1959 (5) TMI 60 - SC - Indian Laws

Court upholds constitutionality of Sugar Export Promotion Act, 1958, finding restrictions reasonable and in public interest.

The Lord Krishna Sugar Mills Ltd. and Ors. Versus The Union of India (UOI) and Ors.

The Court upheld the constitutionality and legality of the Sugar Export Promotion Act, 1958, finding that the restrictions imposed by the Act were ... - Issues Involved:1. Constitutionality of the Sugar Export Promotion Act, 1958.2. Legality of the orders passed under the Act.3. Alleged discrimination under Article 14 of the Constitution.4. Infringement of fundamental rights under Articles 19(1)(f) and (g) and Article 31 of the Constitution.5. Reasonableness of restrictions imposed by the Act.6. Validity of penalties imposed under Section 7 of the Act.7. Consideration of contemporaneous legislation in determining the reasonableness of restrictions.Detailed Analysis:1. Constitutionality of the Sugar Export Promotion Act, 1958:The petitioners challenged the constitutionality of the Sugar Export Promotion Act, 1958, arguing that it was discriminatory and violated Article 14 of the Constitution. They contended that the Act unfairly targeted sugar manufacturers using the vacuum pan process and did not impose similar obligations on other sugar producers or manufacturers of other commodities. The Court held that the classification was reasonable and related to the object of the Act, which was to earn foreign exchange. The Court found that the selection of the sugar industry for export was justified due to the demand for vacuum pan sugar abroad and the need for foreign exchange to finance development schemes.2. Legality of the Orders Passed Under the Act:The petitioners questioned the legality of orders passed by the export agency under the Act. The Court examined the scheme of the Act, which authorized the Central Government to specify an export agency and fix the quantity of sugar to be exported. The export agency was empowered to demand sugar from factory owners and sell it either abroad or within India. The Court upheld the legality of these orders, noting that they were in accordance with the provisions of the Act.3. Alleged Discrimination Under Article 14 of the Constitution:The petitioners argued that the Act was discriminatory as it only applied to sugar manufacturers using the vacuum pan process and not to other sugar producers or manufacturers of other commodities. The Court rejected this argument, stating that the classification was reasonable and related to the objective of earning foreign exchange. The Court emphasized that the government could classify commodities based on their potential to earn foreign exchange and that the selection of vacuum pan sugar was justified.4. Infringement of Fundamental Rights Under Articles 19(1)(f) and (g) and Article 31 of the Constitution:The petitioners contended that the Act infringed their fundamental rights to hold, acquire, and dispose of property and to carry on trade or business. They argued that the Act amounted to compulsory acquisition of their property without compensation and imposed unreasonable restrictions on their trade. The Court held that the restrictions imposed by the Act were reasonable and in the public interest. The Court noted that the Act provided for the payment of the sale proceeds to the owners after deducting expenses and that the additional price allowed on internal sales compensated for any potential losses from exports.5. Reasonableness of Restrictions Imposed by the Act:The Court examined whether the restrictions imposed by the Act were reasonable. The petitioners argued that the Act imposed unreasonable restrictions by requiring them to export sugar at a loss. The Court found that the government had made arrangements to recoup the losses by allowing an increase in the price of sugar for internal consumption. The Court held that the restrictions were reasonable and did not infringe the fundamental rights of the petitioners.6. Validity of Penalties Imposed Under Section 7 of the Act:The petitioners challenged the validity of the penalties imposed under Section 7 of the Act, which provided for an additional excise duty on sugar if the export quota was not met. The Court noted that no penalties had been imposed on the petitioners and therefore did not address the validity of the penalties in detail. The Court stated that the issue could be considered if and when penalties were actually imposed.7. Consideration of Contemporaneous Legislation in Determining the Reasonableness of Restrictions:The Court considered whether the reasonableness of restrictions imposed by one Act could be determined by reference to an order made under another Act. The Court held that in judging the reasonableness of a law, it was permissible to consider contemporaneous legislation passed as part of a single scheme. The Court emphasized that the restrictions imposed by the Sugar Export Promotion Act were reasonable in light of the arrangements made under the Essential Commodities Act to increase the price of sugar for internal consumption.Separate Judgments:- A.K. Sarkar, J.: Dissented, arguing that the Act imposed unreasonable restrictions by compelling sugar manufacturers to export sugar at a loss without adequate compensation. He held that the Act was invalid as it imposed a loss on the petitioners' trade, which could not be justified by the objective of earning foreign exchange.- K. Subba Rao, J.: Agreed with the majority but emphasized that the reasonableness of restrictions should not depend on notifications issued under another Act. He held that the restrictions imposed by the Act were reasonable and in the public interest, considering the need to earn foreign exchange and build a foreign market for sugar.Conclusion:The majority of the Court upheld the constitutionality and legality of the Sugar Export Promotion Act, 1958, dismissing the petitions with costs. The Court found that the restrictions imposed by the Act were reasonable and in the public interest, and did not infringe the fundamental rights of the petitioners.