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TMI Blog1959 (1) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... taining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, to provide by order for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Section 3(2) further provided inter alia for controlling the price at which any essential commodity might be bought or sold. In exercise of these powers, the Central Government promulgated the Sugar (Control) Order, 1955, (hereinafter called the Order), on August 27, 1955. Clause 5 of the Order gave power to the Central Government, by notification in the Official Gazette, to fix the price or the maximum price at which any sugar might be sold or delivered, and different prices might be fixed for different areas/factories or different types or grades of sugar. Such price or maximum price had to be fixed with due regard to various factors, with which we shall deal later. On June 27, 1958, the Central Government promulgated the Sugar Export Promotion Ordinance, No. V of 1958, empowering it to appoint an export agency for carrying out the work of buying sugar in the Indian market and exporting the same to foreign markets and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is an essential commodity for the life of the people to all parts of the country according to their needs and requirements, checking the speculative tendency of the market and destroying the creation of an artificial shortage by unscrupulous persons. Prices of sugar were first put under control as far back as 1942 and this control continued up to 1947, when it was withdrawn on December 8, 1947. It was, however, found that internal prices were raised during the de-control period on the pretext of subsidizing export, which never materialised. In consequence, control was again imposed on September 2, 1949; but it was lifted in 1952, when it was found that there was sufficient stock available at the end of the 1951-52 season. In 1953-54, however, production fell and control had again to be imposed for that season. It was, however, lifted a year later. In November 1956 there was a considerable surplus of sugar and the Central Government permitted export of 1.53 lakh of metric tons in 1957. The Central Government was again approached in 1958 to make the export of sugar a permanent feature and it agreed to allow export during 1958 in view of the carry over from the previous season an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex-factory prices and is bad, firstly, on the ground that the Act and the Order do not authorise the Central Government to fix ex-factory prices, and, secondly, on the ground that even if ex-factory prices can be fixed under the Act and the Order, the impugned notification is still bad as it fails to fix prices for the ultimate consumer which must be done under the Act; (2) The impugned notification imposes an unreasonable restriction on the right to trade under Article 19(1)(g), inasmuch as (i) it compels factories to sell sugar at a loss, (ii) it fixes the price arbitrarily, and (iii) there is no reasonable safeguard against the abuse of power and no provision for a check by way of appeal or otherwise; (3) The impugned notification is bad inasmuch as it is discriminatory because it fixes ex-factory prices only for factories in Punjab, Uttar Pradesh and North Bihar and not for factories in other parts of India and there is no reasonable calcification discernible on any intelligible differentia on the basis of which prices have been controlled in certain regions only. 5. Re. (1) (a). The Act deals with essential commodities which have been defined therein. The preamble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the production, supply and distribution of, trade and commerce in, essential commodities in the interests of the general public, so that the supplies of such commodities may be maintained or increased, their, equitable distribution secured and they may be available to the general public at fair prices. Considering the history of sugar control and the trends which appeared in the market from April, 1958, it cannot possibly be said that the impugned notification does not subserve the purposes of the Act and the Order. There can be little doubt that fixation of ex-factory prices of sugar mills in the main surplus areas would have the effect of stabilising sugar prices for the general public, which is the consumer, at a fair level and make sugar available at fair prices. In the affidavit filed on behalf of the Government it is stated that as a result of this action prices have come down to normal levels. This is demonstrable proof, if such was needed, that the impugned notification subserves the purposes of the Act. This contention, therefore, fails. 6. Re. (1) (b). The argument under this head is two-fold. It is said that in the first instance, s. 3 of the Act requires that pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore if fixation of price at the ex-factory level is enough to ensure a fair price for the consumer, there is no reason why the Government should not stop at that and should go on also to fix wholesale and retail prices. It is urged that the middleman who buys from the factory is not controlled and he can sell at any price; and, therefore, the object of the Act may not be achieved. Theoretically this may be so and a middleman may abuse his position. If he does so, we have no doubt that the Government will intervene as it has ample power to fix wholesale and retail prices also. But if the purpose is served by merely fixing the ex-factory price, we see no reason why the Government must fix wholesale and retail prices also. The petitioners have not even alleged that as a matter of fact the wholesalers and retailers are profiteering and making it impossible for sugar to be available for the general public at a fair price. In the circumstances, it was not necessary in fact for the Government to fix wholesale or retail prices. In law, we see no warrant for holding that under s. 3(1) and s. 3(2)(c) of the Act, the Government must not only fix ex-factory prices but also wholesale and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an unreasonable restriction on the right to carry on trade under Art. 19(1)(g). Clause 5 of the Order lays down the factors which have to be taken into consideration in fixing prices. These factors include among other things a reasonable margin of profit for the producer and/or trade and any incidental charges. This was kept in mind when prices were fixed by the impugned notification. The petitioners have certainly filed with their affidavit a schedule giving the cost of production. According to them, their cost of production is above the price fixed by the impugned notification. This schedule has not been admitted by the Government. We see no reason to accept the ipse dixit of the petitioners as to their cost of production. The sugar crushing season begins about the end of October and finishes about the end of May, so that fixation of price in July, 1958, would be on the basis of the 1957-58 season. Market prices were available to the Government when they fixed the prices by the impugned notification. In the case of the three States, namely, Punjab, Uttar Pradesh and North Bihar, the prices fixed by the impugned notification were above prices prevalent in the beginning of April a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus these factors are a check on the power of the Central government if it is ever-minded to abuse the power. We are therefore of opinion that the impugned notification is not an unreasonable restriction on the petitioners' right to carry on trade under Art. 19(1)(g). 8. Re. (3). This raises the question of discrimination. It is said that price control is imposed on factories in Punjab, Utter Pradesh and North Bihar and that there is no reasonable basis for such classification; factories in other parts of India are left uncontrolled with the result that there is discrimination. From the material supplied it appears that there are 97 sugar factories in Punjab, Uttar Pradesh and North Bihar while there are 50 sugar factories in the rest of India, of which as many as 18 are in the State of Bombay. In the other States there are very few factories, the lowest being in West Bengal, Orissa and Kerala with one factory each and the highest being in Madhya Pradesh with seven factories. We also understand that the major part of production of sugar in this country is from the factories in Punjab, Uttar Pradesh and North Bihar. Of the 97 factories which have been controlled, as many ..... X X X X Extracts X X X X X X X X Extracts X X X X
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