# M/S. DIWAN SUGAR & GENERAL MILLS (PRIVATE) LTD. AND OTHERS v. THE UNION OF INDIA

- **Citation:** [1959] Supp. 2 S.C.R. 123
- **Court:** Supreme Court of India
- **Decided:** 1958-07-30
- **Case number:** Writ Petition No. 134 of 1958
- **Bench:** S. R. Das, Jafer Imam, s. K. DAS, K. N. W ANclioo, M. HrnAYATULLAH
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-diwan-sugar-general-mills-private-ltd-and-others-v-the-union-of-india-1588
- **Pages:** 14

## Headnote

Sugar Control-Notification fixing price ex-factory-Legality
-Restrictions on right to trade-Discrimination-Sugar (Control)
Order, r955, cl. 5-Essential Commodities Act, I955 (IO of r955),
s. 5-Constitution of India, Arts. r4, r9(r)(g).
In exercise of the powers under s. 3 of the Essential Commodities Act, 1955, and under cl. 5 of the Sugar (Control) Order,
1955, the Government of India issued a notification dated July
30, 1958, fixing the ex-factory price per maund of sugar produced
in Punjab, Uttar Pradesh and North Bihar. The petitioners
challenged the legality o:t the notification on the grounds (1) that
it was beyond the ambit of authority conferred on the Central
Government under s. 3 of the Essential Commodities Act, 1955,
and clause 5 of the Sugar (Control) Order, 1955, and that, in any
case, it was bad as it could not subserve the purposes of the Act
ensuring equitable distribution of the commodity to the consumer at a fair price, (2) that the Act and the Order did not
authorise the Central Government to fix ex-factory prices, and,
in aμy case, the notification failed to fix prices for the ultimate
consumer, (3) that it imposed an unreasonable restriction on the
right to trade under Art. l9(1)(g), inasmuch as it fixed the price
arbitrarily, and there was no reasonable safeguard against the
abuse of power, and (4) that it was discriminatory because it fixed
ex-factory prices only for factories in Punjab, Uttar Pradesh and
North Bihar and not for factories in other parts of liidia and
there was no reasonable classification discernible on any intelligible differentia on the basis of which prices had been controlled
in certain regions only.
Held, (1) The notification dated July 30, 1958, is within the
authority conferred on the Central Government by s. 3 of the
Essential Commodities Act, 1955, and cl. 5 of the Sugar (Control)
Order, 1955·
(2) Section 3 of the Act which provides for control of price
is very general in terms and authorises the Central Government
to fix the ex-factory price of sugar without fixing the wholesale
or retail prices ; and, since fair prices for the consumer are
ensured by fixing the ex-factory price, the notification in question
subserves the purposes of the Act, and is valid.
(3) Clause 5 of the Sugar (Control) Order, 1955, lays do~n
the factors which have to be taken into consideration in fixing
prices, and as the prices were fixed in accordance therewith, the
r959
January 23.
1959
Diwan Sugar &-
General Mills
(Private) Ltd.
v.
Union of India
124
SUPREME COURT REPORTS [1959] Supp.
action taken by the Government in the interests of the general
public could not be challenged on the ground that it was an unreasonable restriction on the right to carry on trade under Art.
rg(r)(g) of the Constitution.
(4) Though under the notification prices are fixed for factories only in Punjab, Uttar Pradesh and North Bihar, in effect,
they are fixed for the whole of India, as the other States are
deficit; consequently, the notification brougM about no discrimination between different regions.
ORIGINAL JURISDICTION:
Writ Petition No. 134 of
1958.
Writ Petition under Article 32 of the Constitution of
India for the Enforcement of Fundamental Rights.
N. C. Chatterjee, K. P. Mukherjee, P. D. Himatsinghka and B. P. Maheshwari, for the petitioners.
M. C. SetalvarZ, Attorney-General for India, B. Sen
and R. H. Dhebar, for the respondent.
J{. P. Khaitan, K. P. Mukherjee and B. P. Maheshwari, for Interveners l to 10.
G. S. Pathak, K. P. Mukherjee and B. P. Maheshwari, for lnterveners 11 to 13.
1959. January 23.
The Judgment of the Court
was delivered by
-..
Wanchoo J.
WANCHOO, J.-This petition under Art. 32 of the
Constitution challenges the legality of the notification"
dated July 30, 1958, (hereinafter called the impugned
notification), issued by the Government of India fixing
the ex-factory price per maund of sugar produced in
Punjab, Uttar Pradesh and North Bihar. It has been
supported by two sets of interveners consi

## Text

(2) S.C.R. SUPREME COURT REPORTS
123
M/S. DIWAN SUGAR & GENERAL MILLS
(PRIVATE) LTD. AND OTHERS
v.
THE UNION OF INDIA
(S. R. DAS, c. J., JAFER IMAM, s. K. DAS,
K. N. W ANclioo and M. HrnAYATULLAH, JJ.)
Sugar Control-Notification fixing price ex-factory-Legality
-Restrictions on right to trade-Discrimination-Sugar (Control)
Order, r955, cl. 5-Essential Commodities Act, I955 (IO of r955),
s. 5-Constitution of India, Arts. r4, r9(r)(g).
In exercise of the powers under s. 3 of the Essential Commodities Act, 1955, and under cl. 5 of the Sugar (Control) Order,
1955, the Government of India issued a notification dated July
30, 1958, fixing the ex-factory price per maund of sugar produced
in Punjab, Uttar Pradesh and North Bihar. The petitioners
challenged the legality o:t the notification on the grounds (1) that
it was beyond the ambit of authority conferred on the Central
Government under s. 3 of the Essential Commodities Act, 1955,
and clause 5 of the Sugar (Control) Order, 1955, and that, in any
case, it was bad as it could not subserve the purposes of the Act
ensuring equitable distribution of the commodity to the consumer at a fair price, (2) that the Act and the Order did not
authorise the Central Government to fix ex-factory prices, and,
in aμy case, the notification failed to fix prices for the ultimate
consumer, (3) that it imposed an unreasonable restriction on the
right to trade under Art. l9(1)(g), inasmuch as it fixed the price
arbitrarily, and there was no reasonable safeguard against the
abuse of power, and (4) that it was discriminatory because it fixed
ex-factory prices only for factories in Punjab, Uttar Pradesh and
North Bihar and not for factories in other parts of liidia and
there was no reasonable classification discernible on any intelligible differentia on the basis of which prices had been controlled
in certain regions only.
Held, (1) The notification dated July 30, 1958, is within the
authority conferred on the Central Government by s. 3 of the
Essential Commodities Act, 1955, and cl. 5 of the Sugar (Control)
Order, 1955·
(2) Section 3 of the Act which provides for control of price
is very general in terms and authorises the Central Government
to fix the ex-factory price of sugar without fixing the wholesale
or retail prices ; and, since fair prices for the consumer are
ensured by fixing the ex-factory price, the notification in question
subserves the purposes of the Act, and is valid.
(3) Clause 5 of the Sugar (Control) Order, 1955, lays do~n
the factors which have to be taken into consideration in fixing
prices, and as the prices were fixed in accordance therewith, the
r959
January 23.
1959
Diwan Sugar &-
General Mills
(Private) Ltd.
v.
Union of India
124
SUPREME COURT REPORTS [1959] Supp.
action taken by the Government in the interests of the general
public could not be challenged on the ground that it was an unreasonable restriction on the right to carry on trade under Art.
rg(r)(g) of the Constitution.
(4) Though under the notification prices are fixed for factories only in Punjab, Uttar Pradesh and North Bihar, in effect,
they are fixed for the whole of India, as the other States are
deficit; consequently, the notification brougM about no discrimination between different regions.
ORIGINAL JURISDICTION:
Writ Petition No. 134 of
1958.
Writ Petition under Article 32 of the Constitution of
India for the Enforcement of Fundamental Rights.
N. C. Chatterjee, K. P. Mukherjee, P. D. Himatsinghka and B. P. Maheshwari, for the petitioners.
M. C. SetalvarZ, Attorney-General for India, B. Sen
and R. H. Dhebar, for the respondent.
J{. P. Khaitan, K. P. Mukherjee and B. P. Maheshwari, for Interveners l to 10.
G. S. Pathak, K. P. Mukherjee and B. P. Maheshwari, for lnterveners 11 to 13.
1959. January 23.
The Judgment of the Court
was delivered by
-..
Wanchoo J.
WANCHOO, J.-This petition under Art. 32 of the
Constitution challenges the legality of the notification"
dated July 30, 1958, (hereinafter called the impugned
notification), issued by the Government of India fixing
the ex-factory price per maund of sugar produced in
Punjab, Uttar Pradesh and North Bihar. It has been
supported by two sets of interveners consisting of sugar
factories in these areas who did not join the petition.
The case of the petitioners is that the Essential
Commodities Act, 1955 (X of 1955), (hereinafter called
the Act), was passed by Parliament in 1955, for the
control of the production, supply and distribution of,
and trade and commerce in, certain commodities,
which included sugar. By s. 3 of the Act, the Central
Government was given the power, if it was of opinion
that it was necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and
(2) S.C.R.
SUPREME COURT REPORTS
125
availability at fair prices; to provide by order for
regulating or prohibiting the production, supply and
distribution thereof and trade and commerce therefn.
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 fixing the quantity of sugar for export. The Central Government was also authorised by that Ordinance to fix quotas apportioning the quantity of sugar
to be supplied by each factory for export and levy an
additional excise duty at the rate of Rs. 17 per maund
on any factory failing to deliver its quota of sugar for
ex port. On the same day, . three notifications were
issued : (i) fixing 50,000 tons of sugar as the quantity
to be exported out of India during the period ending
October 31, 1958, (2) appointing the Indian Sugar
Mills Associatiou, Calcutta, as the export agency, and
(3) delegating the powers conferred on the Central
Government to the Chief Director of Sugar and Vanaspati, Ministry of Food and Agriculture also.
Then
followed the impugned notification fixing ex-factory
prices of sugar produced by the factories in Punjab,
Uttar Pradesh and North Bihar. It is being challenged on the ground that the price fixed is considerably
below the cost of production and ignores various factors affecting the cost of production and distribution
of sugar including charges incidental to sale and
I959
Diwan Sugar &·
General Mills
(Private) Ltd.
v.
Union of India
-·-
Wanchoo ].
I959
Diwan Sugar 6'
General Mills
(Private) Ltd.
v.
Union of India
Wanchoo ].
126
SUPREME COURT REPORTS [1959] Supp.
distribution. The impugned notification is also attacked on the ground that it did not fix any price at which
the persons purchasing sugar from the mills would sell
it, so that it was open to the middleman who bought
sugar from the factories to sell it at any price, thus
creating discrimination between factories and factories and between the producers· selling sugar and the
middlemen who buy sugar selling the same in their
turn. It is also alleged that fixing of the price was
arbitrary and did not take into account the cost of
production of a large number of units in the country
and did not provide for a fair and equitable distribution of sugar in the country at a price in any way
related to the price at which the factories were compelled to sell their products. Consequently, the petitioners prayed for an appropriate order, direction or
writ in the nature of mandamus or any other writ
quashing the Sugar (Control) Order, 1955, arrd all
orders made in pursuance of it including the impugned
notification.
The petition has been opposed by the Central
Government. It is contended on their behalf that the
entire object of fixing the price of sugar was (a) to
make it available at a reasonable price to the consumer, and (b) to ensure adequate and smooth flow
and supply of sugar which is an essential commodity
for the life of the people to all parts of the country
according to their need~ 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
'·
/
(2) S.C.R. SUPREME COURT REPORTS
127
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 and also for earning foreign exchange in
the interest of the country. Therefore, the Central
Government promulgated the Sugar Export Promotion
Ordinance, No. V of 1958, on June 27, 1958.
But as
this Ordinance was expected, a tendencyideveloped in
the sugar industry to push up prices after the month
of April 1958. As a result of this tendency, prices
went up by about a rupee per maund in May and
June 1958,. and it was feared that they might go up
further in view of the quota for export announced on
June 27, 1958. In view of this apprehension, the
industry assured Government that the sugar factories
would offer to sell their released stocks freely at prices
prevalent before the export policy was announced, i.e.,
in the week before June 27, 1958. In spite, however,
of this assurance, there was a general rise in prices
during the four weeks preceding the impugned notification.
This rise was particularly marked in
Northern India. It was in these 'circumstances that
the Government decided to control ex-factory prices of
sugar in Punjab, Uttar Pradesh and North Bihar.
The Government took all relevant factors into account
in fixing the price.
This was done in the interest of
the general public in order that sugar might be available at fair prices.
As Uttar Pradesh and North
Bihar are the main surplus areas and feed the deficit
areas of the country, it was not necessary to control
prices elsewhere; nor was it necessary to control prices
beyond the ex-factory stage as the prices in the wholesale or the retail markets are governed by ex-factory
prices. There was in the circumstances no question
of discrimination or any unreasonable restriction on
carrying on trade in sugar. The Government did not
admit that the price fixed was below the cost of production generally. Consequently, it was prayed that
the petition should be dismissed.
I959
Diwan Sugar &
General Mills·
(Private) Ltd.
v.
Union of India
Wanchoo ].
I959
Diwan Sugar &
General ft1ills
(Private) Ltd.
v.
Union of India
Wanchoo j.
128
SUPREME COURT REPORTS [1959] Supp.
Learned counsel appearing for the petitioners and
the interveners raise the following points in support of
their contention that the impugned notification is
illegal and invalid :-
(1) (a) The impugned notification is beyond the
ambit of authority conferred on the Central Government under s. 3 of the Act and clause 5 of the Order,
and in any case it is bad as it cannot possibly subserve
the purposes of the Act ensuring equitable distribution
of the commodity to the consumer at a fair price ;
(b) The impugned notification merely fixes exfactory 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 classification discernible on any
intelligible differentia on the basis of which prices
have been controlled in certain regions only.
Re. (J) (a).
The Act deals with essential commodities which
have been defined therein. The preamble shows that
it has been passed in the interest of th~ general public
for the control of the production, supply and distribution of, and trade and commerce in, certain commodities.
Section 3 of the Act gives power to the Central
Government to pass orders under the Act if it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing
(2) S.C.R.
SUPREME COURT REPORTS
129
their equitable distribution and availability at fair
prices. No attack has been made on the vires of the
Act; but the vires of the Order relating to sugar passed
under the Act and particularly of the impugned notification fixing ex-factory prices in Punjab, Uttar
Pradesh and North Bihar have been attacked.
The
Order in our opinion merely carries out the purposes
of the Act and cl. 5 thereof gives the ambit of the
powers of the Central Government in fixing prices, and
lays down the manner in which it should be done and
the factors which should be taken into consideration
in doing so.
Though in the petition, the Order was
attacked on the ground that it gave ' uncontrolled,
unguided and unfettered' power to the executive and
imposed unreasonable restrictions on the right to
carry on trade, no arguments were addressed to us on
the constitutionality of the Order itself. We are in
this case concerned only with that part of the Order
which deals with the fixation of price.
Clause 5
provides for factors that the Government will take
into ace omit in fixing prices and these are: (i) price
or minimum price fixed for sugarcane, (ii) manufacturing cost, (iii) taxes, (iv) reasonable margin. of profit
for producer and/or trade, and (v) any incidental
charges. It is amply clear from this that price is to be
fixed after taking into account all reasonable factors
which go into the consideration of price fixation. In
view of this it cannot be said that the Order gives
' uncontrolled, unguided and unfettered ' power to the
executive to fix prices arbitrarily.
We shall proceed
therefore on the basis that the Act and the Order so
far as they are concerned with the fixation of price
are valid.
This brings us to the' question whether the impugned
notification is beyond the authority conferred on the
Central Government by s. 3 of the Act and clause 5 of
the Order. Reading s. 3 of the Act with the preamble,
it would be obvious that the object of the Act is to provide for control of the production, supply and distribution of, trade and commerce in, essential commodi-
. ties in the interests of the general puQlic, so that the
17
I9$9
Diwan Sugar&·
General Mills
(Private) Ltd.
v.
Union of India
Wanchoo J.
'959
Diwan Sugar &
General idills
(Pri·vate) Ltd.
v.
Union of India
Wanchoo ].
130
SUPREME COURT REPORTS [1959] Supp.
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.
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 prices for the consumer only should be fixed.
The object of s. 3 is undoubtedly to secure essential
commodities at fair prices for the general public, i.e.,
the consumer. It is well-known that there are three
kinds of prices prevalent in the market for a commodity like sugar, namely, ex-factory price, wholesale
price and retail price. It is the last that the consumer
has to pay. It is urged that when s. 3 provides for
availability of essential commodities at fair prices to the
general public it means that price can only be fixed at
the stage where the consumer is the purchaser. In
particular, our attention was invited to clause (c) of
s. 3 (2), which provides for control of price at which
any essential commodity may be bought or sold. Now
there is no doubt that the object of the Act is to
secure essential commodities for the consumer, i.e., tlie
general public;'at fair prices; but it does not follow
from this that t,his object can only be achieved if retail
prices are fixed and that there is no other way of
achieving it. In any case, clause (c) of s. 3 (2)' which
speaks specifically of control of price is very general
(2) S.C.R. SUPREME COURT REPORTS
131
in terms. It provides for fixation of price at which
any essential commodity may be bought or sold ; it
does not specify the stage at which the price should be
fixed.
Therefore, we are of opinion that the control
provided under clause (c) of s. 3 (2) is control at any
of the three stages mentioned above. There is no
reason to cut down the generality of the words used in
clause (c) so as to make them applicable only to the
last stage, namely, the retail price. This contention,
therefore, thats. 3 only authorises the Central Government to fix the retail price, i.e., the price for the
consumer, fails.
It is then urged that even if the power is there to
fix prices at all stages, the Act requires that the price
must be fixed for the consumer, whether it is fixed
at an earlier stage or not.
There are no words in
s. 3 (1) ors. 3 (2) (c) of the Act, which compel such an
interpretation. It is true that the object of the Act is
to ensure fair prices for the consumer; but if fair prices
for the consumer can be ensured by fixing the exfactory price, there is no reason why the Government
should go on also to fix the wholesale or retail price.
It is well-known that the wholesale and retail prices
depend upon ex-factory price, in the case of a commodity like sugar. Therefore 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.
Theoreti·
cally 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
I959
Diwan Sugav &
General Mills
{Private) Ltd,
v.
Union of India
Wanchoo ].
132
SUPREME COURT REPORTS [1959] Supp.
'?59
price. In the circumstances, it was not necessary in
fact for the Government to fix wholesale or retail
Diwan Sulfa' &
•
I 1
c
h ]d'
h
G'"''"l Mills
pnces.
n aw, we see no warrant 1or
o mg t at
(P,ivafo) Ltd.
under s. 3 (1) ands. 3 (2) (c) of the Act, the Governv.
ment must not only fix ex-factory prices but also
Union of India wholesale and retail prices. What prices the Government will fix depend upon their estimate of the situawan'"00 f.
tion, which would serve the object of the Act. We are,
therefore, of opinion that there is no force in this contention either.
·
Re. (2).
The contention under this head is that the impugned notification is invalid as it is an unreasonable
restriction on the petitioners' right to carry on trade
under Art. 19 (1) (g).
The argument is urged in three
ways; namely, (i) factories are being compelled to sell
at below the cost of production, (ii) the price fixed is
arbitrary, and (iii) there is no safeguard against abuse
of power.
The argument that the factories are being
compelled to sell at below the cost of production is
put in two ways. It is said that the press note issued
by the Government on July 30, 1958, shows that the
Government was of the view that prices should be
pegged at the level at which they were in the week
preceding June 27, 1958, and inasmuch as they fixed
prices below that level or even below the level at
which they were at the end of May, 1958, the prices
were below the cost of production.
We must say that
this is a complete misunderstanding of the press
note of J nly 30, 1958.
All tha.t that press note said
was that prices had risen even before June 27, 1958,
in expectation of a large export quota.
Thereafter, the
Government were assured by the industry that prices
would not rise further after J nne 27 ; but this assurance was not kept and prices went up further by
one rupee per ma.nnd by the end of July. It was in
these circumstances that the Government intervened.
There was, however, no commitment in this press note
by the Government that if they intervened they would
fix prices at what they were either in the week before
June 27, 1958, or in the last week of May; nor is
there anything in the press note to suggest that the
(2) S.C.R.
SUPREME COURT REPORTS
133
prices prevalent on either of these two days were proper prices and that any price below them would not
even meet the cost of production. The press note had
nothing to do with the cost of production; nor were the
Government bound to fix the prices at the level of the
end of June or the end of May. When they eventually
decided to intervene at the end of ,July, they were free
to take action under the Act and the Order and so
long as the prices fixed were in accordance therewith,
the action could not be challenged on the ground that
it was 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 margip 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 the prices prevalent in the beginning of
April and also above the average prices for the month
of April, though in the: case of Punjab and_ West
Uttar Pradesh they were slightly below the prices of
the 30th of April. These prices were prevalent in the
free market and must certainly have taken account
of a fair margin of profit for the producer, though in
the case of an individual factory due to factors for
which the producer might himself be responsible, the
cost of production might have been a little more.
r959
Diwan Sugar &
General .Wills
(Private) Ltd.
v.
Union of India
Wanchoo J.
'959
Diwan Sugar &>
General Mills
(Private) Ltd.
v.
Union of India
Wanchoo ].
134
SUPREME COURT REPORTS [1959] Supp.
Therefore, the prices fixed by the Government by the
impugned notification can in no circumstances be said
to have been proved to be below the cost of production.
The petitioners were also not unaware of this state of
affairs, and therefore, in the rejoinder came out with
the story of distress sales by the mills in the early
part of the crushing season.
We are not impressed by
this story, and in any case there could hardly be any
question of distress sales in April when the crushing
season was almost coming to an end.
We see therefore no reason to hold that the prices fixed were
below the cost of production aJ?d were therefore an
unreasonable restriction on the petitioners' right to
carry on trade under Art. 19(l)(g). This also disposes
of the second ground of argument under this Head,
namely, that the prices were arbitrary. All relevant
factors prescribed under cl. 5 of the Order were
apparently taken into consideration and the prices fixed
themselves show that they were not arbitrary. The
last argument in this connection is that there is
no reasonable safeguard against the abuse of power and
no check by way of appeal or otherwise is provided
against the order of the Central Government. It
is enough to say that we are here dealing with the
power of the Central Government to fix prices in the
interests of the general public. It is in these circumstances absurd to expect that there would" be
some provision by way'of appeal or otherwise against
this power of the Central Government. So long as
the Central Government exercises its power in the
manner provided by the Act and the Order-and this
is what it appears to have done-, it cannot be said that
any further safeguard is necessary in the form of an
appeal or otherwise. The safeguards are to be found
in cl. 5 itself, namely, that the Central Government
must give consideration to the relevant factors mentioned therein before fixing the price, and 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).
(2) S.C.R. SUPREME COURT REPORTS
Re. (3).
135
This raises the question of discrimination. It is
said that price control is imposed on factories in
Punjab, Uttar 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 Ker ala 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 as 90 are in Uttar Pradesh and North
Bihar and it is these two areas which are what are called
mainly surplus areas.
The price of sugar in India
depends upon the price of the factories in Uttar Pradesh
and Bihar. The contention of the Government is that as
soon as the price is controlled in Punjab, Uttar Pradesh
and Bihar the price for the whole of India is fixed, for
other States are deficit and import sugar from these
States, particularly Uttar Pradesh and North Bihar.
In these circumstances if price is fixed in this area, price
all over India is practically fixed, and it is not necessary to fix prices separately so far as factories in other
States which are said to be mainly deficit, are concerned. In the circumstances we are of opinion,
that though in form prices are fixed for factories only
in Punjab, Uttar Pradesh and North Bihar, in effect
they are fixed for the whole of India, once the
production of these three regions is controlled. There
is, therefore, in our opinion no discrimination in effect
by the fixation of prices in these three regions.
The
argument that there is discrimination is purely theoretical, in view of the economic factors which control
the price of sugar in this country. Thus in fact
there is no discrimination after the control of sugar
I959
Diwan Sugar b
Generul Mills
(Private) Ltd.
v.
Union of India
Wanchoo j.
I959
Diwan Sugar(&..
General Mills
(Private) Ltd.
v.
Union of India
Wanchoo j.
'959
January 28.
136 SUPREME COURT REPORTS [1959] Supp.
prices in these three regions and the contention that
the factories in the other areas are left free to sell at
any price is specious and does not merit a moment's
consideration. We are therefore of opinion that in
effect the impugned notification brought about no
discrimination between different regions or between
producers and middlemen in view of what we have
said already in Re. l (b ), and consequently, it is not
necessary to consider the last part of the submission
under this head. There is in fact no discrimination by
the impugned notification and this contention fails on
that ground.
There is no force therefore in this petition and it is
hereby dismissed with costs.
Petition dismissed.
BENGAL CHEMICAL & PHARMACEUTICAL
WORKS LTD., CALCUTTA
v.
THEIR WORKMEN
(P. B. GAJENDRAGADKAR, A. K. SARKAR and
K. SuBBA RAo, JJ.)
Industrial Dispute-Reference-Government, if empowered to
transfer from one Tribunal to another-Award-If can be superseded
by fresh agreement-Disputes referred on fresh agreement-Reference
if bad-Industrial Disputes Act, r947 (r4 of r947), ss. 2(r) and
7A.
Industrial Disputes (Amendment and Miscellaneous Provisions) Act: r956 (36 of r956), s. 30-litdustrial Disputes (Amendment) Act, r957 (r8 of r957), s. 2.
Supreme Court-Scope of furisdiction vis-a-vis the Award of
Tribunal-Right of appeal-Constitution of India, Art. r36.
Aggrieved by an Award of r95r, the employees placed before
the Company a fresh charter of demands which was mutually
settled by a written agreement which provided, inter alia,
that the existing rate of dearness allowance should prevail
which was adjustable to any future substantial change in the
cost of living index of the working class.
As the cost of living
increased disputes arose, and in spite ol the said Award of r95r,