance. It is true that in Clause (ii) of Para 34, there has been no denial of the averments made in para 46 (e) of the petition. Para 34, however, starts with the following: That the contentions made by the petitioners in para 46 of the petition are not admitted. I say that proper submissions will be made thereon, on behalf of the respondent at the time of hearing. The learned Additional Soliciter General has placed reliance upon the starting words of para 34 and submits that the allegations made in paragraph 46 including para 46 (e) of the petition have not been admitted which means a denial of the same. Much submissions have been made on the scope and extent of the word not admitted . There can be no doubt that a fact stated to be not admitted is a denial of that fact. It would have been better for the appellants to specifically deny the allegations made in para 46 (e) of the petition. We do not, however, think that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave an ultimate discretion and are not bound to select a person or persons whom they consider unsuitable. The above observation of Lord Pearson which has been relied on by Mr. Ray does not support his contention that in view of the expression having regard to in Clause 4A of the Control Order, the Government is enjoined to ensure or reflect in the retention price the increases in the cost of production. A Statutory requirement to have regard to any existing terms or circumstances does not necessarily mean a duty to comply with them (Stroude' Judicial Dictionary Fourth Edn, Vol. 2, Page 1214). That statements has been made with reference to the decision of the Privy Council in Ishak v. Thowfeek (supra). Thus by the said observation of Lord Pearson it has not been laid down that the expression have regard to means a duty. The expression, in our opinion, means that all relevant factors should be taken into account and tonsidered before the Government fixes the retention price. In Ryots of Gara-bandha v. Zamindar of Parlakimedi, AIR 1943 PC 164, the Privy Council observed that the expression have regard to only obliged the Government to consider all relevant materials t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of indigenous aluminium. There can be no doubt that consideration does not mean to give a cursory glance by the Government on the relevant materials, but it requires giving due weight to such materials. Thereafter, it would be the concern of the Government whether it would include all factors in the cost of production in the retention price or not and, in this respect, the decision of the Government would be final and conclusive unless it demonstrably leads to manifest injustice and hardship. In an earlier decision in Union of India v. Kamalabai, relied upon by Mr. Ray for HINDALCO. the Supreme Court had to consider the scope and extent of Section 8(1)(e) of the Requisitioning and Acquisition of Immovable Property Act, 1952. Clause (e) relates to the making of an award by the Arbitrator determining the amount of compensation payable for the requisitioning or the acquisition of any property. It provides inter alia that in making an award, the Arbitrator shall have regard to the circumstances of each case and the provisions of Sub-sections (2) and (3) so far as they are applicable. Sub-sections (2) and (3) enjoin what the amount of compensation payable for the requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in Sub-section (3), there shall be paid to that producer an amount therefor which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to- (a) the minimum price, if any, fixed for sugarcane by the Central Government wider this section; (b) the manufacturing cost of sugar; (c) the duty or tax, if any, paid or payable thereon; and (d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar, and different price may be determined, from time to time, for different areas, or for different factorie or for different kinds of sugar. Explanation.-- For the purpose of this sub-section, producer means a person carrying on the business of manufacturing sugar. In these two decisions, the Supreme Court has not interpreted or considered the expression having regard to occurring in Section 3(3C) of the Essential Commodities Act, but held that the fair price has to fee determined in respect of the entire products ensuring to the industry a reasonable r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the expression having regard to in Section 3(3C) of the Essential Commodities Act, the Supreme Court was of the view that it was statutorily obligatory to ensure to the industry a reasonable return on the capital employed in the business of manufacturing sugar. The same expression being in Clauae 4A of the Control Order, Mr. Ray submits, it should be held that it is statutorily oblgatory on the part of the Central Government to ensure to the aluminium industry the estimated cost of pvoduction or the increases in the cost of production in the retention price of indigenous aluminium. Counsel submits that in Prag Ice Oil Mills' case, the Supreme Court has, in effect construed the expression having regard to as denoting an obligation on the part of the Government. 38. Attractive though the contention is, we regret, we are unable to accept the same. It will be incorrect to say that in Prag Ice Oil Mills' case (AIR 1976 SC 1296), the Supereme Court considered or interpreted the expression having regard to accurring in. Sec. 3(3C) of the Essential Commodities Act. It is true that in Panipat's case and in Ankapalle's case , it has been observed that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutorily obligatory for the Government to ensure or reflect in the retention price, the estimated cost of production or the increases in the prices of inputs. 40. It is said on behalf of HINDALCO that, if the Government is not bound to include in the retention price all the increases in the cost of production, reasonable return on the capital employed apart, the producer will suffer loss, it is urged that the Government not having reflected in the retention price the increases in the prices of various inputs of production for which the Government is responsible and the whole of increase in the power tariff rate, HINDALCO has suffered loss since the revision of retention and sale prices m terms of the impugned orders. Indeed. from the balance sheet of HINDALCO for the year 1980 an endeavour has been made before us by the learned Counsel for HINDALCO to show that in that year HINDALCO has suffered a loss of about ₹ 21 lakhs in regard to production of aluminium. The appellants and MMTC, however, do not admit that HINDALCO has suffered any loss whatsoever; on the contrary, it is their case that HINDALCO has made a profit of 1,98,47,197/- after deducting from its income a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r controlling the price at which such commodity may be bought or sold. These mesures are taken obviously in the interest of the consumers which is of paramount consideration. The interest of producer or manufacturers of an essential commodity is no doubt a factor to be taken into consideration, but surely it is of much lesser importance and must yield to the interest of the general public who are the consumers. This does not mean that the Government will not look to the interest of the industry, and it is the duty of the Government to strike a balance between the need or the demand for the essential commodity concerned and the interest of the industry. but in no case the interest of the industry should be given preference and predominant consideration surrendering public benefit. If in serving the interest of the public the industry has to suffer a loss for a temporary period, such loss cannot, be considered a relevant factor in setting at naught the governmental action in faxing the price of an essential commodity. Care should also be taken by the Government to see that the loss is not a perpetual one or a huge loss which may result in the closure of the industry but because the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are, however, unable to agree with this argument. The policy of price control has for its dominant object equitable distribution and availability of the commodity at fair price so as to benefit the consumers. It is manifest that individual interests, however, precious, they may be must yield to the larger interest of the community namely, in the instance case, the large body of the consumers of sugar. In fact, even if the petitioners have to bear some loss there can be no question of the restrictions imposed on the petitioners being unreasonable. 43. In view of the above decisions of the Supreme Court and particularly the decision in the case of New India Sugar Works, no challenge can be made to the impugned orders of the Government passed under the Control Order on the ground that HINDALCO has suffered loss. 44. We have so far proceeded on the assumption that HINDALCO has suffered a loss, for, as alleged by it, the retention price does not reflect all the increases in the prices of various inputs of production. We would however, like to state some significant facts. On Sept. 28, 1979 under a covering letter, HINDALCO submitted to the Controller of Aluminium a statement, sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, after the passing of the impugned orders, the total increase that was made by HINDALCO in the prices of uncontrolled semi-fabricated items of aluminium was ₹ 3,370/- per tonne, that is to say above the total increase in the costs of the inputs of the controlled metal. The significant fact to be noticed is that while the appellants in para. 23 of their affidavit-in-opposition averred that in view of the increase by HINDALCO of the prices of uncontrolled semi-fabricated items by ₹ 2,200/-per tonne, HINDALCO got an additional receipt of ₹ 1.5 lakhs per day, the alleged loss being ₹ 1.45 lakhs per day was not denied in para. 18 of the affidavit-in-reply, although it wag alleged that losses suffered by it on controlled items had not been compensated at all. It was also not disclosed by HINDALCO in para. 23, what the daily additional receipt was consequent on the increase in the prices of uncontrolled items by ₹ 2,200/- per tonne, Moreover, it has been noticed already that HINDALCO further, increased the prices of uncontrolled items by ₹ 1,170/- per tonne over and above ₹ 2,200/-. If after the increase by ₹ 2,200/- there was an additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... congestion in the fluid milk market, caused by a shortage of demand. As a remedy, the Provincial Legislature passed the Daily Products Sales Adjustment Act, 1929 authorising the appointment of an adjustment. Committee. The Committee fixed monthly the standard prices for fluid milk and manufactured products. The farmers had to submit returns to the Committee as to the quantity of milk sold by them, and a farmer selling fluid milk had to pay to the Committee a levy assessed according to the quantity he sold. The total of these levies which together made up the difference in value of the milk disposed of in the two forms, was to be apportioned by the Committee among the farmers who had sold milk products. The expenses of the Committee were to be met by a further levy on the farmers. Both the levies were recoverable as debts, Lord Thankerton who delivered the iudgment of the Board observed as follows: The main issue of this appeal is whether the adjustment levies are taxes..... In the opinion of their Lordships, the adjustment levies are taxes. They are compulsorily imposed by a statutory committee..... They are enforceable by law. Compulsion is an essential feature of taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery is without any legislative sanction, for, in such a case, there would be no element of exaction which is a sine qua non to the imposition being a tax. For these reasons, the earlier Privy Council case in the City of Halifox v. Nova Scotia Car Works Limited, 1914 AC 992 : (AIR 1914 PC 227 (2)) and the decision in Attorney-General v. Wills United Dairies Ltd., (1922) 127 LT 822 which have been relied on by Mr. Ray do not apply to the facts of the instant case. 50. It is not the case of the appellate that Section 3 of the Essential Commodities Act authorises the imposition of any Tax, for, according to them, Clauses 4A and 4B of the Control Order do not seek to impose any tax on the aluminium producers or manufacturers. Section 3 does not at all contemplate an imposition of tax. It is no doubt true that without any express and specific authority of a statutory provision a tax cannot be imposed on any person. But as we have held that there is no exaction of money from HINDALCO or from any other producers or manufacturers of aluminium, the question of imposition of tax does not at all arise. 51. Realising the difficulty Mr. Ray has for the first time advanced an argument t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price has to be fixed but, if there is no adequate simply of the essential commodity, supply thereof has to be increased. 53. The Government has fixed the sale price of indigenous aluminium which is considered to be fair and within the pecuniary limits of the consumers. The cost of production of HIN-DALCO is lower than the sale price but it is higher so far as BALCO and MALCO are concerned. If BALCO and MALCO have to sell aluminium at the sale price without any subsidy, they will have to close their business, for they cannot be compelled to produce and sell aluminium at a perpetual loss, Closure of their business would seriously, affect, the supply and availability of aluminium. If the supply of Aluminium is such that it cannot meet the demand, mere fixation of the sale price would serve no purpose of the consumers and, consequently, the objectives under Section 3 of the Act cannot be achieved. In order to obviate this difficulty the concept of retention price normally reflecting the cost of production has been introduced. As the retention price fixed for HINDALCO is lower than the sale price, it has to pay to the Aluminium Regulation Account the sum which is the difference betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct should be given a liberal interpretation (See P. P. Enterprises v. Union of India ). Thus unless it is manifestly unjust, any action by the Government in exercise of its regulatory power in the matter of availability of any essential commodity at a fair price will be perfectly legal and justified. For all this we hold that the provisions for fixation of retention prices and for payment in the Aluminium Regulation Account are quite legal and valid. 55. There is no substance in the contention of HINDALCO that it is entitled to the whole of the sale price. No such claim was ever made by. it be fore, for it could not be made. The claim has been made for the first time before us with a view to characterising the payment in the Aluminium Regulation Account as exaction of money amounting to imposition of tax. It has been found already that such payment is not tax, for HINDALCO is not entitled to the whole of the sale price. It is only entitled to the retention price as fixed by the Government, which is less than the sale price. It may be that for the time being a producer whose retention price is less than the sale price holds the whole of the sale price and, in case of non-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aluminium Regulation Account. It appears that the Control Order has made a distinction between a producer and a manufacturer. A producer is one who produces aluminium from bauxite or alumina. A manufacturer is one who manufactures aluminium, that is to say aluminium of different specifications. The manufacturers of al-minium purchase aluminium ingots from the producers for the purpose of manufacture of different aluminium goods. These purchases are to be made at the sale price fixed by the Government under the Control Order. HINDALCO is both a producer and a manufacturer of aluminium. It has auxiliary plants for processing un-wrought indigenous aluminium into aluminium of different specifications, such as sheets, circles, sections etc. Under the third proviso of Clause 4 (1) of the Control Order, the Government has been authorised to fix the sale price and under Clause 4A the retention prices per tonne of unwrought indigenous aluminium produced and transferred by a producer to his auxiliary plant for fur-ther precessing arid sale as indigenous aluminium of different specifications such transfer being deemed to be a sale under the Explanation to Clause 3 (1) of the Control Order. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn, for it would be impossible for them to compete with a producer who is also a manufacturer. Consequently, there will be a great set back in the aluminium industry and the object of Section 3 of the Essential Commodities Act, namely for maintaining or increasing supplies of aluminium or for securing its equitable distribution and availability at, fair price, would be frustrated. The provisions of the impugned clauses of the Control Order are obviously to equalise the cost of unwrought aluminium of the producers of aluminium with that of other manufacturers of aluminium. It is true that prima facie there is no element of sale when unwrought aluminium is transferred by a producer to his auxiliary plants for the purpose of manufacturing aluminium of different specifications. But in order to obviate the inequality in the cost of unwrought aluminium, a producer who is also a manufacturer has been treated as two different entities, namely (1) as a producer and (2) as a manufacturer. As a manufacturer, he has been placed in the same position as other manufacturers, so that one producer is not treated differently from another and one manufacturer is not treated differently from another m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been, to some extent, inconvenient for the producers as that would have delayed production of aluminium goods on account of compliance with the formalities of sale and re-purchase of unwrought aluminium. By deeming a transfer to be a sale, the Government appears to have acted for the benefit and convenience of the producers who are also manufacturers of aluminium goods. We do not think that any objection can be taken on the ground that the Government has no power to deem a transfer to be a sale. It may be that Clause 3 of the Control Order under which a transfer of unwrought aluminium to the auxiliary plants of a producer shall be deemed to be a sale is not strictly in accordance with the provision of Clause (f) of Sub-section (2) of Section 3. But in considering the propriety and validity of such a provision, the Court will look to the substance of the provision and the object which it. seeks to achieve rather than to its form. So we do not think that any illegality has been committed by the Government in fixing the sale and retention prices of unwrought aluminium after it is transferred by a producer to his auxiliary plants for manufacture of aluminium of different specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther processing and sale as indigenous aluminium of different specifications. 64. It is contended that under Clause 4A, separate retention prices have to be fixed for each producer in respect of goods manufactured by him from unwrought aluminium. The properzi rods are manufactured by HINDALCO and also by the other three producers. It is complained by HINDALCO that in fixing its retention prices in respect of properzi rods, the cost of conversion of unwrought aluminium into properzi rods has been taken by the Government uniformly for all the four producers fixing the same at the sum of ₹ 335/- per tonne on the basis of weighted average of the cost of conversion of all the producers. Such fixation of conversion cost, Counsel for HINDALCO submits, is in violation of Clause 4A of the Control Order under which the conversion cost has to be fixed separately in respect of each producer. It is the case of HINDALCO that its actual cost of conversion is ₹ 530/- per metric tonne which should have been taken into consideration in fixing the retention price and that, accordingly, it has suffered loss for the fixation of ₹ 335/- as the conversion cost on an illegal basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. This, in our opinion, cannot be a ground for directing the Central Government to re-consider the fixation of retention price of properzi rods. 66. It is not in dispute that the in-crease in the retention price for unwrought aluminium of HINDALCO by ₹ 655/- per tonne is on account of the increase in the electric power rates. It has been already stated that the sources of electric power of HINDALCO are U.P. State Electricity Board and Renu-sagar which is a subsidiary of HINDALCO. The case of HINDALCO is that the cost of Henusagar power was totally ignored by the Government, and that in dealing with the cost of U. P. State Electricity Board supply, the Government had acted arbitrarily and subjected HINDALCO to hostile discrimination. HINDALCO claims that there has been an increase in the cost of power to the extent of ₹ 1,104,45, that is, at the rate of 5.97 paise per unit. On the other hand, the Government has claimed that full increase in the cost of power has been reflected in the said sum of ₹ 665/- in the retention price. 67. In the statement of calculations which has been annexed to the writ petition [(Annexure 5 (4)] HINDALCO claims that there has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LCO that on account of low fixation of the retention prices it had been suffering ]oss of ₹ 1.45 lakhs every day. Again, we may assume that HINDALCO had suffered loss as the entire increase in the power rates has not been reflected in the retention price. Alleging that it had been suffering loss HINDALCO withheld payment in the Aluminium Regulation Account. It appears from the balance sheet for the year 1979 that a sum of ₹ 6,06.65,8.71/- has been set apart for the Aluminium Regulation Account. The balance sheet for the year 1980 reveals that a sum of ₹ 14,30,44,230/- has been kept back for the Aluminium Regulation Account. The total amount which has been withheld by HINDALCO is ₹ 20,37,10,101/- which, it may be presumed, has been invested by HIN-DALCO. The minimum interest which HINDALCO can reasonably be presumed to have earned, by such investment is 10% which would mean on amount of interest of ₹ 2,03,07,000/- every year. For the last four years, the said sum stands withheld and the total amount of interest, which HINDALCO has earned must be, in the minimum, more than ₹ 8.00,00,000/-. Even assuming that HINDALCO had suffered loss, by withholdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 3 has not been challenged by HINDALCO. It is said that HINDALCO has been discriminated against at least in respect of the increase in the cost of power. Whether the retention price fixed for HINBALCO reflects the whole of the increase in the cost of power supplied to it by the U. P. State Electricity Board and Renusagar is a disputed question of fact which cannot be gone into in a proceeding under Article 226 of the Constitution. It has been already pointed out by us that even if the entire increase in the cost of power was net included in the retention price that has not prejudiced HINDALCO, for it has earned a considerable amount of interest on the amount payable by it to the Aluminium Regulation Account. AS regards the contention that HINDALCO should have been given an opportunity of being heard before the impugned orders were passed, we do not think that there is any merit in the contention. HINDALCO itself made representation to the BICP which considered such representations. The recommendations of BICP were placed before the Government, and it can be reasonably presumed that the Government, after considering such representations and the recommendations of the BICP, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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