Natural justice limits statutory exemption power where accrued cane price rights may be reduced or defeated.

A statutory exemption under clause 5(3) of the Sugar Cane Control Order, 1966 could not be granted without hearing the cane growers because the exemption directly affected their accrued entitlement to additional cane price. The Court treated the exemption power as part of the regulatory scheme for fixation and payment of price, not as a separate administrative discretion, and held that natural justice applied before any order could reduce or extinguish growers' rights. The Government was required to invite and consider the growers' objections on the factory's claimed profit position before deciding exemption. The impugned exemption order was therefore invalid.

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Issues: Whether the Central Government could grant wholly or partial exemption from payment of additional cane price under clause 5(3) of the Sugar Cane Control Order, 1966 without hearing the cane growers, and whether such exemption order was valid in law.

Analysis: The exemption power under clause 5(3) was held to be part of the statutory scheme governing fixation and payment of additional price, and not an independent administrative act. The order affected the growers' right and interest in receiving additional price already determined under the Order. Since the price-fixation mechanism itself contemplated hearing the interests of both growers and producers, the later exemption decision, which could extinguish or reduce the growers' accrued entitlement, also required observance of natural justice. The Government had to invite and consider the growers' objections before deciding whether the factory had made no or inadequate profit and whether exemption should be granted.

Conclusion: Hearing of the cane growers was mandatory before exemption under clause 5(3) could be granted, and the impugned exemption order was invalid.

Final Conclusion: The exemption granted to the factory could not stand, and the growers' challenge succeeded.

Ratio Decidendi: Where a statutory exemption power directly affects an accrued monetary entitlement created by a regulatory scheme, the authority must afford an opportunity of hearing to the persons whose rights are likely to be diminished or defeated.

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