1990 (8) TMI 398 - SC - Indian Laws

Supreme Court Upholds Uniform Cement Price, Justifies Differential Treatment

The Supreme Court upheld the fixation of a uniform retention price of Rs. 100 per tonne for all cement producers, finding it rational and not violative of ... Equality before law and non-discrimination under Article 14 - Permissible judicial review of administrative price fixation - Principle of uniform industry-wide price based on representative efficient units - Scope of executive power to vary prices having regard to changes in costEquality before law and non-discrimination under Article 14 - Permissible judicial review of administrative price fixation - Fixation of a uniform retention price of Rs. 100 per tonne in 1969 does not violate Article 14. - HELD THAT: - The Court held that fixation of the uniform retention price was made on a rational basis: the Tariff Commission's approach, the industry's own acceptance in principle of a uniform price, the weighted average increase of Rs. 7 per tonne in cost of production, and expert determination of a weighted average retention price of Rs. 93 per tonne. The exercise was within the policy-making domain of the Central Government directed to ensure supply and equitable distribution in the public interest, and falls within the limited scope of judicial review which is confined to checking for unconstitutionality, illegality under the governing Act, or manifest arbitrariness such that no fair minded authority could have acted as it did. The Court found no such arbitrariness here and held that the choice of Rs. 100 (as opposed to Rs. 104 claimed by industry) concerns the merits of policy which are not amenable to interference absent a demonstrable constitutional or legal infirmity.The challenge under Article 14 to the 1969 uniform retention price was rejected; fixation at Rs. 100 per tonne was upheld.Scope of executive power to vary prices having regard to changes in cost - Interpretation of power to alter Schedule and vary prices - Clause 12 of the Cement Control Order, 1967 did not preclude the Central Government from fixing a uniform retention price for all units even though different prices were specified earlier in the Schedule. - HELD THAT: - Clause 12 confers power on the Central Government to vary prices 'having regard to' changes in factors relevant to price, including increase or decrease in cost of production or distribution. The Court construed 'having regard to' as requiring consideration of enumerated and other relevant factors, not as imposing a limitation preventing a uniform price where such course is justified by relevant changes. Since the uniform price was fixed having regard to changes in cost and other relevant data, Clause 12 did not operate to inhibit the impugned revision.Clause 12 does not restrict the Government's power to fix a uniform retention price; the 1969 amendment was permissible under Clause 12.Classification and reasonable basis for differential treatment - Burden of proof to establish similar exceptional status - The appellant Chettinad Cement Corporation Ltd. was not entitled to the differential treatment given to M/s. Travancore Cement Ltd.; no material established that Chettinad was a similar sub-standard uneconomic unit deserving exception. - HELD THAT: - The Government furnished reasons justifying special treatment of Travancore Cement Ltd. as a sub-standard unit with limited capacity and no scope for expansion, rendering it uneconomic. Chettinad produced no material to show comparable incapacity or uneconomic status. The Court found a rational basis for the classification and declined to interfere; absence of evidence from Chettinad meant it could not claim analogous treatment.No direction for differential fixation in favour of Chettinad; the distinct treatment of Travancore was upheld as rational.Final Conclusion: The appeals were dismissed: the 1969 fixation of a uniform retention price (except for the specially justified Travancore unit) was upheld as constitutionally and legally sustainable, Clause 12 did not prohibit such fixation, and no entitlement to differential treatment was established by the appellant Chettinad; parties to bear their own costs. Issues Involved:1. Fixation of a uniform retention price for cement producers.2. Alleged discrimination contravening Article 14 of the Constitution.3. Validity of the Cement Control (Amendment) Order, 1969.4. Differential treatment of specific cement producers.Summary:1. Fixation of a Uniform Retention Price for Cement Producers:The appellants challenged the fixation of a uniform retention price of Rs. 100 per tonne for all cement producers, arguing that it treated unequals as equals, violating Article 14 of the Constitution. Historically, different retention prices were fixed for different categories of producers based on the Tariff Commission's recommendations, which were accepted by the Government. The Central Government, however, decided to introduce a uniform retention price in 1969, which was contested by the appellants.2. Alleged Discrimination Contravening Article 14 of the Constitution:The appellants argued that the uniform retention price was discriminatory as it did not account for the different costs of production among producers. They contended that the earlier system of three different retention prices was reasonable and that the new uniform price system was arbitrary. The Court, however, found that the fixation of Rs. 100 per tonne was based on a rational basis, considering the weighted average increase in the cost of production and the industry's acceptance of a uniform price principle.3. Validity of the Cement Control (Amendment) Order, 1969:The appellants argued that Clause 12 of the Cement Control Order, 1967, did not permit the fixation of a uniform price for all producers. The Court held that Clause 12 allowed the Central Government to vary prices based on changes in relevant factors, including the cost of production. The fixation of the uniform retention price was found to be within the Government's power and based on expert opinion, thus not arbitrary or unreasonable.4. Differential Treatment of Specific Cement Producers:The appellants contended that the differential treatment of M/s. Travancore Cement Limited, which was given a higher retention price, was discriminatory. The Court found that M/s. Travancore Cement Limited was classified differently due to its status as a sub-standard and uneconomic unit without scope for expansion, justifying special consideration. The appellants failed to show that they were similarly situated to M/s. Travancore Cement Limited.Conclusion:The Supreme Court dismissed the appeals, holding that the fixation of a uniform retention price of Rs. 100 per tonne was based on a rational and permissible principle, and did not violate Article 14 of the Constitution. The Court also upheld the differential treatment of M/s. Travancore Cement Limited as justified. The parties were directed to bear their own costs.