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SC Says Both Central & State Governments Have Power to Fix Sugarcane Prices

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The Supreme Court of India on Wednesday held that both the Central Government as well as the State Government have the power to fix the price of sugarcane.

Acting upon a reference made by the three judges bench on conflict of two precedents of the Supreme Court passed in “Ch. Tika Ramji  vs. The State of Uttar Pradesh” and “U.P. Cooperative Cane Unions Federations vs. West U.P. Sugar Mills Association”, the matter was referred to the constitution bench comprised of Justice Arun Mishra, Justice Indira Banerjee, Justice Vineet Saran, Justice M.R Shah and Justice Anuradha Bose.

Following questions were referred to the larger bench:-

  • Whether   by   virtue   of   Article   246   read   with Schedule VII List III Entry 33 of the Constitution the field is occupied by the Central legislation and hence the Central Government has the exclusive power to fix the price of sugarcane?
  • Whether Section 16 or any other provision of the U.P. Sugarcane (Regulation   of   Supply and Purchase) Act, 1953 confers any power upon the State Government to fix the price at which sugarcane can be bought or sold? 
  • If the answer to this question is in the affirmative, then whether Section 16 or the said provision of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 is repugnant to Section 3(2)(c) of   the   Essential   Commodities   Act,   1955   and Clause 3 of the Sugarcane (Control) Order, 1966? And if so, the   provisions   of   the   Central   enactments   will prevail over the provisions of the State enactment and the State enactment to that extent would be void under Article 254 of the Constitution of India.
  • Whether the SAP fixed by the State Government in exercise of powers under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 is arbitrary, without any application of mind or rational basis and is therefore, invalid and illegal?
  • Does the State Advised Price (for short “SAP”) constitute a statutory fixation of price? If so, is it within the legislative competence of the State?
  • Whether the power to fix the price of sugarcane is without   any   guidelines   and   suffers   from conferment of arbitrary and uncanalised power which is violative of Articles 14 and 19(1)(g) of the Constitution of India?

The bench observed that in Tika Ramji case, this Court did not comment on whether a power which the State Government exercised under Section 16 of the 1953 U.P. Act would be repugnant to the Central legislation, since this Court found no such power exercised by the State Government. In the case of U.P. Coop. Cane Unions Federations has the court has specifically gone into the question of repugnancy and held that the inconsistency or repugnancy will rise if the State Government fixes a price which is lower than that fixed by the Central Government.

But, if the price fixed by the State Government   is   higher   than   that   fixed   by   the   Central Government, there will be no occasion for any inconsistency or repugnancy as it is possible for both the orders to operate simultaneously and to comply with both of them. A higher price fixed by the State Government would automatically comply with the provisions of clause 3(2) of 1966 Order. Therefore, any price fixed by the State Government which is higher than that fixed by the Central Government cannot lead to any kind of repugnancy, observed the bench.

Senior Advocate Jayant Bhushan appearing on the behalf of appellants saidd that there cannot be two minimum prices, one fixed by the Central Government as minimum price and other fixed by the State Government as State Advised Price (SAP), which is also a minimum price and once the Centre has fixed a minimum price, any other price whether minimum price or SAP would be repugnant to the Centre’s decision and the Centre’s power and such power of the State Government would therefore have to yield to the Central legislation under Article 254 of the Constitution, both legislations being under the Concurrent List.

Krishnan Venugopal, Senior Advocate appearing for State of U.P. has said that as such there is no apparent conflict between the two decisions of Constitution Bench of this Court in the case of Tika Ramji and U.P. Coop. Cane Unions Federations. He further said that, there has been a sea change in the law relating to repugnancy between Central law and State law in the context of laws made under the Concurrent List, List III in the VII Schedule to the Constitution of India, where both, the Union and the States have power to make law.

The bench observed that the view taken by the Constitution Bench of this Court in the subsequent decision in the case of U.P. Coop. Cane Unions Federations is the correct law. There is no conflict between the two decisions of this Court in the case of Tika Ramji  and in the case of  U.P. Coop. Cane Unions Federations and therefore, there is no necessity to refer the matter to the larger Bench consisting of seven Judges.

The final conclusions of the Supreme Court were:-

  • By virtue of Entries 33 and 34 List III of seventh Schedule, both the Central Government as well as the State Government have the power to fix the price of sugarcane. The Central Government having exercised the power and fixed the “minimum price”, the State Government   cannot   fix   the   “minimum   price”   of sugarcane. However, at the same time, it is always open for the State Government to fix the “advised price” which is always higher than the “minimum price”,   in  view   of   the   relevant   provisions   of   the Sugarcane (Control) Order, 1966, which has been issued in exercise of powers under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953.
  • The Sugarcane (Control) Order, 1966 which have been issued  under   Section   16   of   the   U.P.   Sugarcane (Regulation   of   Supply   and   Purchase)   Act,   1953 confers power upon the State Government to fix the remunerative/advised price at which sugarcane can be bought or sold which shall always be higher than the minimum price fixed by the Central Government.
  • Section 16  of  the  U.P.  Sugarcane  (Regulation of Supply and Purchase) Act, 1953 is not repugnant to Section 3(2)(c) of the Essential Commodities Act, 1955 and Clause 3 of the Sugarcane (Control) Order, 1966 as, as observed hereinabove, the price which is fixed by the Central Government is the “minimum price” and the price which is fixed by the State Government is the “advised price” which is always higher than the “minimum price” fixed by the Central Government and therefore, there is no conflict. It is only in a case where the “advised price” fixed by the State Government is lower than the “minimum price” fixed by the Central Government, the provisions of the Central   enactments   will   prevail   and   the “minimum price” fixed by the Central Government would prevail. So long as the “advised price” fixed by the State Government is higher than the “minimum price” fixed by the Central Government, the same cannot be said to be void under Article 254 of the Constitution of India.
  • The view taken by the Constitution Bench of this Court in the case of U.P. Cooperative Cane Unions Federations vs. West U.P. Sugar Mills Association is the correct law.

Apart from aforesaid declaration about the fixation of prices of sugarcanes in the state of U.P, it is also observed that the farmers are still in distress due to the non-payment of their supplies to the Sugar mills owners. In spite of Supreme court of India along with Allahabad High Court holdings which says that the Sugarcane farmers will have the first right to recover the dues from the sale of sugar by the sugar mill then the banks, still there are lot of dues against mill owners. The non-payment for longer period to the sugarcane farmers should be considered as the prime concern for
the nation.

-India Legal Bureau

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