1976 (3) TMI 238 - SC - Indian Laws

Supreme Court rules on retroactive price control for rice supplies, emphasizing date of sale

The Supreme Court of India ruled in a batch of Appeals regarding the price for rice supplies sold by the appellants in January and February 1964. The ... - ISSUES PRESENTED AND CONSIDERED 1. Whether supplies of rice made before the promulgation of an amending Price Control Order are payable at the enhanced prices specified by that subsequent amending order or at the controlled prices prevailing on the dates the supplies were made. 2. Whether the use of the term 'substituted' in an amending Price Control Order implies retrospective operation to the beginning of the relevant season or to dates antecedent to the notification in the absence of an express deeming or retrospective clause. 3. Whether price-control notifications issued under section 3 of the Essential Commodities Act, 1955, which operate alongside requisition/levy orders, create a continuing seasonal price right entitling suppliers to enhanced rates fixed after the date of sale. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Temporal effect of amended price-control order on sales concluded prior to amendment Legal framework: Section 3 of the Essential Commodities Act empowers the appropriate Government to fix maximum prices by notification; requisition/levy orders under the Act impose obligations to sell specified quantities to the State at the controlled price. The Andhra Pradesh Rice Procurement (Levy) order, 1959 required millers to sell on requisition at the 'controlled price' defined as the maximum price fixed under section 3 for sale by the Central Government from time to time. Precedent treatment: The Court relied on prior authority holding that orders under section 3(2)(f) operate as offers of sale which must be accepted on requisition and that the price payable is the controlled price prevailing when the goods are ascertained or when property in the goods passes to the buyer (unreported decision cited; High Court decisions following same principle). Mani Gopal Mitra v. State of Bihar was cited for the general rule against retrospective operation of amendments in absence of express words. Interpretation and reasoning: The Court held that where the sale (requisition and delivery) occurred before the amending order came into force and property in the goods passed to the buyer on those dates, the sellers are entitled only to the controlled price obtaining on the dates of sale. The amending order, having been promulgated later, did not alter completed transactions. The reasoning rests on (a) the absence of any express retrospective provision or deeming clause in the amending order; (b) the established interpretive principle that notifications and statutes are prospective unless expressly or by necessary implication made retrospective; and (c) the statutory scheme which ties the price payable under requisition/levy to the controlled price 'from time to time' but necessarily measured at the time of sale/transfer of property. Ratio vs. Obiter: Ratio - The authoritative rule that an amending price-control notification does not affect concluded sales: where property has passed under a requisition/levy, the price payable is the controlled price prevailing on the date the sale was effected and not a subsequently fixed enhanced price absent express retrospective language. Supporting observations about administrative inconvenience and policy objections to reopening closed transactions are explanatory but form part of the operative ratio. Conclusions: The Court concluded that the appellants were entitled only to the controlled price prevailing on the dates of supply (Rs. 46.89 per quintal) and not to the enhanced rate fixed by the subsequent Third Amendment (Rs. 52.25 per quintal) because the sales were completed before the amendment's coming into force. Issue 2 - Significance of the word 'substituted' in the amending order and implication of retrospectivity Legal framework: Canon of statutory construction - literal meaning of words versus the contextual and temporal effect of enactments/notifications; presumption against retrospective operation absent express words; exceptions where a later provision is declaratory/explanatory of a prior act such that relation-back is appropriate. Precedent treatment: The Court referenced the passage from Craies on Statute Law and the illustrative historical authorities where an amending statute that is purely explanatory or declaratory may be treated as relating back (e.g., Att.-Gen. v. Pought). Mani Gopal Mitra was invoked to buttress the presumption against retrospectivity absent clear words. Interpretation and reasoning: The Court acknowledged the literal meaning of 'substituted' but rejected any automatic inference of retrospective operation from that term alone. It emphasized that the decisive criterion is whether the amending notification contains express language or a deeming clause manifesting an intention to affect past transactions. Because the Third Amendment contained no such clause and was not explanatory or declaratory of an obvious omission in the earlier order, the ordinary presumption of prospectivity applied. Ratio vs. Obiter: Ratio - The term 'substituted' in an amending notification does not, without more (e.g., express retrospective language or a deeming provision or being purely declaratory), render the amendment retrospective. Obiter - Discussion of the Craies passage and examples of genuinely declaratory amending statutes is explanatory of the limit to that rule. Conclusions: The Court concluded that the use of 'substituted' did not, in itself, import retrospective effect; therefore, the amendment operated from its date of issue and not from dates prior to promulgation. Issue 3 - Character of price-control orders as 'seasonal prices' and claim for seasonal application Legal framework: Interpretation of administrative price notifications in light of their statutory source and purpose; assessment of evidentiary basis for treating such notifications as setting prices for an entire season versus operative dates. Precedent treatment: No precedent was cited to endorse treating centrally fixed controlled prices as automatically seasonal entitling retrospective uplift; the Court referenced earlier authorities on timing of price applicability (see Issue 1 precedents). Interpretation and reasoning: The Court rejected the submission that controlled prices fixed by the Central Government are 'seasonal prices' entitling suppliers to enhanced rates fixed after physical supply dates. The rejection was grounded in the absence of cogent material establishing that the statutory mechanism was intended to operate seasonally so as to affect prior sales. The Court emphasized that, under the requisition/levy mechanism, price entitlement is tied to the controlled price at the time of sale/transfer, not to any subsequent seasonal re-fixation. Ratio vs. Obiter: Ratio - Absent supporting material or statutory language, price-control notifications under section 3 cannot be treated as seasonal instruments that alter rights in closed transactions; entitlement is measured at the date of sale/transfer. Observations about practical difficulties from reopening closed transactions are ancillary but reinforce the ratio. Conclusions: The Court held that the 'seasonal price' contention lacked foundation; the appellants could not claim the later-fixed enhanced price on the ground of season-wide application. Cross-references and practical consequences Cross-reference: Issue 1 and Issue 2 are interlinked - the temporal effect analysis (Issue 1) depends on the interpretive rule concerning retrospective operation (Issue 2). The Court applied the general rule against retrospectivity to conclude that the amending order could not affect concluded sales. Practical consequences: Acceptance of the appellants' contentions would reopen past completed transactions and create administrative and commercial difficulties; the Court treated this practical consideration as reinforcing the interpretive presumption against retrospectivity where no clear language indicates otherwise.