SARASWATI INDUSTRIES SYNDICATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners in these three connected writ petitions (Civil Writs 381, 405 and 406 of 1971) are producers and sellers of sugar having the fundamental rights guaranteed by clauses (f) and (g) of Article 19 (1) of the Constitution to hold and dispose of their sugar to their best advantage as businessmen. The State can, however, impose reasonable restrictions in the interest of the general public on the exercise of these rights. Sugar is a necessary article of consumption and is an essential commodity. Parliament has, therefore, empowered the Central Government under sub-section (1) of Section 8 of the Essential Commodities Act, 1955 (hereinafter called the Act) to promulgate Orders to provide for "regulating or prohibiting the production, supply and distribution thereof and trade and commerce" in essential commodities including sugar "if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices". These are aptly called powers of "control" in the title of Section 8 and known as such. After its amendment in 1967, the Act provides for two methods of price control:

(2.) Prior to 1967, there was a total control of the price of sugar enforced by the first method referred to above. From the season 1967-68 till 25th May, 1971, however, the Government followed the policy of partial control enforced by the second method referred to above. Accordingly, only a part of the sugar production of a season was ordered to be sold at the prices for various grades fixed by the Government. This part of the sugar production is called the levy sugar and the prices at which it has to be sold are called me levy prices of sugar. The other part of the sugar production, that is, the remainder after the levy sugar could be sold by the sugar producers at any prices they Could obtain to their best advantage in the market for its various grades. This may be called the free sugar sold at the market prices.

(3.) In fixing the price for the levy sugar under sub-section (3C) of Section 3, the Government was required to have regard to the four factors mentioned therein. Two of them, namely, the minimum price fixed for sugarcane and the duty or tax paid or payable on sugar, were known to the Government. But the other two factors, namely, the manufacturing cost of sugar and a reasonable return on the capital employed in the business of manufacturing sugar, had to be ascertained as facts. The Tariff Commission was, therefore, requested by the Government to determine mem. The Commission obtained information from the Government and the sugar industry and heard representatives of the industry including some of the petitioners and made their report on "Cost Structure of the Sugar Industry and the Fair Price for Sugar" 1969. The Commission divided the country into various zones to determine the cost of production of sugar in each zone. The petitioners are the three sugar factories in the Haryana zone with which alone we are concerned in these writ petitions. The Commission recommended that a return of Rs. 10.59 per quintal of sugar should be obtainable by me industry over and above its cost of production. The Government accepted me recommendations of the Commission and issued Orders fixing the price of levy sugar on the basis of the cost of production as found by the Commission in the Haryana zone allowing a return of Rs. 10.50 per quintal of sugar thereon. The cost of production of sugar is made up mainly of me price payable for the sugarcane and the manufacturing cost of sugar. These manufacturing costs were called conversion charges by the Commission in as much as they are the expenses incurred in converting the sugarcane juice into sugar in a sugar factory. The conversion charges consisted of the following items, namely: