Price fixation formula must rely on relevant material; use of Telangana unit data rendered the Government order arbitrary.

Price fixation under the Andhra Pradesh Oil Palm Act must rest on relevant material and objective criteria, and the State could not lawfully use the oil extraction ratio of a processing unit situated in Telangana to fix the price for Andhra Pradesh after bifurcation. The High Court held that ignoring the Pedavegi unit's extraction ratio amounted to reliance on irrelevant considerations, making the Government Order arbitrary and violative of Article 14. The estoppel plea based on alleged meeting consensus was rejected because a constitutional challenge could not be barred on that basis. The pricing formula was struck down and the State was directed to refix the price in accordance with the Act and the Court's observations.

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Issues: Whether the price fixation formula for oil palm fresh fruit bunches could validly rest on the oil extraction ratio of a processing unit situated in the successor State of Telangana, and whether the impugned Government Order was arbitrary and violative of Article 14 of the Constitution of India.

Analysis: Section 13(1) of the Andhra Pradesh Oil Palm (Regulation of Production and Processing) Act, 1993 empowers the State Government to fix the minimum price and the formula for oil palm fresh fruit bunches, but such fixation must be based on relevant material and objective criteria. The Act requires growers to supply produce within the notified factory zone, and the statutory scheme, together with the Government of India's communication, indicated that the oil extraction ratio had to be determined with reference to the processing industry established by the State Government concerned. The Court held that, after bifurcation of the State, the extraction ratio of a unit situated in Telangana could not be used to fix price for the residuary State of Andhra Pradesh, and that ignoring the Pedavegi unit's extraction ratio amounted to reliance on irrelevant considerations. The plea of estoppel based on the alleged meeting consensus was rejected, as constitutional challenge under Article 14 could not be barred by such alleged acceptance.

Conclusion: The impugned Government Order fixing the pricing formula was arbitrary, illegal and violative of Article 14, and could not be sustained.

Final Conclusion: The writ petition succeeded, and the State was directed to refix the price of oil palm fresh fruit bunches for the relevant oil year in accordance with the Act and the Court's observations.

Ratio Decidendi: A price-fixation decision under a welfare statute is valid only if it is founded on relevant considerations and objective material; reliance on extraneous or geographically inapplicable data renders the fixation arbitrary and unconstitutional.

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