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TMI Blog1996 (10) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... ded Family represented by its Karta and respondents in other appeals are factories. The Central Government had fixed the price of the sugarcane under Rule 3(1) of the Rules issued under Section 3(3)(c) of the Essential Commodities Act, 1955 at ₹ 8.60 per quintal. Various meetings of the sugarcane growers and the sugarcane factories and their associations, were convened by the Government of Madhya Pradesh and ultimately the agreement got crystallised at the meeting held on March 21, 1976 to fix the final price of the sugarcane at ₹ 12 per quintal for the sugarcane supplied at the factory and ₹ 11.50 per quintal for the sugarcane supplied at other supply centers. Though the sugarcane was supplied by the cane-growers, since theirs amounts could not be paid, the appellant-Government resorted to Section 21 of the Act to enforce the liability by recovering the same as arrears of land revenue. The respondents came to challenge the demands by filing the aforesaid writ petitions. The Division Bench of the High Court in the aforesaid judgments in three appeals has held that since no separate agreement was entered into between the respondents and the sugarcane growers, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cane. At best, it would be only a compulsion. Unless there is an individual written agreement between the factory and each sugarcane grower, there is no contract to pay over the same. Such of the amounts, de hors the Order, cannot be recovered as arrears of land revenue since such liability visits with penal consequences of prosecution under Section 7 of the Essential Commodities Act. He also contends that the retrospective effect cannot be given to the price of the sugarcane supplied earlier and that therefore, the Order of the High Court is clearly legal. He also contends that unless the price is fixed under the Order, no liability to pay interest arises thereon on the delayed payment of the value of the sugarcane, as was originally determined by the Central Government under the Order. Under those circumstances, the view taken by the High Court is correct in law. In support thereof, he places reliance on the judgments of this Court in State of Tamil Nadu v. Kothari Sugar and Chemicals Ltd. [1996]2SCR275 and Thiru Arooran Sugar Ltd. v. Dy. Commercial Tax Officer, (1988) 71 STC 444, (Mad). 5. The first question that arises for consideration is : whether there is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 (If. Section 23(3) of the Act, also couched in similar language, enables to novate by contract the minimum price fixed by the Central Government in respect of cess payable to Government. 8. This would clearly indicate that despite the fixation of minimum price under Clause (1) of Rule 3, by agreement between the sugarcane grower and the purchaser of the sugarcane, they would be at liberty to agree to sell or purchase the sugarcane at a higher price than that was fixed by the Central Government under Clause (1) of Rule 3. Only for postponement of payment beyond 14 days, there should be an agreement in writing between the parties obviously with the concurrence of the Central Government or authorised authority in that behalf. Thus, there is no statutory prohibition in that behalf to pay higher price. That would be further clear by Rule 3(2) which speaks of the contract between the parties for payment of higher price of sugarcane fixed under Clause (1) of Rule 3 pursuant to the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have also agreed for the same, we are of the considered view that he was a consenting party and there was consensus ad idem to pay higher price of sugarcane than the minimum price fixed by the Central Government and they acted upon it. There was no prohibition for oral agreement between growers and owners through the service of the Cane Commissioner, a statutory authority to effect such agreement. It is not in dispute that thereafter the sugarcane growers supplied the sugarcane to the respondent factories and that they utilized the sugarcane for producing the sugar. Other factories had paid the agreement price. 11. The contention of Shri S.K. Jain that the agreement was retrospective is not correct. It is seen that the sugarcane crushing year has been defined under the Order itself and during the season the price fixed by the Central Government was treated by the State Government to be the tentative price, subject to agreements between the parties and the final price was agreed as contracted by the parties. Thus, we hold that the payment of price @ ₹ 12 per quintal at the factory and ₹ 11.50 per quintal at the purchasing center was agreed price for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Collector on receipt of such certificate, shall proceed to recover from such occupier the amount specified therein as if it were an arrear of land revenue together with further interest up to the date of recovery. 13. It would thus be clear that the Cane Commissioner having power to compel the cane growers to supply cane to the factory Khandsari unit, he has incidental power and duty bound to ensure payment of the price of the sugarcane supplied by the sugarcane grower. The price fixed or agreed is a statutory price and bears the stamp of statutory first charge on the sugar and assets of the factory over any other contracted liabilities to recover the price of the sugarcane supplied to the factory or Khandsari unit. 14. Section 23 deals with levy of cess on the sugarcane and Sub-section (3) contemplates that notwithstanding the terms of any contract or agreement for sale of cane whether entered into before or after the imposition of the cess under this Section, the buyer of the cane shall be liable to pay the amount of the cess in addition to and as part of the contracted price of such cane. The person who commits default in making payment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. Though Shri S.K. Jain is right in contending that unless there is an agreement between the parties, the liability cannot be fastened under the Order or the Act; but in view of the finding that there was an agreement between the parties, as held earlier, the ratio in the judgment in Kothari's case (supra) relied on by the Counsel is of not much assistance in the facts of this case. On the other hand, it supports the view we have expressed above. Therein, this Court upheld that if there is an agreement between the parties, then by operation of the Order the liability would be fastened on the sugar factory. In those cases, there was a finding that there was no proof of agreement entered into between the factory and the cane-growers. Therefore, sales tax would not be recovered on the price fixed in excess for minimum cane price fixed by the Central Government under the Order. 19. In Thiru Arooran Sugars Ltd. 's case (supra) relied on by Shri Jain, the learned Judges had considered Rule 3(1) of the Order and the finding that there is no power to fix any price in excess of the minimum price fixed under the Order, which argument was rejected. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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