# D1&ember, 6. 760 SUPREME COURT REPORTS [1963] SUPP. SETH BANARSI DAS v. THE CANE COI\1MISSIONER & ANOTHER

- **Citation:** [1963] Supp. 2 S.C.R. 760
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Civil Appeal No. 226 of 1960
- **Bench:** S. K: Das, J. L. Kapur, A. K. Sarkar, M. HmAYA'l'ULLAH, Raghuber Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/d1-ember-6-760-supreme-court-reports-1963-supp-seth-banarsi-das-v-the-cane-coi-2842
- **Pages:** 37

## Headnote

Sugar Factories, Control of-Agreement-Whether bindinyTeat-Provisions of ·'· 18(2) Whether mandatory or direcloryRule 23, if violativt of Art. 14-Rule 23(6), if beyond rulemaking power under s. 30-Uttar Pradesh Sugar Factories
Control Act, lu38 (U. P. of 1938), s.,, 18(2), 30-U. P. Sugar
Factories Control Rules, 1938, r. 23.
Certain disputes arose between the appellant and the Cane
Marketing Society Ltd., Bijnor. The
a~ellant preferred a
claim to the Cane Commissioner for compensation for short
supply of Sugar-cane.
The Society also moved the Cane
Commissioner for arbitration. The Commissioner passed an
order calling upon the parties to be present before him for a
decision of the dispute. It wa• then that the appellant filed a
petition under Art. 226 of the Constitution of India for a writ
of certiorari to quash the proceedings pending before the Cane
Commissioner, for a writ of prohibition for restraining the Cane
Commissioner from continuing the proceedings and a writ of
quo warranto for a declaration that the Cane Commissioner had
no right to assume the office of arbitrator in the dispute. The
appellant contended that there could be no arbitration because
the claim was not a proper claim as the Society had omitted to
complete the prescribed form XIl by leaving the schedule, the
area of cultivation and the estimated yield blank and as the
agreements were not signed by the Mills who did not accept
them in their incomplete state. In the alternative, ii was contended that Ruic 23 offended against Art. 14 of the Constitu.
tion. It was also contended that r. 23(6) providing for an
appeal went beyond the rule-m1king power of the Provincial
Government under s. 30 of the Act. • The writ petition was
dismissed by the High Court. The Letters Patent appeal WolS also
dismissed. The appellant came to this Court by a certificate.
HeU, that the agreement was a binding agreement. The
form prescribed set out a number of conditions and all of them
have been incorporated in the agreement executed by the
Society. There has been no deviation from the prescribed
form except some minor omission. The failure to execute the

1962
Seth Banarsi Dar
v.
Cane Commission11
762 SUPREME COURT REPORTS (1963) SUPP.
representative and the Arbitration Act furnishes no answer
because it is inconsistent with the Rule.
It is, therefore,
obvious that the arbitration must be with the consent of the
parties and they must express their consent either by selecting
an agreed sole arbitrator or by appointing their representative
on the Board. This choice is entirely theirs. If the parties
do not agree, there can be no arbitration at all and the case
must be disposed of by the Cane Commissioner himself.
Where there are two
procedures, one for everyone and the
other if the disputants voluntarily agree to follow it, there can
be no discrimination because discrimination can only be found
to exist if the election is with some one else who can exercise
his will arbitrarily. Rule 23 as a whole does not offend Art.14
of the Constitution.
Per Raghubar Dayal, J.-It is true that the provisions of
s. 30(2) (u) relate to the settlement of disputr.s betwoen the
parties but that by itself does ·not mean that the State Government can provide for appeals against the orders of the arbitrator or arbitrators. These provisions do not expressly state that
the rule can provide for an appeal against the award of the
arbitrator. They make no reference either for the provision of
an appeal or for the procedure to be followed by the Appellate
Tribunal or for the enforcement of the order of the Appellate
Tribunal. The absence of-such a reference establishes that
cl. (u) did neither contemplate nor empowered the State
Government to make rules providing an appeal against the
award of arbitrator or arbitrators. Further, the order of the
Commissioner is not an award and this is recognised by the
language of r. 23(8) which refers to the decision of the Cane
Commissioner to the award of the arbitrator or

## Text

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1962
D1&ember, 6.
760 SUPREME COURT REPORTS [1963] SUPP.
SETH BANARSI DAS
v.
THE CANE COI\1MISSIONER & ANOTHER
(S. K: DAS, J. L. KAPUR, A. K. SARKAR,
M. HmAYA'l'ULLAH and RAGHUBER DAYAL, JJ.)
Sugar Factories, Control of-Agreement-Whether bindinyTeat-Provisions of ·'· 18(2) Whether mandatory or direcloryRule 23, if violativt of Art. 14-Rule 23(6), if beyond rulemaking power under s. 30-Uttar Pradesh Sugar Factories
Control Act, lu38 (U. P. of 1938), s.,, 18(2), 30-U. P. Sugar
Factories Control Rules, 1938, r. 23.
Certain disputes arose between the appellant and the Cane
Marketing Society Ltd., Bijnor. The
a~ellant preferred a
claim to the Cane Commissioner for compensation for short
supply of Sugar-cane.
The Society also moved the Cane
Commissioner for arbitration. The Commissioner passed an
order calling upon the parties to be present before him for a
decision of the dispute. It wa• then that the appellant filed a
petition under Art. 226 of the Constitution of India for a writ
of certiorari to quash the proceedings pending before the Cane
Commissioner, for a writ of prohibition for restraining the Cane
Commissioner from continuing the proceedings and a writ of
quo warranto for a declaration that the Cane Commissioner had
no right to assume the office of arbitrator in the dispute. The
appellant contended that there could be no arbitration because
the claim was not a proper claim as the Society had omitted to
complete the prescribed form XIl by leaving the schedule, the
area of cultivation and the estimated yield blank and as the
agreements were not signed by the Mills who did not accept
them in their incomplete state. In the alternative, ii was contended that Ruic 23 offended against Art. 14 of the Constitu.
tion. It was also contended that r. 23(6) providing for an
appeal went beyond the rule-m1king power of the Provincial
Government under s. 30 of the Act. • The writ petition was
dismissed by the High Court. The Letters Patent appeal WolS also
dismissed. The appellant came to this Court by a certificate.
HeU, that the agreement was a binding agreement. The
form prescribed set out a number of conditions and all of them
have been incorporated in the agreement executed by the
Society. There has been no deviation from the prescribed
form except some minor omission. The failure to execute the

1962
Seth Banarsi Dar
v.
Cane Commission11
762 SUPREME COURT REPORTS (1963) SUPP.
representative and the Arbitration Act furnishes no answer
because it is inconsistent with the Rule.
It is, therefore,
obvious that the arbitration must be with the consent of the
parties and they must express their consent either by selecting
an agreed sole arbitrator or by appointing their representative
on the Board. This choice is entirely theirs. If the parties
do not agree, there can be no arbitration at all and the case
must be disposed of by the Cane Commissioner himself.
Where there are two
procedures, one for everyone and the
other if the disputants voluntarily agree to follow it, there can
be no discrimination because discrimination can only be found
to exist if the election is with some one else who can exercise
his will arbitrarily. Rule 23 as a whole does not offend Art.14
of the Constitution.
Per Raghubar Dayal, J.-It is true that the provisions of
s. 30(2) (u) relate to the settlement of disputr.s betwoen the
parties but that by itself does ·not mean that the State Government can provide for appeals against the orders of the arbitrator or arbitrators. These provisions do not expressly state that
the rule can provide for an appeal against the award of the
arbitrator. They make no reference either for the provision of
an appeal or for the procedure to be followed by the Appellate
Tribunal or for the enforcement of the order of the Appellate
Tribunal. The absence of-such a reference establishes that
cl. (u) did neither contemplate nor empowered the State
Government to make rules providing an appeal against the
award of arbitrator or arbitrators. Further, the order of the
Commissioner is not an award and this is recognised by the
language of r. 23(8) which refers to the decision of the Cane
Commissioner to the award of the arbitrator or arbitrators and
to the Commissioner's order in appeal. The provision for an
appeal in r. 23(6), therefore, is not to be treated as something
ancillary to the provision for settling disputes between the
parties by the Cane Ccmmissioner for which object cl. (u)
empowered the State Government to make rules with respect
to certain matters. The right to appeal is a substantive right
and is 10 be conferred on a party by or under t.he Act. The
Act must either provide for the appeal or enact that the rules
framed thereunder may provide for appeals against certain
orders or decisions. In the absence of such a pr.wision in the
Act, the rules cannot provide for appeals. The result is that
r. 23(6) is void.
It is clear from the variom provisions of r. 23 that there
is a difference in the procedure for the dispute being decided
by the Cane Commissioner and the dispute being decided by
the arbitrator or a Board of Arbitration. In the former case,
2 S.C.R.
SUPREME COURT REPORTS
763
the decision of the Cane Commissioner is final and enforceable
by the Civil Court referred to in r. 23(8). In the latter case,
the award of the sole arbitrator or the Board of Arbi1ration is
appealable to the Commissioner of the Division in which the
factory is situated and the order of the Commissioner is final
and enforceable by the Civil Court. It follows that the procedure provided by r. 23 for decision of the dispute touching
the agreement is such that parties similarly situated may have
the dispute decided by different persons and by different procedures according to the inclination of the Cane Commissioner
whose discretion in this matter is uncontrolled by any guiding
principles. The rule, therefore, offends against Art. 14 of the
Constitution and is void.
The entire r. 23 is struck down both because in its present foi m it is discriminatory and because sub-r. (6) is void
inasn1uch as the State Government had no power to enact it
and it is not severable from the rest of the rule.
Ruf (T. A.) &: Co. v. Pauwels, [1919] 1 K. B. 660; Statt
of U. P. v. Manbodhan Lal Srivastava, [1958] S. C.R. 533,
Bhikraj v. Union of India, A. I. R. 1962 S. C. 113, Thomaa v.
Kelly, (1888) 13 App. Cas. 506, Jagan Nath v. Jaawant Singh,
[1954] S. C.R. 892, Kamaraja Nadar v. Kunju Thevar, [1959]
S. C. R. 583, Hari Vishnu Kamath v. Syed Ahmed l&haque,
[1955] l S. C.R. IJU4, Radhakineson Gopikisson v. Bcdmukund
Ramchandra ( 1932) L. R. 60 I. A. 63 and Jugal Kishore
Rameshwa.rda. v. Mrs. Goolbai Hormmji, [1955] 2 S. C.R. 857,
referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 226 of 1960.
Appeal from the judgment and decree dated
February 2, 1956, of the Allahabad High Court in
Special Appeal No. 158of1954.
M. 0. Betalvad, Attorney-General for India,
Veda Vyasa, R. K. Garg, B. O. Agarwal, Shiv BaBtri
and K. K. Jain, for the appellant.
B. P. De8ai, K. B. Hajela and 0. P. Lal, for
respondent No. I.
0. K. Dapktary, Solicit.or-General for India,
Radhy Lal Agarwal and P.O. Agarwal, for respondent No. 2.
1962
Sith Bonarsi Das
v.
Cane Commissioner
1962
Seth Ba11a1asi Dos
v.
Cane Commissioner
Hida)•alul/ah, J.
764 SUPREME COURT REPORTS [1963] SUPP.
19()'.J.
December 6. The Judgment of Das,
Kapur, Sarkar and Hidayatullah, JJ., was a delivered
by Hidayatullah, J., Dayal, J., delivered a separate
Judgment.
HIDAYATULLAH ].,-This is an appeal on a
certificate granted by the High Court of Allahabad
under Article 133 (1) (c) of the Constitution against its
judgment and order <lated February 2, 1956. By
the judgment, under appeal, which was passed in a
Letters Patent Appeal, the Divisional Bench confirmed the order of a learned single judge dismissing
the petition of the appellant under Art. 226 of the
Constitution. Seth Banarsi
Das, the
appellant
before us, was the petitioner in the High Court and
the two respondents before us, namely, the Cane
Commissioner, U. P., Lucknow, and
the Cane
l'vlarketing Society Ltd., Bijnor, were the opposite
parties.
The petition asked for a number of writs in
the alternative, but its purport was to seek to prohibit
the two respondents from continuing certain proceedings pending before the Cane Commissioner under
rule 23 of the United Provinces Sugar Factories
Control Rules, 1938. That rule provides for arbitration in disputes touching agreements entered into
by sugar cane factories and cane growers for supply
of sugar cane as laid down by the United Provinces
Sup ar Factories Control Act, 1938.
The facts of the case are as follows:-
The appellant was at the material time the
lessee
and "Occupier" of Shiva Prasad Banarsi
Das Sugar Mills, Bijnor, for five years from the
crushing season 1946-4 7 to 1950-51. The second
respondent is the Cane Marketing Society Ltd.,
Bijnor, which is a society registered under the
U ttar Pradesh Co-operative Societies Act, and one
of its objects is to supply sugar cane grown by its
members to the sugar mills. Before the control of
2 s.c.R.
SUPREME COURT REPORTS
765
sugar cane, cane growers, whether they belonged to
a co-operative society or not, sold sugar cane directly
to the factories and made supplies from any area as
it suited them. The United Provinces Sugar Factories
Control Act was passed for the purpose of licensing of
sugar factories and for regulating the supply of sugar
cane intended for use in such factories and the price
at which it may be pur<;hased and for such other
matters as may be incidental thereto.
The broad
outline of the Act and the rules framed thereunder
may be given here.
Under the Act the control of sugar cane grown
in the State was vested in an officer known as the
cane Commissioner and Advisory Committees and
Sugar Control Board were to be appointed to advise
upon and effectuate control of sugar and sugar cane.
There was a scheme for licensing of factories with
which we are not concerned in this case. Chapter IV
of the Act made provision for regulating the purchase
of sugar cane. Under s. 14, the State Government
could require the •Occupier' of any factory to
submit to the Cane Commissioner an estimate in the
prescribed form and manner of the quantity of sugar
cane which would be required in. his factory during a
crushing season. This estimate was examined by the
Cane Commissioner who. after consulting the Advisory
Committee in that area, published it with such
modifications, if any, as he thought fit to make.
Under s. 15 the Cane Commissioner, in consultation
with the Advisory Committee (if any) and
the
'Occupier' of the factory,
could issue an order
declaring an area to be 'a reserved area' for the
purpose of supply of sugar cane to. a particular
factory. Section 18 then provided as follows :-·
"18. Purchase of cane in reserved area.-( I) A
cane-grower or a Cane-growers' Co-operative
Society in a reserved area may offer, in the
form and by the date prescribed, to supply to
1962
Selk BanarJi Das
••
Cane Commissioser
H itlayatallali, J.
1962
Seth Banarsi Das
••
Cane Commissioner
Hidayatu/lah, J.
766 SUPREME COURT REPORTS [1963] SUPP.
the occupier of the factory for which the area
is reserved cane grown by the cane-grower or
by the members of such Cane-growers' Cooperative Society as the case may be, not
exceeding the quantity, if any, prescribed for
such grower or Cane-growers' Co-operative
Society.
(2) The Occupier or manager of a factory
for which an area is reserved shall enter into an
agreement, in such form, by such date and on
such terms and conditions as may by prescribed,
to purchase the cane offered in accordance with
sub-section (I):
Provided that, he shall not enter into an
agreement to
purchase cane from a person
who is a member of a Cane-growers' Co-operati ve Society.
(3) Except with the permission of the
Provincial Government, cane grown in a
reserved area shall not be purchased in such
area by a purchasing agent, or by any person
other than occupier of the factory for which
such area has been reserved.
( 4) Cane grown in a reserved area shall not
be sold by any person other than a cane-grower
or a Cane-growers' Co-operative Society:
Provided that a cane-grower or a Cane-growers' Co-operative Society may deliver cane
intended for use in a factory through another
cane-grower or through a carrier.
( 5) During the crushing season the Provincial Government may, if it is satisfied that there
is likely to be in the area reserved for a factory
any quantity of cane available for sale to the
occupier of the factory in excess of the quantity
2 S.C.R.
SUPREME COURT REPORTS
767
for which he is required to enter into agreements, direct that cane shall not be purchased
outside the reserved areas until the occupier of
the factory enters into agreements to purchase
all the cane offered to him in the reserved
area:
Provided that such prohibition shall not
apply in respect of cane for the supply of
which agreements in writing have been entered
into before such direction was issued."
In addition to the reserved area, s. 19 provided
for declaration of assigned area. and purchase of
sugar cane therein. The factory was authorised to
take its supplies also from the assigned area. The
important difference between the two areas was that
the factory was bound to enter into agreements with
cane growers or cane growers' co-operative societies
in an area reserved for the factory for the prescribed
quantity of sugar cane but in an assigned area, the
factory could enter into an agreement for a specified
quantity of sugar cane as the factory desired. In
other words, in a reserved area if sugar cane of the
prescribed quality was offered by the cane grower
or cane growers' society, the factory was bound to
purchase that cane up to the prescribed quantity but
in an assigned area the factory was at liberty to
purchase cane, as it needed, subject to its entering
into an agreement for the purpose.
In addition to the reserved and assigned areas
there was a third category, namely, areas which were
neither reserved nor assigned.
We are not concerned with such areas or the provisions dealing with
the purchase of sugar cane
from
such areas.
Section 27 provided for certain penalties.
Sub·
section 3 (b) provided as follows: -
"(3) If the occupier or manager of a factoryx
x
x
x
1962
Seth Banaui D.s
v.
Cane Cbmmissioner
Hidayatullah, J.
1962
Seth Banarsi Das
v.
CtzM Commissirmer
Hidayatullah, J.
768 SUPREME COURT REPORTS [1963) SUPP.
(b) intentionally fails to enter into agreements as required by section (2) of
section 18 . .. ... he shall be punishable with fine which may extend to
two thousand rupees "
·
Section 30 gave power to the Government to
make rules. The material portions of section 30 for
our purpose are as fol!ows:-
"30 Power to rruike rules.-( I) The Provincial
Government may make rules to carry out the
provisions of this Act.
(2) In particular and without prejudice to
the generality of the foregoing power, such
rules may provide fur;
x
x
x
x
(u) the reference to the Cane Commissioner
of disputes relating to the supply of cane for
decision or if he so directs to arbitration, the
mode of appointing an arbitrator or arbitrators,
the procedure to be followed in proceedir1gs
before the Cane Commissioner or such arbitrator or arbitrators, and the enforcement of the
decisions of the Cane Commissioner or the
awards of arbitrators;"
In exercise of the powers conferred by the
last quoted section, the following rules (among others)
were framed :-
"15. Purchase of cane growing in a reserved
area.-(I) The occupier or manager of a factory
shall estimate or cause to be estimated by
30th September, the quantity of sugarcane with
each grower enrolled in the Growers' Register
and shall submit the estimates to the Collector.
The Collector may, after such enquiries as he
considers necessary, modify the estimates and
2 S.C.R. SUPREME COURT REPORTS
769
cause them to be published in such manner as
he may direct. In framing these estimates,
sugarcane grown in more than one-third of the
area of land suitable for sugarcane cultivation
in the holding of each grower may be excluded.
(2) A cane-grower or a cane grower's cooperative society in a reserved area may offer
in form 10, Appendix III, by the 15th October
each year to supply during the crushing season
to the occupier or manager of the factory for
which the area has been reserved, cane not
exceeding, in the case of a cane-grower, the
quantity estimated in accordance with subrule (1).
(3) The occupier or manager of the factory
for which the area is reserved shall enter into an
agreement with the cane-grower or the cane
growers' co-operative society as the case may
be, in forms 15 and 18 respectively or in any
other form approved by the Cane Commissioner
within a month of the offer mentioned in subrule (2).
( 4) The occupier or manager of a factory
shall spread the purchase made in the reserved
area in an equitable manner and shall in the
case of cane-grower of the reserved area make
purchase of cane only after issuing requisition
slips.
In order to comply with this rule the occupier or manager shall cause identification cards
to be distributed to all cane-growers of the
reserved area to whom requisition slips have
been issued and shall maintain a record of the
same. He will also keep a record of the requisition slips issued and distributed to the growers
and returned by them.
1962
Seth Banarsi DaJ
v.
Can1 Commissio1111
Hiday1tullah1 J.
1962
&th B•narsi Das
••
CtW Commissioner
Hidayotrdlah, J.
770 SUPREME COURT REPORTS [1963] SUPP.
(5) Cane grown in a reserved area shall
not except with the permission of the Cane
Commissioner be purchased by any person with·
out the previous issue at convenient centres in
the reserved area of requisition slips and identification cards to the growers, by the occupier
or manager of the factory for which the area
is reserved.
(6) Requisition slips and identification
cards to members of a 'can :-growers' co-operative society shall not be issued except by such
society.
(7) In case of a dispute whether a particular system adopted for the purchase of cane
grown in the reserved area is equitable or no,t,
the dispute may be referred to the Cane
Commissioner whose decision shall be final"
"23. Arbitration (1) "'ny dispute touching an
agreement referred to in section 18 (2) or
section 19 (2) of the Act shall be referred to
the Cane Commissioner for decision, or if he
so directs to arbitration.
No suit shall lie in
a civil or revenue court in respect of any such
dispute.
(2) If the Cane Commissioner directs the
reference of a suit to arbitration, it shall be
referred to a sole arbitrator acceptable to the
parties concerned. In case no sole arbitrator
is acceptable to both parties, the dispute in
question shall be referred to a Board of Arbitration, consisting of one representative of each
party and an umpire acceptable to both repre·
sentatives. If the representatives or the parties
-
are unable to elect such an umpire within a
fortnight, the Cane Commissioner shall either
himself act as umpire or nominate one. The
umpire shall be the President of the Board of
2 S.C.R.
SUPREME COURT REPORTS
771
Arbitration and shall have a vote in case of
disagreement between the representatives.
(3) The sole arbitrator or the President
of
the Board of Arbitration shall have
the
full power of a court in respect of sum·
moning the parties, witnessess and records.
( 4) The decision of the sole arbitrator or
Board of Arbitration shall be final and binding
on both parties and shall not be called in
question in any civil or revenue court.
( 5) The sole arbitrator or the Board of
Arbitration shall give an award within the
time fixed by the Cane Commissioner, failing
which the Qane Commissioner may decide the
dispute himself or appoint another arbitrator
or arbitrators for the purpose.
(6) Any party considering himself aggrieved by an award may appeal to the Commi·
ssioner of the Division in1which the factory is
situated within one month of the date of the
communication of the award and the Commissioner shall pass such order as he deems fit.
(7) The Commissioner's order in appeal
shall be final.
(8) On application to the Civil Court having
j llrisdiction over the subject matter of the
decision or award, the decision of the Cane
Commissioner, or the award of the arbitrator
or atbitrators, or the Commissioner's order in
appeal against an award, shall be enforced by
the Court as if such decision, award, or order
in appeal were a decree of that Court."
"25. Pe11(Jlties.-(l) Any person contravening
any of the provisions of these rules for which no
/962
Seth Banarsi Das
••
Cane Commissiofllf'
H idayalallah, J.
1962
Seth Banarsi Das
••
Cane Commissioner
Hidayalullah, J.
772 SUPREME COURT REPORTS [1963] SUPP.
penalty has been provided in the Act or not
obeying a lawful order or direction conveyed
to him in writing which the Cane Commissioner
or a Collector or an lnspector is authorised to
pass or issue shall be punishable with fine which
may extend to Rs. 750: "
(Proviso omitted)
We are concerned with the crushing seasons
of 1949-50 and 1950-51. In these two years, the
Cane Marketing Society offered sugar cane by Form
10.
According to the appellant, the Society should
have offered 85% of its net estimated crop but it
made an offer in both the years which was less than
85% and actually supplied a quantity which was
still less.
The relevant figures for the two years,
according to the appellant, were as follows :-
1949-50
1950-51
(In Lacs of Maunds)
Net estimated Crop
45.82
55.20
Less 15%
6.82
8.28
85% which should have}
been offered
39.00
46.92
Opposite party No. 2}
offered to sell finally
32.00
32.00
Shortage in offer
7.00
14.92
Actually supplied
23.11131
29·7954
Actual shortage
15.88869
17.1246
The appellant therefore preferred a claim to
the Cane Commissioner for compensation for the
short supply calculated at one anna per maund of
sugar cane, by an application dated
October 31,
1950. This was preceded by a long correspondence
'
2 S.C.R.
SUPREME GOUR T REPORTS
773
which began in June 1950. Of this correspondence
a few of the letters have been priu ted in the record
of the case. The first letter is by the appellant to
the Cane Marketing Society Ltd., Bijnor, in which a
claim for Rs. 1,02,116-13·0, as compensation on
account of short supplies in the season 1949-50 was
made. The next letter in August, 1950, showed that
the Society was claiming a sum of Rs. 1,64,094-4-6
as commission for the years 1948-49 and 1949 -50
and that the appellant was setting up a counterclaim for Rs. l,0!,890·2-9 as compensation for short
supply. On November 4, 1950, the appellant wrote
a final letter giving the accounts and sending a
cheque for Rs. 22628-13-0 in full satisfaction of the
claim. This cheque was accepted by the Society
but under protest. The real dispute was about the
compensation for short supplies which the Society
did not admit. According to the Society they had
a claim for Rs. 2,63,624-2-6 and they also moved
the Cane Commissioner under Rule 23 ( l) of the
U. P. Sugar Control Act and Rules, 1938, for arbitration. The Cane Commissioner, who had not
acted on the letter of the appellant, then passed an
order on July 26, 1951, calling upon the parties to
be present before him on August 18, 1951, for the
decision of the dispute. On September 3, 1951, the
appellant filed a petition under Art. 226 of the Constitution for a Writ of Certiorari to quash the proceedings pending before the Cane Commissioner, for a
Writ of Prohibition for restraining the Cane Commissioner from continuing the proceedings and for a
writ of quo warranto for a declaration that the Cane
Commissioner had no right to assume the office of
arbitrator in the dispute. In support of the petition
the appellant contended that there could be no arbitration in this dispute because the agreement was
not a proper agreement as the Society had omitted
to complete the prescribed form XII by leaving the
Schedule, the area of cultivation and the estimated
yield, blank and as the agreements were not signed
1962
Seth Banarsi D.s
v.
Cane Commissioner
Hidayatullali1 J.
1962
Sith Bana1si Das
v.
Cane Commissiontr
Hidayatullah, J.
774 SUPREME COURT REPORTS [1963] SUPP.
by the Mills who did not accept them in their incomplete state. In the alternative, it was contended
that Rule 23 offended against Art. 14 of the Constitution because it provided two different methods of
decision of the disputes-one by the Cane Commissioner and the other by arbitration-leaving it to
the arbitrary will of the Cane Commissioner to
choose which it should be in a particular case, and
by providing an appeal in one case, and not in the
other. It was further contended that the provision
in sub-Rule (6) of Rule 23, which provided for an
appeal went beyond the rule-making power of the
Provincial Government as no such power was conferred on it by s. 30 of the Act and sub-Rule {tl)
being unseverable, the whole of Rule 23 must fail
and that there could be no action by the Cane
Commissioner.
The petition was heard by Chaturvedi, J., and
was dismissed.
A special appeal under the Letters
Patent was heard by Mootham, C. J., and C. B.
Agarwala, J. Both of them concurred in dismissing
the appeal but there was a difference as to sub-Rule
(6) between the learned judges.
According, to the
learned Chief Justice,
in making
sub-Rule (6)
of Rule 23 the Provincial Government
had exceeded its power and the Rule was invalid but the
sub-Rule was severable and the rest of the Rule was
validly framed.
According to Agarwala, J., the
sub-Rule was properly framed and there was a right
of
appeal both against the order of the Cane
Commissioner as well as the award of the arbitrators to the Commissioner of the Di vision.
Both the
learned j udgeq held that the provisions of Rule 23
were not discriminatory and thus not void under
Art. 14. In this appeal the same points, which
were urged before the High Court, have been urged
before us.
The scheme of the Act and the Rules analysed
above shows that the purchase of suger cane was
2 S.C.R..
SUPREME COURT REPORTS
775
regulated.
There were reserved areas, assigned areas
and other areas. Supplies from a reserved area were
meant for a factory for which the area was reserved
and forms were prescribed for offer, agreements etc.
so that the scheme might not be defeated by parties
contracting out of the scheme. We are not concer·
ned with the merits of the rival contentions about
short supply or unpaid commission. Those are
matters for adjudication elsewhere. We are only con·
cerned with the legality of the proceedings before
the Cane Commissioner. This dispute has been referred to him under Rule 23 not only by the ~ociety
but earlier also by the appellant.
The appellant
now says that he had made a mistake and seeks to
avoid a decision by the Cane Commissoner or by
arbitrator and has set up two contentions. The first
is that by reason of three defects in the agreement of
1949-50 season and two in the agreement of 1950-51
season there is no binding contract as is contemplated
bys. 18(2) and the agreement not having come into
force the Commissioner has no power to act under
Rule 23. The defects are :
(a) Absence of signature for the mills in both
agreements,
(b) Schedule left blank in both agreements,
(c) Two blanks left in the agreement for
1949-50 season where an area and a quan·
tity had to be mentioned.
The second contention is that Rule 23 enjoining arbitration is void under Arts. 13 and 14 of the
Constitution as, on its face it allows discrimination and
sub-Rule (6) of Rule 23 making provision for an appeal is beyond the rule-making power conferred by
s. 30 of the Act and that sub-Rule being unseverable
Rule 23 as a whole fails. We shall deal with the first
contention separately and the other two points in the
second contention together.
1962
Seth Ba1tarsi Das
v.
Cane CommissfoMT
/962
Seth Banarsi Dat
v.
Ca11e Cnmmissioner
llidoyatullah, J,
776 SUPREME COURT REPORTS [1963] SUPP.
The first question thus to consider is whether
there is a binding contract between the parties or not.
Clause No. 10 of the agreement which is in the prescribed form, says that "all disputes touching the
agreement shall be decided by arbitration as provided
for in the rules and no suit shall lie in a civil or
revenue court in respect of any such dispute". The
exclusion of the jurisdiction of courts is also provided
in Rule 23(1). If the agreement were binding the
matter would have to be referred to arbitration as
laid down in Rule 23.
The agreement was challenged in the petition under Article 226 on four grounds.
Three of them deal with the facts in dispute with
which we are not concerned.
The last was that "no
agreement was entered into at all between the parties
as contemplated under s. 18(2) of the U.P. Sugar
Factories Con,rol Act and in the form No. 12 as
prescribed under the Rules made thereunder."
The
defects that arc pointed out now, it is said, make out
that there was no agreement at all.
To begin with the agreement was accepted on
both sides and was acted upon. , The appellant himself moved the Cane Commissioner for the enforcement of the agreement on October 31, 1950. He
now says that this was under the erroneous belief
that even without a written agreement Rule 23 applied. Even in the proceedings before the Cane Commissioner the appellant caused an appearance to be
made and asked for time. No objection that there
was no valid agreement, was taken. In his letters to
the Society the appellant relied upon the agreements
and calculated his compensation and the commission
of the Society on its
basis. The appellant sent
requisitions for supplies for sugar cane in accordance
with Rule 15(5) and (6) and the agreement. He accepted bills and paid for them. The appellant had the
signed form 10 and also form 12 with him.
He
could h;i ve got the blanks filled in and also signed
the agreement but evaded doing this. By his conduct
••
'
2 S.C.R. SUPREME COURT REPORTS
777
the appellant appears prima facie to have accepted the agreement though now he is relying on his
own default and petty omissions in the form.
Now it must be remembered that this form was prescribed so that the scheme of the Act and Rules should
work smoothly, and the purchase and sale of sugar
cane should follow a particular pattern. The failure
to enter into an agreement in the prescribed form was
made an offence to compel the factories to keep to the
scheme. Here the form in fact has been med. All the
terms are included and none has been altered or new
terms added. The agreement has also been acted upon.
The question is whether the want of signature of the
complaining party and the existence of the blanks
render the contract void and non-existing.
There is no doubt that in the agreement for
the season 1949·50 the area of the crop in one place
and the approximate yield from that area in another
have not been filled in the blank space provided for
that purpos•c.
The form in 1950-51 has no such
blanks. The agreement was preceded by from No.
10 which showed these particulars. That form was
with the appellant and it supplied these two details,
namely, the area urider cultivation and the estimated yield. Indeed, the two forms between them
contained all the particulars which are required to be
entered in the body of the agreement.
As regards
the schedule to the agreement the headings read as
follows:-
Village Area under sugar
cane Deal: Ratoon: l' !ant
Approximate Remarks
yield in Mds.
If the appellant required this information it
could have been furnished.
The Schedule merely
gives details village by village of the area under
cultivation mentioned in form No. 10 and the body
of the agreement and also shows the quality grown
1962
Seth Ba11ar;i DiJJ
v.
Cane Conunis,iotter
Hiday.;tultah, J.
Seth Danarsi Das
v.
Cane CommiJsioner
JlidaJaluilah, J.
778 SUPREME COURT REPORTS [1963] SUPP.
in each village. This is obviously to facilitate requisitions being sent and the appellant if he has any
complaint on this score can raise it in the proceedings.
The banks in the body of the agreement for 1949-50
thus are insignificant. Those details were already
mentioned in form 10. They do not bear upon the
terms which are quite unaffected by the omissions.
The form for 1949-50 season was therefore not invalid because of the omissions in the body of the
agreement. The schedule was intended to record
the details of the crop grown but those details were
not an integral part of the agreement or its terms.
The agreements for 1949-50 and 1950-51 season were
therefore not invalid for this reason also.
This leaves over the absence of the signature
of the party who had the custody of the document
and who is now complaining of its absence. It is
somewhat odd that he should complain of the lack
of bis own signature
because it is tentamount
to his making a virtue of his own lapse. The argument is therefore attempted to be put on a legal
foundation and it is that s. 18 (2) used mandatory
language aud attached penal consequences and the
slightest deviation in a material respect and particularly the Jack of signature of one of the contracting
parties renders the agreement null and void.
What
the law requires is that the cane growers and the
factories should, in view of the scheme, conform to
certain terms and conditions which have been predetermined so that the scheme of rationalisation does
not fail.
For this purpose a form is
prescribed
and the form shows the place where the parties have
to sign in token of their acceptance. Of course, the
terms could be accepted orally but the
section
requires that the contract should be in a particular
form and h.ence in writing.
As to signatures it was
held by Duke L. .J. as he then was in Ruf (T. A.)
& Co. v. Pauwels (') as follows :-
(I) [19t9r I K.B. 660, 670,
2 S.C.R.
SUPREME COURT REPORTS
779
"As to the suggestion which was made that the
words 'contract in writing' imports a contract
made by means of a writing or writings signed
by both ·parties, I do not think the words
necessarily have that meaning.
A document
purporting to be an agreement may be an
agreement in writing. s.ufficient to satisfy the
requirements of an Act of Parliament though
it is only verified by the signature of one of
the parties. Re Jones (1895) 2 Ch. 7111."
The learned Attorney General, however, con·
tends that the prescriptions of s. 18(2) being manda·
tory they had to be
followed to the letter.
He
urges that in as much as the Act and the rules pre·
scribe a penalty for breach the· section cannot but
be regarded as mandatory in all its parts.
He
assumes that the appellant may be guilty and
punished but, says he, the mandatory provision not
having been followed according to the letter there
can be no resulting valid contract.
A large number
of rulings on how to distinguish between mandatory
and directory provisions of law were cited before us
in support of the contention.
More cases were cited
to show that where a form is prescribed, the form! aone
must be used otherwise there is no contract. We shall
only briefly refer to them.
The general rule as to which provision of law
can be regarded as mandatory and which directory
is stated in Maxwell on the Interpretation of Statutes
at page 364 : -
"It has been said that no rule can be laid
down for determining whether the command (of
the statute)· is to be considered as
a mere
direction or. instruction involving no invalida·
ting consequence in its disregard, or as impera•
tive, with an implied nullification
for disobedience, beyond the fundamental one that
1962
Sith Bawsi Da~
••
Can1 Commissiontt
Hidaytltullah, J,
1962
Sith Banorsi DtJs
v.
Cont
Commi~siontr
Hi11:;•atu/loh, J.
780 SUPREME COURT REPORTS (1963] SUPP.
it depends on the scope and object of the enactment. It may, perhaps, be found generally
correct to say that nullification is the natural
and usual consequence of disobedience, but the
question is in the main governed by considerations of convenience and. justice (R. v. Ingall
(2) 2 Q,.B.D. 208, per Lush,J.), and, when
that result would involve general inconvenience
or injustice to innocent persons, or advantage
of those guilty of the neglect, without promoting the real aim and object of the enactment,
such an intention is not to be attributed to
the legislature. The whole scope and purpose of the statute under consideration must be
regarded. The general rule is, that an absolute enactment must be obeyed or fulfilled
exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially."
This rule has been applied in many cases both
in India and in England. In State of U. P. v.
1llcmbodlian Lal Srivastava (1) this Court observed
that no general rule can re laid down but the object of the statute must be looked at and even if the
provision be worded in a mandatory form, if its
neglect would work serious general inconvenience
or in justice to persons who have no control over those
entrusted with the duty and at the same time would
not promote the main object of the Legislature, it is
to be treated only as directory and the neglect of it
though punishable would not affect the validity of
the acts done;
These observations have been followed in other cases and recently in Bliikraj v. Union
of India (') it was observed that where a statute requires that a thing shall be done in a particular
manner or form but does not itself set out the consequences of non-compliance the question whether
the prescription of law shaII be treated as mandatory
or directory could only be solved by regarding the
object, purpose and scope of that Jaw. If the statute
(I) ll958J S.C.R. 533.
(2) A.I.a. (1962) 113, 119.
2 S.C.R.
SUPREME COURT REPORTS
781
is found to be directory a penalty may be incurred
for non-compliance but the act or thing done is regarded as good.
It is unnecessary to multiply these
cases which are based upon the statement in Maxwell which is quoted over and over again.
Now the prescription of the law in the present
case was that the cane growers and the factory must
enter into an
agreement in a prescribed form.
That form has in fact been used, only there are
certain blanks and the appellant has not signed where
he was expected to do so.
Reliance is placed by the
appellant upon a decision of the House of Lords
reported in Thomas v. Kelly (') particularly the
observaticms of Lord Macnaghten where a distinction was made between the words "in accordance
with the form" and "in the form". It is argued that
the Act and the rules in the present case require the
agreement to be in the form prescribed and not in
accordance with the form.
It is submitted that a
substantial compliance may be permissible when the
words of the statute are "in accordance with the
form" but that strict compliance is necessary when
the words are "in the form": The form in Thomas
v. Kelly (') was in a different category from their form
which we have. Under the statute, which prescribed
the form (a bill of sale), it was provided that a bill of
sale given by way of security was void. unless made
in accordance with the form;
The form used there
being not in accordance with the form prescribed
was held to be void though there are observations
to show that if this consequence had not been
attached a departure from the statutory form in any
thing which was not a characteristic of that form
would not have been fatal. In the body of the bill
of sale executed in that case there was no description
of the things intended to be assigned and this portion
was regarded as characteristic of the form prescribed.
There are some cases ofthis Court in which
the prescribed forms have been considered, In two
(I) (1888) IS App. Oas.