# D.C.M. Shriram Industries Ltd. & others v. State of U.P. and others

- **Citation:** (2000) 3 ILRA 116
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2000
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/d-c-m-shriram-industries-ltd-others-v-state-of-u-p-and-others-39470
- **Pages:** 6

## Text

INDIAN LAW REPORTS ALLAHABAD SERIES [2000
116
226 of the constitution of India but by any
Civil court under section 9 of the code of
Civil procedure or before any other
appropriate forum having such jurisdiction
to grant injunction though it was and will
be duty of the police administration to take
appropriate action under the police Act,
I.P.C. and Cr.P.C. and of the Civil
Administration under the Cr.P.C. to protect
citizens whose property is sought to be
squandered or misappropriated by any one
by taking law in his own hands and/or by
resorting in apprehension of breach of the
peace.

8. Consequently we refuse to grant
relief in relation to prayer No. 1 but in the
larger interest of justice direct the District
Magistrate
and
the
Higher
Police
Authorities of the District Mathura to look
into the matter and stop the mischief if it is
attempted to be done by Respondent Nos.
4 to 12.

9. With these observations and
directions this writ petition is disposed of
but having regard to the peculiar facts and
circumstances we make no order as to cost.

10. The office is directed to hand
over a copy of this order to Smt. Sarita
Singh, learned standing Counsel for its
intimation to the District Authorities of
Mathura for compliance of the directions
made as above.
Petition Disposed of.

25,*,1$/ -85,6',&7,21
25,*,1$/ -85,6',&7,21
&,9,/ 6,'(
&,9,/ 6,'(
'$7(' $//$+$%$'
'$7(' $//$+$%$'
%()25(
%()25(
7+( +21·%/( 0 .$7-8 -
7+( +21·%/( 0 .$7-8 -
7+( +21·%/( $ .<2* -
7+( +21·%/( $ .<2* -

&LYLO 0LVF :ULW 3HWLWLRQ 1R RI

'&0 6KULUDP ,QGXVWULHV /LPLWHG DQG
RWKHUV
«3HWLWLRQHUV
9HUVXV
6WDWH RI 83 DQG RWKHUV «5HVSRQGHQWV

&RXQVHO IRU WKH 3HWLWLRQHUV
6KUL 6KDQWL %KXVKDQ
6KUL 7DUXQ $JDUZDO
6KUL 5DNHVK 'ZLYHGL
&RXQVHO IRU WKH 5HVSRQGHQWV
6KUL %KDUDW -L $JDUZDO
6KUL 3L\XVK $JDUZDO
6&

83 6HHUD 1L\DQWUDQ $GKLQL\DP
6HFWLRQ 20DUNHW SULFH RI 0RODVVHV
± WR ZKLFK WKH 6XJDU )DFWRU\ LV HQWLWOHG WR
UHFHLYH"2UHWLUHG
+LJK
&RXUW
-XGJH
GHSXWHG WR GHFLGH WKLV TXHVWLRQ ZLWKLQ
WKH SHULRG RI PRQWKV WKH UDWH IL[HG E\
LQWHULP RUGHU LI DQ\ VXUSOXV DPRXQW VKDOO
EH DGMXVWHG E\ HLWKHU RI WKH SDUWLHV DV WKH
FDVH P\
EH2PDUNHW SULFH PHDQV
IUHH
PDUNHW SULFH DQG2QRW WKH SULFH IL[HG E\
WKH FKHPLFDO ,QGXVWU\
+HOG23DUD
,Q RXU RSLQLRQ WKH LPSXJQHG RUGHU LV
DUELWUDU\ DV LW KDV FRQVLGHUHG WKH PDUNHW
SULFH RQO\ IURP WKH SRLQW RI YLHZ RI WKH
FKHPLFDO LQGXVWU\ DQG QRW WKH IUHH PDUNHW
SULFH ,Q RXU RSLQLRQ PDUNHW SULFH PHDQV
WKH IUHH PDUNHW SULFH DV REVHUYHG DERYH
DQG QRW WKH PDUNHW SULFH YLV D YLV WKH
FKHPLFDO LQGXVWU\
&DVH ODZ GLVFXVVHG
:3 1R RI GHFLGHG RQ '%
$,56&2
3All] D.C.M. Shriram Industries Ltd. & others V. State of U.P. and others
117
$,5
6&2
$,5
6&
$,5

By the Court

1. Heard Sri Shanti Bhushan and Sri
Tarun Agarwal, learned counsel for the
petitions and Sri Bharat Ji Agarwal and
Piyiush Agarwal, counsel for the
respondent Nos. 3 & 4 and the learned
Standing Counsel for the respondent Nos.
1 & 2.

2. This writ petition has been filed
against
the
impugned
order
of
the
Controller of Molasses dated 25.08.1999
(Annexure-7 to the writ petition). By that
order the petitioner's application under the
proviso to section 8 (la) of the U.P. Sheera
Niyantran Adhiniyam has been rejected.

The petitioners are sugar factories
which also have their own distilleries
Under
the
U.P.
Sheera Niyantran
Adhiniyam 1964 and the orders passed
there under, it has been provided that
40% of the molasses produced by the
sugar factories are reserved for Chemical
Industries, 40% could be sold in the open
market and 20% will be reserved for
country liquor producers Section 8 reads
as follows.

3. "8. Sale and Supply of molasses-
(1) The Controller may with the prior
approval of the State Govt. By order
require the occupier of any sugar factory to
sell or supply in the prescribed manner
such quantity of molasses to such person,
as may be specified in the order, and the
occupier
shall,
notwithstanding
any
contract, comply with the order.

(1-a) Notwithstanding anything
contained in Sub-Section (1) the occupier
of a sugar factory shall sell or supply forty
percent of the molasses produced in each
quarter of a molasses year in the sugar
factory to such chemical industries which
are actual users of molasses and are
granted
licensee
under
the
United
Provinces Excise Act. 1910:

Provided
that
such
quantum
of
molasses as is not required by the said
chemical industries may be solid or
supplied by the occupier of the sugar
factory to any oil unit which is actual users
of molasses with the prior approval of the
Controller.

(2) The order under sub-section (1 )

(a) Shall require supply to be made only
to a person who requires it for his
distillery or for any purpose of industrial
development:
(aa) may require the person referred to in
clause (a) to utilize the molasses
supplied to him under an order made
under this section (1) of Section 7- A and
to observe all such restrictions and
conditions, as may be prescribed,
(b) may be the entire quantity of
molasses in stock or to be produced
during the year or for any portion but the
proportion of molasses to be supplied from
each sugar factory to its estimated total
produce of molasses, during the year
shall be the same throughout the Sate
save where, in the opinion of the
Controller, a variation is necessitated by
any of the following factors:

(i) the requirement of distilleries within
the area in which molasses may be
transported from the sugar factory at a
reasonable cost ;
INDIAN LAW REPORTS ALLAHABAD SERIES [2000
118
(ii) the requirement for other purposes
of industrial development within such area
and
(iii) the availability of transport facilities
in the area

(3) The
Controller
may make such
modifications in the order under SubSection (1) as may be necessary to
correct any error or omission or to meet a
subsequent change in any of the factors
mentioned in clause (b) of Sub Section (2).

(4) The occupier of a sugar factory shall
be liable to pay to the State Govt., in
manner prescribed. Administrative charges
at such rate, not exceeding fifteen rupees
per quintal as the State Govt. may from
time to time notify, on the molasses sold or
supplied by him.

(5) The Occupier shall be entitled to
recover from the person to whom the
molasses is sold or supplied an amount
equivalent
to
the
amount
of
such
administrative charges, in addition to the
price of molasses."

4. The short controversy in this case
is about the price at which the sugar
factory has to sell the molasses to the
chemical industries. Section 10 of the
Sheera Adhiniyam had provided for fixing
the maximum price for the sale of
molasses. In the year 1998 this provision
was deleted and thereafter there was no
statutory control over the price of molasses
to be sold to the chemical industries. The
problem which arose was that while on the
one hand the sugar industries had to sell
40% of their production of molasses to
the Chemical Industries, on the other
hand, there was no statutory provision for
fixing the price at which this molasses
was to be sold. This difficulty was
resolved by a Division Bench of this Court
in Writ Petition No. 120 of 1999, decided
on 09.07.1999 D.C.M. Shriram Industries
Ltd. and others Vs. State of U.P. and
others, (copy of which is Annexure-5 to
the writ petition). The division bench held,
and in our opinion rightly so, that the price
which the sugar factory is entitled to
receive is the market price of molasses.
This view appears to be correct and
reasonable because if the sugar factory
offers to sell molasses at an exorbitant
price which is far above the market price it
will be an indirect way to refuse to sell to
the chemical industry Hence the Division
Bench held that the price to be paid to the
sugar factory shall be the market price.
The petitioner were asked to make a
representation to the Controller under the
proviso to Section 8 (l a).

5. By the impugned order dated
25.8.1999, the Controller of molasses has
rejected
the
representation
of
the
petitioners in which the petitioners had
alleged that the chemical industry was not
willing to lift the molasses at the
prevailing market price, and hence, the
molasses should be released in favour of
the petitioners for either self consumption
or sale in the open market. Against that
order this writ petition has been filed. The
Controller
in
the
impugned
order
observed," the rates quoted by the sugar
mills for the reserved molasses have in
actual effect been in accordance with the
open market price of the molasses and not
in accordance with the sale and purchase
rates of the controlled molasses."

6. The petitioners are aggrieved by
the observation in the impugned order that
the market price to be paid to the sugar
factory by the observation in the impugned
order that the market price to be paid to the
3All] D.C.M. Shriram Industries Ltd. & others V. State of U.P. and others
119
sugar factory by the chemical industries
should be the market price for the
Chemical
Industries

Sector.

The
grievance of the petitioner is that the
market price is the general market price in
the open market and not market price is
the general market price for any particular
sector. We agree with the submission of
Sri Shanti Bhushan that the market price
cannot be taken only for the purpose of
Chemical Industry. Market price is the
price at which a willing seller would sell
to a willing buyer as held by the Supreme
Court in a number of cases viz A.I.R.
1987 S.C. 720. A.I.R. 1976 S.C. 2219,
A.I.R. 1977 S.C. 1560 and A.I.R. 1967
S.C. 465 etc. This market price is
determined by the free play of market far
us.

7. We can visualize a businessman
who is selling molasses in the open
market. Such a businessman would sell to
whoever offers the highest price, and he
has no concern whether the buyer belongs
to the chemical industry or any other
industry. The aim of a businessman is
obviously to get the highest price for his
product, and he has no concern whether his
buyer is of any particular industry or not
price, in our opinion, the approach of the
Controller in the impugned order that the
market price should be calculated only
form the point of view of the chemical
industry is not correct. In fact, the
Controller has observed that the rates
quoted by the sugar mills are in
accordance with the market price of the
molasses.

8. Sri Bharat Ji Agarwal, learned
counsel for the respondent nos. 3 and 4 has
submitted that the market price should not
be taken to mean the free market price.
We do not agree. In our opinion the market
price means the free market price in the
open market. Market price is to be
contrasted to a controlled price fixed by
the government or some authority under
a statute for fixing the price. Since
Section 10 has been deleted there can be
no fixed price fixed by any authority. The
market price hence undoubtedly means the
free market price. Since in his own order
the
Controller
has
observed
in
the
penultimate paragraph that the sugar mill
has offered the market price that is
between Rs. 135 to 150 per quintal but the
chemical industry had refused to lift at that
price hence permission should have been
granted to the petitioners under the proviso
to Section 8 (l a) of the Sheera
Adhiniyam.

9. In our opinion the impugned order
is arbitrary as it has considered the market
price only from the point of view of the
chemical industry and not the free market
price. In our opinion market means the
free market price (as observed above) and
not the market price vis a vis the
chemical industry .

10. Shri Bharat Ji Agarwal then
argued that the division bench in Writ
petition No.120 of 1999 had observed that
discriminatory price can be changed by
the

producers.
We
have carefully
examined the observations of the division
bench in this connection, and in our
opinion the said observations only mean
that the sugar factories can enter into
voluntary
agreements
with
different
purchasers
of
molasses
for
selling
molasses at different prices.

11. In the circumstances we quash
the impugned order dated 25.8.99. In this
case an interim order was passed on
10.09.99 directing the petitioner to sell the
INDIAN LAW REPORTS ALLAHABAD SERIES [2000
120
reserved molasses to the chemical industry
at Rs. 125/-per quintal. The aforesaid
interim order reads as follows.

"In the meantime, upon consideration of
the facts and circumstances of the case and
the submissions made across the Bar. It is
provided as an interim measure, and
without prejudice to the rights and
contentions
of
the parties, that the
petitioners shall sell the reserved quantity
of molasses to the concerned allotted
chemical units at the rate of Rs.125/- per
quintal. In Case the concerned chemical
units do not lift the molasses at the rate
aforesaid. In the fortnight from the date
of receipt of notice served by the
petitioners, it will be open to the
petitioners to captively consume the stocks
of molasses of the second quarter of the
sugar year 1998-99 or sell it to any other
person in the open market. This is subject
to such order as may be passed by the
court to adjust the equity between the
parties."

In our opinion market price now be
determined afresh for the period of the
lifting of molasses in pursuance of the
impugned order dated 10.09.99 (as
extended from time to time).

12. It may be mentioned here that the
petitioners
are
themselves
purchasing
molasses for their distillery, and in
paragraph 20 (f) of the writ petition
(which has been added by an amendment
application, which we have allowed) it has
been stated that the petitioners have been
purchasing molasses form various parties
at the rate between Rs. Rs. 180/- to
Rs.210/- per quintal. By the amendment
application, which we have allowed to
day, it has been claimed that the
petitioners should be entitled for
compensation for the difference between
the prevailing market price and the
interim price of Rs.125/- per quintal
which was much below the prevailing
market price at the relevant time was
Rs.180/- to Rs.210/- per quintal. However,
the respondents are disputing the figures
and have alleged that the alleged market
price was much lower than the price
claimed by the petitioners, We are not
going into the question as to what was the
prevailing market price in the open
market at the relevant time as there is a
factual controversy. Hence, we are sending
the matter to a retired Hon'ble Judge of
this Court who will decide this controversy
after considering the various relevant
factors and evidence and after hearing the
parties or their counsel. It may be
mentioned here that one of the factors
which is certainly relevant in determining
the market price is that the petitioners
themselves have been purchasing molasses
at the rate of Rs.180/- to Rs.210/- per
quintal as stated in paragraph 20 ( f ) of
the writ petition. This is very relevant
because no one will ordinarily purchase at
a higher price if a commodity is available
in the free market at a lower price. Hence
this is certainly an indication that the
prevailing market price at the relevant time
was Rs. 180/- to Rs. 210/- per quintal
because no business man will purchase a
commodity at a higher price than the price
at which it is available in the open market.
In fact the division bench in writ petition
no.120/99 has observed, "In a System of
uncontrolled pricing, it would not be
unreasonable to quote rates at which the
petitioners are themselves purchasing
molasses for consumption in their own
distillery. The controller is to take this and
other factors into reckoning while dealing
the
reckoning
while
dealing
the
controversy of whether. The rates quoted
3All] Ram Hit V. State of U.P. through D.M., Fatehpur and others
121
by the occupiers of sugar factories are
higher than the market ." However, this
is only of the relevant factors and is not the
conciuse factor for determining the market
price. There may be other relevant factors
also (e.g. the price, which the other sugar
factories charged for the 40% reserved
quota at the relevant time) and hence we
are not expressing a final opinion on this
point.

13. Sri Bharat Ji Agarwal, learned
counsel for the respondents has alleged
that the same sugar factory has sold the
molasses to the chemical industry @ 116/-
per quintal in August and September
1999. We are not expressing our final
opinion on this matter. It is possible that
the molasses was sold at a lower price due
to pressure from some authority or for
some other reason, and hence that may not
necessarily be the market price. It is our
considered opinion that the market price
should be determined after hearing both
the parties or their counsels and also
considering the evidence adduced by them
by a retired High Court Judge preferably
within three months of production of a
certified copy of this order.

14. Shri Shanti Bhushan, learned
counsel for the petitioners agrees that the
remuneration to the retired Judge will be
paid by the petitioners. We direct that the
petitioners hall pay Rs.50,000/- to the said
retired Judge and we nominate for the
purpose Hon'ble Mr. Justice A.N.
Verma, a retired Judge of this Court and
former Chairman of the Monopolies
Commission. The petitioners shall also pay
a sum of Rs. 3000/- per month to Hon'ble
Justice Verma in addition to his
remuneration for engaging a Secretary for
the purpose. The petitioners shall also pay
any incidental expenses incurred by Mr.
Justice Verma to him. If the proceedings
before Hon'ble Mr. Justice Verma take
longer than three months then a further
sum of Rs.25,000/- will be paid to him by
the petitioners. These payments must be
made in advance to Mr. Justice Verma by
the petitioners. Also, the parties must
supply copies of all documents on the
record of this petition to him. The parties
or their counsels shall appear before
Hon'ble
Mr.
Justice

Verma
on
29.07.2000, and no separate notices shall
be sent to them.

15. Since respondents have paid
Rs.125/- per quintal for the amount of
molasses which they have lifted under the
interim orders of this Court, if it is found
by the Hon'ble Judge to whom we are
sending the matter that the market price
was more than 125/- per quintal, then the
balance will be paid by the respondents to
the petitioners within two months of the
decision of the said Hon'ble Judge. If,
however, it is found that the free market
price was less than Rs. 125/- per quintal
than the petitioners will pay the balance to
the respondents.

Petition is allowed . No orders as to
cost.

25,*,1$/ -85,6',&7,21
25,*,1$/ -85,6',&7,21
&,9,/ 6,'(
&,9,/ 6,'(
'$7(' 7+( $//$+$%$'
'$7(' 7+( $//$+$%$' 7+
7+ -81(
-81(
%()25(
%()25(
7+( +21
%/( $.<2* -
7+( +21
%/( $.<2* -

&LYLO 0LVF :ULW 3HWLWLRQ 1R RI

5DP +LW
«3HWLWLRQHU
9HUVXV
6WDWH RI 83 WKURXJK 'LVWULFW 0DJLVWUDWH
)DWHKSXU DQG RWKHUV
«5HVSRQGHQWV