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2016 (2) TMI 776
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....ericulture) Department. 4. Under this G.O.Ms, the State Government had adopted a formula for pricing of oil palm fresh fruit bunches (FFBs) for the oil year from 01-11-2014 to 31-10- 2015 in exercise of powers conferred under Section 13 (1) of the Andhra Pradesh Oil Palm (Regulation of Production and Processing) Act, 1993 (for short 'the Act'). 5. The said Act was enacted to provide for regulation and cultivation of oil palm for orderly growth and processing thereof and for matters connected therewith. The said Act provides the constitution of a committee called 'the Andhra Pradesh Oil Palm Advisory Committee' to advice the State Government on the following matters set out in Section 4: a) Extension of the areas under cultivation of oil palm; b) Problems relating to the cultivation of oil palm; c) Problems faced by the oil palm processing industry; d) Co-ordination between the oil palm growers and industry and sorting out of all matters which may arise; e) To bring to the notice of the Government any measures that will suit the orderly development of the oil palm cultivation and industry; f) Such other matters as may be pr....
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....d its Managing Director was requested to take further necessary action for registration of the new entity in the successor States by constituting Board of Directors and apportionment of Assets and Liabilities between the two States as per the approved demerger plan and as per the provisions of the Andhra Pradesh Cooperative Societies Act, 1964. 13. The Department of Agriculture and Cooperation, Union of India had entrusted on 27.2.2011 the responsibility to recommend the formula for pricing FFBs of Oil Palm to the Commission for Agricultural Costs and Prices (CACP), which had a mandate to fix MSP of 24 agricultural commodities. Suggestions were made to the said committee. After obtaining inputs from all the stake holders, CACP submitted a report in January 2012 to 4th respondent proposing formula for pricing for FFBs. 14. In its report, it recommended that formula for pricing of FFBs be fixed at 13.54% of net Crude Palm Oil (for short 'CPO') weighted average price plus 75.25 % on 9% recovery of palm kernel nuts weighted average price. This was arrived at based on estimated cost of cultivation at 75.25% in the total cost of production of CPO from farm level to factory level an....
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.... the year 2013-14 in AP Oil Fed (Pedavegi) mill which is 16.57% stating that this is in line with the CACP report. 21. The Committee however decided in the said meeting that the OER at 17.55% as obtained in AP Oil Fed, at Ashwaraopeta, Telangana State during the Oil Year 2013-14 should be taken into account while fixing the price of Oil Palm FFbs in the residuary State of Andhra Pradesh for Oil Year 2014-15. 22. The petitioners however allege that the suggestion of 1st respondent during the committee meeting to accept the OER at 17.55% as obtained in AP Oil Fed, at Ashwaraopeta, Telangana State was not agreed by the petitioners on the ground that the said plant was situated not in the State of Andhra Pradesh and that the OER of the said plant cannot be the basis for fixing FFB price for the State of Andhra Pradesh when there exists a Government plant within the said State of Andhra Pradesh. 23. This is however disputed by the respondents who allege that the members of 1st petitioner Association, and in particular its representatives, had agreed to the OER of 17.55% as obtained in AP Oil Fed, at Ashwaraopeta, Telangana State as the basis for fixing for FFB price for the Sta....
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....2.2015 was issued fixing the following formula for the pricing of Oil Palm FFBs w.e.f. 1.11.2014 to 31.10.2015 under Sec.13(1) of the Act by 1st respondent: "13.20 percent of net Crude Palm Oil (CPO) weighted average price (based on the actual,average OER of 17.55% recovered for the oil year 2013-14 by the APOILFED Aswaraopet Unit) plus 75.25 percent on 9% recovery of palm kernel nuts weighted average price, realized by APOILFED." The G.O.Ms further states that the 17.55% OER obtained by the Oil Palm Processing Unit, Aswaraopet of APOILFED during the Oil Year 2013-14 is taken as the basis for fixing the price of the Oil Palm FFBs in the residuary State of Andhra Pradesh is being taken since the APOILFED was not yet bifurcated. CONTENTIONS OF PETITIONERS 29. Petitioners contend that the impugned G.O.Ms.No.2 dt.18-02-2015 issued by 1st respondent for the oil year 2014-15, taking the OER of 17.55% on the basis of the OER obtained in the AP Oil Fed Oil Palm Processing Unit at Aswaraopet in Telangana State, and applying it post- bifurcation (of the erstwhile composite State of Andhra Pradesh into the State of Telangana and the residuary State of Andhra Pradesh) in the ....
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....014-15. Petitioners contend that they would incur huge loss if the FFB price, as fixed under the said G.O., is applied since certain costs, which require to be taken into consideration while arriving at formula, were not taken into account and it would force them to close down their units. 31. Sri E.Manohar, learned Senior Counsel, appearing for the petitioners reiterated the above submissions and pointed out that while price fixation is a legislative function and principles of natural justice are not attracted, formula laid down by 1st respondent for price fixation can still be questioned on the ground that considerations stipulated under relevant law were not taken into account and also on the ground that there is violation of rights guaranteed by Article 14 of the Constitution of India. According to him, once the Government of India through the CACP directed that the OER to be determined as per the actual oil content extracted in the past by the processing industry established by the State Government concerned, after 02- 06-2014 (when the erstwhile combined State of Andhra Pradesh was divided into the State of Telangana and the residuary State of Andhra Pradesh), the 1st resp....
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....f Aswaraopet Oil Palm Processing Unit in Telangana. He relied upon the decision in Union of India and Another Vs. Cynamide India Ltd. and another (1987) 2 S.C.C. 720 in this regard. CONTENTIONS OF RESPONDENTS 32. The learned Government Pleader on the other hand refuted the above contentions. While admitting that zones were allotted by the Government to the entrepreneurs in the oil palm industry and opportunity was given to them to develop and establish oil palm plantations in the allotted zones, she contended that the oil palm FFBs price fixed under the impugned G.O. cannot be assailed since it was done strictly in accordance with Section 13 of the Act. She contended that the fixation of the oil palm FFB price formula is in accordance with the recommendation of the Commission for Agriculture Costs and Prices (CACP) to whom the Government of India has entrusted the responsibility recommending the formula for pricing of FFBs of oil palm. It was denied that there was any arbitrariness or unreasonableness in fixing the oil palm FFBs pricing formula under the impugned G.O. 33. She contended that the OER, as per the letter dt.13-08-2013 by the Under Secretary, Government of Indi....
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.... is not constant and keeps changing from month to month and it causes loss to the farmers. He relied upon the judgment i n Shri Sitaram Sugar Company Limited and another Vs. Union of India and others (1990) 3 S.C.C. 223 and contended that the price fixation is in the nature of exercise of legislative power and that the Court cannot substitute it's view to that of the Legislature since it is not concerned with matters of economic policy and it does not have the expertise. THE CONSIDERATION BY THE COURT 35. I have noted the contentions of the respective parties. 36. Under Section 13 of the Act undoubtedly the 1st respondent can fix the minimum price of Oil Palm FFBs and this includes the authority to fix the formula for determination of the price of the Oil Palm FFBs. Both the petitioners as well as respondents do not dispute the fact that the Government of India had constituted the CACP to recommend the formula for pricing of FFBs of Oil Palm and that the said Commission had comprehensively studied the entire issue and had recommended a suitable formula for the pricing of FFBs of Oil Palm to be made applicable in all the States in the country uniformly. While the petitioner....
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.... price. Any variation in OER would result in change in the pricing formula in respect of percent of net CPO weighted average price to be paid to the oil palm growers as per enclosed table at Annexure. The OER would be determined as per actual oil content extracted in the past by the processing industry, as established by the State Governments concerned."(emphasis supplied) 40. In the light of the above proceedings, the question which arises for consideration is: " whether 1st respondent is entitled to take into account the OER of the AP Oil Palm Processing Unit located at Aswaraopet in the State of Telangana as the basis for price fixation of oil palm FFBs grown in the State of Andhra Pradesh after the bifurcation of the erstwhile composite State of Andhra Pradesh into the State of Telangana and the residuary State of Andhra Pradesh for the oil palm year 2014-15 (01-11-2014 to 31-11-2015)?" 41. In Cynamide India Ltd. and another (1 supra), the Supreme Court dealt with the aspect of price fixation under the Drugs (Prices Control) Order, 1979 which contained provisions for fixing maximum selling prices of indigenously manufactured bulk drugs and retail prices ....
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....ned was with due regard to the considerations provided by the statute and whether extraneous matters have been excluded from the determination. It held: "45. Price fixation is in the nature of a legislative action even when it is based on objective criteria founded on relevant material. No rule of natural justice is applicable to any such order. It is nevertheless imperative that the action of the authority should be inspired by reason: Saraswati Industrial Syndicate Ltd. [at SCR pp. 961, 962; SCC p. 636, para 13]. The government cannot fix any arbitrary price. It cannot fix prices on extraneous considerations: Renusagar. 46. Any arbitrary action, whether in the nature of a legislative or administrative or quasi-judicial exercise of power, is liable to attract the prohibition of Article 14 of the Constitution. As stated in E.P. Royappa v. State of Tamil Nadu "equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch". Unguided and unrestricted power is affected by the vice of discrimination: Maneka Gandhi v. Union of India. The principle of equality enshrined in Articl....
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.... tax officer. The court is not concerned with any individual case or any particular problem. The court only examines whether the price determined was with due regard to considerations provided by the statute. And whether extraneous matters have been excluded from determination." 58. Price fixation is not within the province of the courts. Judicial function in respect of such matters is exhausted when there is found to be a rational basis for the conclusions reached by the concerned authority.............. 59...........What is best for the sugar industry and in what manner the policy should be formulated and implemented, bearing in mind the fundamental object of the statute, viz., supply and equitable distribution of essential commodity at fair prices in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government. Such matters do not ordinarily attract the power of judicial review."(emphasis supplied)" 43. Keeping in mind the above principles, I will now consider the question framed in this case. 44. It is not disputed that growers of oil palm FFBs are compelled under Section 11 of the Act to sel....
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....al boundaries of the 1st respondent State. 48. Merely because in the erstwhile combined state, the AP Oil Fed had two units- one at Aswarraopet in Khammam District and another in Pedavegi in West Godavari District, and merely because the AP Oil Fed had not been bifurcated by the time G.O.Ms.No.2, dt.18-02- 2015 was issued, the 1st respondent cannot take into account the OER of Aswaraopet Oil Palm processing unit which falls in the State of Telangana (after 02-06-2014 when the combined State of Andhra Pradesh was divided into the State of Telangana and the residuary State of Andhra Pradesh) for fixing the price of FFBs of Oil Palm in the residuary State of Andhra Pradesh. In my opinion, it is impermissible to ignore the OER of the Oil palm processing unit located in Pedavegi in West Godavari District in the residuary State of Andhra Pradesh. This is precisely what was done by 1st respondent. 49. So in my opinion, relevant considerations of OER of Oil Palm Processing Unit in the State of Andhra Pradesh for fixing price of FFBs of Oil Palm in the said State which is indicated by Section 11(2) and Section 12 of the Act, were not taken into account while issuing the impugned G.O. ....
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....s put by the Secretary, (Hort. and Seri), Agriculture and Cooperation Department) long after the said meeting. In fact the specific plea of petitioners is that the minutes were not supplied to them immediately after the meeting and they gave a letter dt.13.1.2015 to furnish the same but they were not furnished to them. Obviously after this letter was received, the minutes were drafted and signed on 13.1.2015. That is the reason why the said minutes do not contain the signatures of the petitioner's or 5th respondent's representatives. 54. Even the said minutes dt.6.1.2015 record on page-1 thereof the contention of the petitioners that for fixing FFB price of Oil Palm, the OER at 16.57% recorded in the Oil Palm Processing Unit, Pedavegi, in the West Godavari District should be taken into account as per Government of India guidelines or 17.40% which was fixed for the previous Oil Year should be taken into consideration. Therefore it is difficult to accept the plea of respondent no.1 that petitioners had agreed in the meeting held on 6.1.2015 for taking of the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana as the basis for fixation of Oil Pal....
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....the Constitution. Were the argument of estoppel valid, an all-powerful State could easily tempt an individual to forego his precious personal freedoms on promise of transitory, immediate benefits. Therefore, notwithstanding the fact that the petitioners had conceded in the Bombay High Court that they have no fundamental right to construct hutments on pavements and that they will not object to their demolition after October 15, 1981, they are entitled to assert that any such action on the part of public authorities will be in violation of their fundamental rights...."(emphasis supplied) Therefore the contention of 1st respondent that petitioners are estopped by their alleged accpetance in the meeting of 6.1.2015 to adopt the OER of Aswarraopet Oil Palm Processing Unit and so they cannot challenge the G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015, cannot be countenanced. 56. The contention of the 5th respondent that the Oil Palm Processing Unit at Aswaraopet had the latest equipment which is not there at Pedavegi also cannot be countenanced since this is not the reason assigned in the impugned G.O. or in the counter-affidavit filed by the 1st r....