INDIA CEMENT LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Both these appeals are against the common judgment of the Madras High Court (hereinafter referred to as 'the High Court') by a certificate under Art. 133(1) of the Constitution prior to its amendment. The appellants 'writ petitions were dismissed by a commonjudgment dated 18-12-1969 by a learned single Judge of the High Court and thereafter, the writ appeals were dismissed by a Division Bench of the High Court on 23-4-1971. The grievance of the appellants before us is, as it was in the High Court, against the fixation of a uniform retention price in 1969 to be paid to all producers for the cement produced by them and acquired by the State Trading Corporation. In short, the appellants' rievance is that the fixation of a uniform retention price for all producers in 1969 instead of three different retention prices for different categories of producers, as was done earlier, amounted to discrimination contravening Art. 14 of the Constitution.

(2.) The background in which the argument of discrimination has to be tested may now be stated. Cement has been a controlled commodity for a long time and its production, distribution and price were regulated by Cement Control Orders issued by the Central Government from time to time in exercise of the powers conferred under the Industries (Development and Regulation) Act, 1951. The arrangement made in 1956 was that the entire quantity of cement produced by all producers was acquired by the State Trading Corporation which distributed in throughout the country at a uniform price on f.o.r. basis. The price payable by the State Trading Corporation to the producer was, however, the 'retention price' or 'ex-works' or 'ex-factory price' fixed by the Government. In accordance with the recommendations of the First Tariff Commission in 1958, the Central Government fixed f.o.r. and ex-factory prices for a period of three years from July 1958, under the Cement Order, 1958. Even though the consumer price was one uniform f.o.r. destination price, there were different retention prices for cement relating to the producers. In case of a new unit commencing production, the Government fixed suitable retention price for it on the basis of cost of production.

(3.) Pursuant to representation by the cement industry for revision in the prices, the Second Tariff Commission was set up by the Government to examine the question. The Tariff Commission, after a comprehensive study, submitted its report on 26-8-1961. 1n the report, it was noticed that fixation of exworks price for individual cement producers had brought stagnation in the cement industry due to lack of competition and incentive amongst producers to reduce the cost of production, improve the operational efficiency and increase the output. It was observed that instead of rewarding efficiency, it had promoted a tendency to inflate costs which facilitated increase in the margin of profit to the producer.The Tariff Commission ultimately grouped the various units under three broad categories on the basis of return on the capital employed. These were the lowest cost group, the high cost group, and those whose cost of production was in between the other two groups. Accordingly, the Tariff Commissioner recommended different retention prices for the manufacturers of cement. The Government generally accepted the recommendations and passed the Cement Control Order, 1961, fixing three different retention prices for three different groups of manufacturers. The Central Government from time to time permitted increase in the retention prices so fixed.