IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7508 OF 2005

WEST U.P. SUGAR MILLS ASSOCIATION & ORS.   …Appellants

Versus

STATE OF UTTAR PRADESH & ORS.     …Respondents

WITH

Civil Appeal No. 7509-7510 of 2005 [BASTI SUGAR MILLS CO. LTD. V. STATE OF U.P. & ORS.]

Civil Appeal No. 150 of 2007 [WEST U.P. SUGAR MILLS ASSN. & ORS.  V. STATE OF U.P. &  ORS.]

Civil Appeal No. 2664 of 2007 [BAJAJ HINDUSTAN LTD. V. STATE OF U.P. & ORS.]

Civil Appeal No. 4026 of 2009 [KISAN MAZDOOR SANGATHAN V. BASTI SUGAR MILLS CO.  LTD. & ORS.]

Civil Appeal No. 4024 of 2009 [COOP.  CANE DEVT.  UNION LTD.  V.  BASTI  SUGAR MILLS  CO. LTD. & ORS.]

Civil Appeal No. 4025 of 2009 [SHAHKARI GANNA VIKAS SAMITI LIMITED V. BASTI SUGAR  MILLS CO.LTD. & ORS.]

Civil Appeal Nos. 4014-4023 of 2009 [STATE OF U.P. & ANR. V. BASTI SGUAR MILLS CO. LTD. &  ORS.]

Contempt Petition (C) No. 169 of 2006 in C.A. No.7508/2005 [STATE OF U.P. & ANR. V. S.K. KANORIA & ORS.]  

Contempt Petition (C) No.253 of 2007 in C.A. No.7508/2005 [U.P.  CANE UNION FEDERATION LTD.  V.  S.K.  KANORIA &  ANR.]

Contempt Petition (C) No.  254 of 2007 in C.A. No.7508/2005 [U.P. CANE UNION FEDERATION LTD. V. SATYAJEET SINGH  MAJITHIA & ANR.]

Civil Appeal Nos. 3911-3912 of 2009 [TIKAULA SUGAR MILLS LTD. & ORS. V. STATE OF U.P. &  ORS.]

Civil Appeal No. 3925 of 2009 [BAJA HINDUSTHAN LTD. & ANR. V. STATE OF U.P. & ORS.]

Civil Appeal Nos. 3996-3997 of 2009 [M/S  UTTAM  SUGAR  MILLS  LTD.  &  ORS.  V.  STATE  OF  UTTARKHAND & ORS.]

Contempt Petition (C) Nos.263-264 of 2008 in C.A. Nos.3996- 3997/2009 [COOP. CANE DEV. UNION, UTTARAKHAND V. RAJ KUMAR  ADLAKHA & ANR.]

Contempt Petition (C) Nos.265-266 of 2008 in C.A. Nos.3996- 3997/2009 [[COOP. CANE DEV. UNION. UTTARAKHAND V. MANMOHAN  SHARMA]

Contempt Petition (C) Nos.267-268 of 2008 in C.A. Nos.3996- 3997/2009 [COOP.  CANE DEV.  UNION,  HARIDWAR,  UTTARAKHAND V  S.M. MITTAL & ANR.]

Civil Appeal No. 4764 of 2009 [WEST U.P. SUGAR MILLS ASSN. & ORS. V. STATE OF U.P. &  ORS.

SLP(C) NO. 21576-21581 of 2008 [U.P.  CO-OPERATIVE CANE UNION FEDERATION V.  BASTI  SUGAR MILLS CO. LTD. & ORS.]

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SLP(C) NO. 21585-21587 of 2008 [STATE OF U.P. & ANR. V. BASTI SUGAR MILLS CO. LTD. &  ORS.]

SLP(C) NO. 18681 of 2008 [[EAST U.P. SUGAR MILLS ASSOCIATION & ORS. V. STATE  OF U.P. & ORS.]

SLP(C) NO. 19183 of 2008 [M/S. MAWANA SUGARS LTD. V. STATE OF U.P. & ORS.] (With prayer for interim relief)

SLP(C) NO. 20205 of 2008 [MODI SUGAR MILLS & ANR. V. STATE OF U.P. & ORS.]

SLP(C) NO. 20206 of 2008 [M/S SBEC SUGAR LIMITED & ANR.  V.  STATE OF U.P.  &  ORS.]

SLP(C) NO. 23202 of 2008 [KISAN MAZDOOR SANGATHAN V. BASTI SUGAR MILLS CO.  LTD. & ANR.]

SLP(C) NO. 26026 of 2008 [UTTAM  SUGAR  MILLS  LIMITED  &  ANR.  V.  STATE  OF  UTTARKHAND & ORS.]

J U D G M E N T  

Dalveer Bhandari, J.

1. The  crucial  issue  involved  in  this  group  of  matters  is  

whether the State of Uttar Pradesh has the authority to fix the  

State Advised Price (for short, ‘SAP’), which is required to be  

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paid over and above the minimum price fixed by the Central  

Government?

2. It  is  submitted  by  the  appellants  that  the  power  to  

regulate distribution, sale or purchase of cane under Section  

16 of the U.P. Sugarcane (Regulation of Supply and Purchase)  

Act, 1953 (hereinafter referred to as the ‘U.P. Sugarcane Act’)  

does not include the power to fix a price.  According to the  

appellants, this aspect has been comprehensively dealt with  

by the Constitution Bench judgment of this court in Ch. Tika  

Ramji  and  others  etc.  v.  State  of  Uttar  Pradesh  and  

others  (1956) SCR 393.  In this case this Court enumerated  

the legislative history of laws relating to sugar and sugarcane  

of  both Centre  and States.  This  Court  came to  the  specific  

conclusion that the power reserved to the State Government to  

fix the minimum price of sugarcane which existed in U.P. Act  

1 of 1938 was deleted from the U.P. Sugarcane Act since that  

power was being exercised by the Centre under Clause 3 of the  

Sugar and Gur Control Order, 1950.  The relevant paragraphs  

from pages 422, 433 and 434 of the  Tika Ramji’s  case are  

reproduced as under:

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“…  …  …Even  the  power  reserved  to  the  State   Government  to  fix  minimum  prices  of  sugarcane   under Chapter V of U.P. Act I of 1938 was deleted  from the impugned Act the same being exercised by  the Centre under clause 3 of Sugar and Gur Control   Order, 1950, issued by it in exercise of the powers  conferred under Section 3 of Act XXIV of 1946.  The  prices fixed by the Centre were adopted by the State   Government  required  under  rule  94  was  that  the  occupier of a factory or the purchasing agent should  cause to be put up at each purchasing centre a notice   showing  the  minimum  price  of  cane  fixed  by  the   Government meaning thereby the Centre.  The State   Government  also  incorporated  these  prices  which   were notified by the Centre from time to time in the   forms of  the  agreements  which were  to  be entered  between  the  cane  growers,  the  cane  growers  cooperative societies… … …”

… … … …

“… … …As we have noted above, the U.P. State   Government did not at all provide for the fixation of   minimum prices for sugarcane nor did it provide for  the  regulation  of  movement  of  sugarcane  as  was   done by the Central  Government in clauses (3) and  (4)  of  the  Sugarcane  Control  Order,  1955.   The  impugned  Act  did  not  make  any  provision  for  the   same and the only provision in regard to the price of   sugarcane  which  was  to  be  found  in  the  U.P.  Sugarcane  Rules,  1954,  was  contained  in Rule  94  which provided that a notice of suitable size in clear  bold lines showing the minimum price of cane fixed  by the Government and the rates at which the cane   is being purchased by the centre was to be put up by  an occupier of a factory or the purchasing agent as   the  case may be at  each purchasing centre.    The  price of cane fixed by Government here only meant  the price fixed by the appropriate Government which  would be the Central Government, under clause 3 of   the Sugarcane Control Order, 1955, because in fact  

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the  U.P.  State  Government never  fixed the  price  of   sugarcane  to  be purchased by the factories.   Even  the provisions in behalf of the agreements contained  in clauses 3 and 4 of the U.P. Sugarcane Regulation  of Supply  and Purchase Order, 1954, provided that   the price was to be the minimum price to be notified   by  the  Government  subject  to  such  deductions,  if   any, as may be notified by the Government from time   to time meaning thereby the Central Government, the   State Government not having made any provision in  that behalf at any time whatever.  … … …”

3. It has been specifically held in  Tika Ramji’s case  that  

there was no power to fix a price for sugarcane under the U.P.  

Sugarcane Act or rules and orders made thereunder.  

4. It is also submitted by the appellants that even if such a  

power had existed under Section 16 of the U.P. Sugarcane Act,  

even then such power would be totally repugnant to the power  

of  the  Central  Government to fix  the minimum price  under  

clause 3 of the Sugarcane Control Order, 1955.  This Court in  

Tika Ramji’s  case has not  commented on whether  such a  

power with the State Government would be repugnant to the  

Central  legislation,  since  it  found  no  such  power  with  the  

State Government, however, the majority judgment in the later  

Constitution  Bench judgment  of  2004  in  U.P.  Cooperative  

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Cane  Unions  Federations v. West  U.P.  Sugar  Mills  

Association and others (2004) 5 SCC 430 held as under:

“The  inconsistency  or  repugnancy  will  arise  if  the   State Government fixed 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  sub  clause (2) of clause 3 of the 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.”

5. According  to  the  appellants,  the  aforementioned  

conclusion  of  the  U.P.  Cooperative  Cane  Unions  

Federations is contrary to Tika Ramji’s case.

6. We have heard learned counsel for the parties at length.  

We  have  also  carefully  perused  and  analysed  both  the  

aforementioned judgments delivered by the two Constitution  

Benches of this Court in  Tika Ramji  and  U.P. Cooperative  

Cane Unions Federations’s cases.

7. In our considered view, there is  a clear conflict  in the  

aforementioned  judgments  of  the  Constitution  Benches.   It  

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may be pertinent to mention that almost every year a spate of  

petitions  are  filed  before  the  Allahabad  High  Court  and  

thereafter before this Court on similar issues and questions of  

law.   Therefore, in the interest of justice, it is imperative that  

the conflict between these judgments be resolved or decided by  

an authoritative judgment of a larger Bench of this Court.   

8. The  learned  counsel  for  the  appellants  in  one  voice  

asserted that these cases be referred to a larger Bench so that  

at least in future the parties would have benefit of a clearer  

enunciation of  law by an authoritative judgment of  a larger  

Bench.   

9. Following questions of law may be considered by a larger  

Bench of this Court:

1) Whether  by  virtue  of  Article  246  read  with  

Entry 33 of List III to the Seventh Schedule 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?

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2) 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?

3) 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.

4) Whether  the  SAP  fixed  by  the  State  

Government  in  exercise  of  powers  under  

Section 16 of the U.P. Sugarcane (Regulation  

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of Supply and Purchase) Act, 1953 is arbitrary,  

without  any  application  of  mind  or  rational  

basis and is therefore, invalid and illegal?

5) Does the State Advisory Price (for short ‘SAP’)  

constitute a statutory fixation of price? If so, is  

it  within  the  legislative  competence  for  the  

State?

6) 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?

10. We are conscious of the fact that ordinarily a Bench of  

three  Judges  should  refer  the  matter  to  a  Bench  of  five  

Judges, but, in the instant case since both the aforementioned  

conflicting judgments have been delivered by the Constitution  

Benches  of  five  Judges  of  this  Court  and  hence  this  

controversy can be finally resolved only by a larger Bench of at  

least seven Judges of this Court.  

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11. Recently, a three-Judge Bench of this court in  Mineral  

Area Development Authority and others v. Steel Authority  

of India and others (2011) 4 SCC 450 dealt with somewhat  

similar situation and this Court in para 2 of the said judgment  

observed as under:

“Before concluding, we may clarify that normally the  Bench of five learned Judges in case of doubt has to  invite the attention of the Chief Justice and request  for  the  matter  being  placed  for  hearing  before  a  Bench  of  larger  coram  than  the  Bench  whose  decision has come up for consideration (see Central   Board of Dawoodi Bohra Community  v.  State of  Maharashtra (2005) 2 SCC 673).  However, in the  present case, since prima facie there appears to be  some conflict between the decision of this Court in  State of W.B. v. Kesoram Industries Ltd.  (2004)  10 SCC 201 which decision has been delivered by a  Bench of five Judges of this Court and the decision  delivered by a seven-Judge Bench of this Court in  India Cement Ltd. v. State of T.N.  (1990) 1 SCC  12,  reference  to  the  Bench  of  nine  Judges  is  requested.  The office is directed to place the matter  on the administrative side before the Chief Justice  for appropriate orders.”

12. Reference of these matters to a larger Bench is made so  

that the controversy which arises almost every year is settled  

by an authoritative judgment of a larger Bench of this Court.   

13. However, in the peculiar facts and circumstances of these  

cases,  we  direct  the  sugar  factories  to  pay  the  balance  

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outstanding principal  amount to the cane growers or to the  

cooperative  societies  according  to  the  SAP  of  the  relevant  

crushing seasons.  In other words, in all those cases where the  

sugar factories and other buyers have not paid the balance  

outstanding principal  amount to the cane growers or to the  

cooperative societies because of the stay orders obtained by  

them from this Court or from the High Court, they are now  

directed  to  pay  the  balance  outstanding  principal  amount  

according to the SAP as fixed by the State Government from  

time to time.   All the stay orders granted by this court or by  

the High Court are modified/vacated in the aforesaid terms.  

Let the balance outstanding principal amount be paid by the  

sugar  factories  within  three  months  from  the  date  of  this  

judgment.

14. In  case  the  balance  outstanding  principal  amount,  as  

directed by this Court, is not paid within three months from  

the  date  of  this  judgment  then  the  sugar  factories/buyers  

would be liable to pay interest at the rate of 18% per annum  

on  the  delayed  payment  to  the  cane  growers  or  to  the  

cooperative societies, as the case may be.   

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15. It  is  made  clear  that  the  payment  of  the  balance  

outstanding  principal  amount  by  the  sugar  factories  is  of  

course without prejudice to the main submissions advanced  

by  them  (sugar  factories)  that  the  State  Government  lack  

legislative competence to impose the SAP.

16. It may be pertinent to mention that all these cases are  

covered by  separate  individual  agreements  where  the  sugar  

factories had undertaken to pay the SAP to the cane growers.  

We are not examining the veracity of these agreements.   

17. It  may  be  relevant  to  note  that  the  SAP  has  been  

continuously increasing every year. In all those cases, where  

for  any reason,  the SAP was not fixed in a particular  year,  

then,  the sugar factories/buyers would be liable  to pay the  

balance outstanding principal amount to the cane growers at  

the rate of the SAP of the previous year.   On consideration of  

all  the  facts  and  circumstances  of  these  cases,  we  request  

Hon’ble the Chief Justice of India to refer these matters to a  

larger  Bench,  preferably  to  a  Bench  consisting  of  seven  

Judges.

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18. All these Civil Appeals and other petitions are accordingly  

referred to a larger Bench.  

…............................J.                                                      (Dalveer Bhandari)

…...........................J.  (T.S. Thakur)

…...........................J.       (Dipak Misra)

New Delhi; January 17, 2012

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