2008 (3) TMI 702 - SC - Indian Laws

Supreme Court directs Central Govt to re-fix levy sugar price considering all factors

MAHALAKSHMI SUGAR MILLS CO. LTD. & ANR. Versus U.O.I. & ORS.

The Supreme Court held that the Central Government must re-fix the price of levy sugar by considering all relevant factors, including the additional price ... - Issues Involved:1. Factors for determining the price of levy sugar under Section 3(3C) of the Essential Commodities Act, 1955.2. Impact of Clause 5A of the Sugarcane Control Order, 1966 on the price of levy sugar.3. Relevance of State Advisory Price (SAP) in determining the price of levy sugar.4. Judicial review and compliance with previous Supreme Court judgments.Detailed Analysis:1. Factors for Determining the Price of Levy Sugar:The core issue is the factors that the Central Government must consider under Section 3(3C) of the Essential Commodities Act, 1955, for determining the price of levy sugar. The relevant factors include:- The minimum price fixed for sugarcane by the Central Government.- The manufacturing cost of sugar.- The duty or tax paid or payable.- Securing a reasonable return on the capital employed in the business of manufacturing sugar.The judgment emphasizes that these factors are mandatory and must be substantially complied with when determining the price of levy sugar.2. Impact of Clause 5A of the Sugarcane Control Order, 1966:The introduction of Clause 5A in the Sugarcane Control Order, 1966, mandated the payment of an additional price to sugarcane growers over and above the statutory minimum price (SMP). The judgment reiterates the importance of taking this additional price into account when determining the price of levy sugar. The Court noted that the Central Government had not consistently considered this additional price, leading to disputes.The Court referenced previous cases, including Malaprabha-I, which held that the additional price under Clause 5A must be included in the cost of production for determining the price of levy sugar. The Court further clarified that both the SMP and the additional price are relevant factors under Section 3(3C).3. Relevance of State Advisory Price (SAP):The judgment also addresses the relevance of the State Advisory Price (SAP) fixed by state governments. The SAP, which is often higher than the SMP, must be considered when determining the price of levy sugar. The Court noted that the SAP is a statutory price and impacts the overall cost of sugar production.The Court emphasized that ignoring the SAP would lead to an incomplete and inaccurate determination of the levy sugar price. The judgment cited the Constitution Bench's decision in UP Coop. Cane Unions Federations, which held that the SAP must be considered under clauses (b) and (d) of Section 3(3C).4. Judicial Review and Compliance with Previous Supreme Court Judgments:The judgment underscores the role of judicial review in ensuring compliance with statutory requirements and previous Supreme Court judgments. The Court noted that the Central Government had not fully complied with the directions issued in Malaprabha-I and Malaprabha-II, which mandated considering the additional price under Clause 5A and the SAP.The Court criticized the Central Government's reluctance to implement these judgments and emphasized that the courts have the power to intervene when statutory requirements are not met. The judgment also highlighted the importance of purposive construction to ensure that the legislative intent and statutory provisions are effectively implemented.Conclusion:The Supreme Court concluded that the Central Government must re-fix the price of levy sugar by considering all relevant factors, including the additional price under Clause 5A and the SAP. The judgment allowed the appeals filed by Mahalakshmi Sugar Mills Co. Ltd. and Govind Nagar Sugar Ltd., and dismissed the appeals filed by the Union of India. The Court directed the Central Government to comply with its directions and re-fix the price of levy sugar for the parties involved in the case.