C.A.No.3890 of 2010 etc.

1  REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO.3890 OF 2010

     M/s Oudh Sugar Mills Ltd.                 …Appellant

vs

Union of India & Anr.                  ...Respondents

WITH

CIVIL APPEAL NO.3891 OF 2010

J U D G M E N T    

R.SUBHASH REDDY,J.     

1. These Civil Appeals are filed by the petitioner in

Writ Petition No.6732 of 1986 filed before the High

Court  of  Judicature  at  Allahabad,  Lucknow  Bench,

Lucknow,  aggrieved  by  the  judgment  and  order  dated

18.07.2006 and further order dated 11.09.2007 passed in

Review  Petition  No.253  of  2006.   By  the  aforesaid

orders, the High Court has dismissed the Writ Petition

and Review Petition respectively filed by the appellant

herein.

C.A.No.3890 of 2010 etc.

2  2. The appellant is a public limited company namely

Oudh Sugar Mills Ltd., situated at Hargaon, District

Sitapur in the State of Uttar Pradesh.  The appellant

company  invoked  the  jurisdiction  of  the  High  Court

under  Article  226  of  the  Constitution  of  India  by

seeking the following reliefs:

“(i) Issue a writ, order or direction in the nature  of  mandamus  directing  the  opposite parties  to  place  the  petitioners’  sugar factory in East U.P. Zone for the purposes of the Sugar (Price Determination for 1984- 85 production) Order, 1984 and Sugar (Price Determination for 1985-86 Production) Order, 1985;

(ii) Issue a writ, order or direction in the nature  of  mandamus  directing  the  opposite parties to permit the petitioner company to realise  the  price  of  their  levy  sugar  as admissible  to  the  sugar  factories  in  the East  U.P.  Zone  under  the  Sugar  (Price Determination for 1984-85 Production) Order, 1984 and Sugar Price Determination for 1985- 86 Production) Order, 1985 and direct the opposite  parties  to  further  continue  to place  the  petitioners  sugar  factory  along with the other sugar factories of district Sitapur in the Uttar Pradesh east zone and may further direct the opposite parties to pay the petitioners the price of levy sugar as  per  the  price  applicable  for  sugar factories in the Uttar Pradesh east zone;

(iii) Declare Section 3(2)(f) and Section 3 (3c) of the Essential Commodities Act, 1955 as ultra vires of Article 14 and 19(1)(g) of the Constitution of India;

(iv) Issue any other writ order or direction as the nature of case may warrant;

C.A.No.3890 of 2010 etc.

3  (v) Issue an ad interim order in favor of the petitioners;

(vi)  Award  the  cost  of  the  case  to  the petitioners.”

3. As the appellant did not press for relief on the

declaration sought on the validity of Section  3(2)(f)

and 3(3c) of the Essential Commodities Act, 1955, the

High Court did not go into the same as such.  

4. For  the  crushing  years  1984-85  and  1985-86  the

appellant sugar mill was placed in central zone for the

purpose  of  fixation  of  price  for  the  levy  sugar.

Mainly,  it  was  the  case  of  the  appellant  that  the

geographical and climatic conditions of the sugar mills

in the District of Sitapur, stand on the same footing

as  that  of  other  similarly  placed  sugar  factories

namely  Seksaria  Biswan  Sugar  Factory  Ltd.  Biswan,

District  Sitapur and  Kisan Sahkari  Chini Mills  Ltd.

Mahmoodabad (Awadh), District Sitapur.  Inspite of the

same, these two factories were included in the eastern

zone,  while  the  appellant  factory  was  discriminated

against and kept in the central zone for the purpose of

fixation of levy sugar price for the crushing years

1984-85 and 1985-86.

C.A.No.3890 of 2010 etc.

4  5. Considering the submissions made on behalf of both

the sides and other material placed on record, the High

Court, by recording a finding that the said decision

was  a  policy  decision  which  permitted  the  Central

Government to make a reasonable classification  and in

absence of any case made out either of arbitrariness or

hostile  discrimination,  dismissed  the  writ  petition

filed by the appellant.

6. We  have  heard  Sri  V.  Shekhar,  learned  senior

counsel appearing on behalf for the appellant and  Ms.

Binu  Tamta,  learned  counsel  appearing  for  the

respondents and have perused the impugned orders and

other material placed on record.

7. The price of levy sugar is fixed for a zone with

an  intention  to  ensure  to  the  manufacturers  of  the

sugar in the zone a reasonable return on their overall

production and investment, provided that the units are

running  economically  and  efficiently.   Sugar  was  a

controlled commodity during the relevant time, covered

by  the provisions  of the  Essential Commodities  Act,

1955.  Certain quantity of sugar called levy sugar, was

to be supplied to the Government at a price fixed by

the  Government  and  rest  of  the  same  was  levy  free

sugar, which could be sold in open market.  The price

C.A.No.3890 of 2010 etc.

5  of levy sugar was fixed based on the Control Order

framed under the Essential Commodities Act. The price

of  levy  sugar  was  fixed  by  the  Central  Government,

having regard to various factors, including the basis

of basic–cost schedules drawn and recommended by the

expert  body.   As  is  evident  from  the  stand  of  the

respondents it appears that the survey report of Bureau

of Industrial Cost & Prices (BICP) regarding the zonal

pattern was not found feasible by the Government of

India and the same was not implemented.  The appellant

has claimed parity with sugar factories at Biswan and

Mahmoodabad, but such units were transferred to eastern

zone on merits adjudged by the State Government and

BICP and levy prices are fixed for zones and not for

each factory.  Zones were also not as per the revenue

districts.  Merely because there is difference in price

in central zone and eastern zone, the appellant cannot

claim, as a matter of right, its unit was to be placed

in  eastern  zone  instead  of  central  zone  during  the

relevant years.  The impugned Orders questioned in the

writ  petition  were  based  on  exhaustive  study  by

experts.   The  conclusions  reached  by  the  Central

Government  in exercise  of statutory  power cannot  be

said to be either discriminatory or unreasonable. So

C.A.No.3890 of 2010 etc.

6  far  as  sugar  units  at  Biswan  and  Mahmoodabad  are

concerned, they were transferred to eastern zone on the

basis  of  merits  adjudged  by  the  State.   When  the

revenue  districts  are  not  the  limits  for  zonal

division, the appellant cannot claim parity with other

units  only  on  the  ground  that  all  the  units  are

situated  in  Sitapur  district.  Even  with  regard  to

appellant unit, after a lapse of time it was considered

feasible  to  place  it  in  eastern  zone  and  we  are

informed that the same was placed in eastern zone.  As

the appellant has failed to demonstrate any invidious

discrimination and statutory violation, merely on the

ground  that  other  units  in  Sitapur  district  were

transferred to eastern zone and that the representation

of the appellant was not acceded to for the relevant

crushing years, is no ground for interference. We are

not persuaded to accept the plea that the appellant was

discriminated against by placing the appellant unit in

central zone and other units in Sitapur district in the

eastern  zone  of  Uttar  Pradesh.   The  action  of  the

Central  Government  in  placing  the  factory  of  the

appellant at two different times in two different zones

also does not constitute any discrimination. The policy

decision  was  taken  from  time  to  time  subject  to

C.A.No.3890 of 2010 etc.

7  satisfaction of the Government  by taking into account

expert reports.  It is also the case of the respondents

that the factory at Mahmoodabad was established at a

very higher free sale sugar over the normal quota as

per  incentive  scheme  of  Government  announced  in

November,  1980.   Several  relevant  factors  were

considered by the State Government before announcing

policy and for fixation of zones, during the crushing

years  of  1984-85  and  1985-86.   For  the  above  said

reasons, we do not find any illegality in the impugned

order dated 18.07.2006 dismissing the Writ Petition and

further order dated 11.09.2007 dismissing the Review

Petition No.253 of 2006, by the High Court. The High

Court  has  considered  the  material  in  detail  and  by

recording  correct findings rejected the plea of the

appellant. In view of such findings recorded and other

reasons referred above, we do not find any merit in

these appeals so as to interfere with the same.  These

appeals are, accordingly, dismissed with no order as to

costs.

8. Pursuant to interim orders passed by this Court,

50%  of  the  amount  demanded  is  deposited  by  the

appellant in the Registry and for the remaining 50%

bank guarantees are furnished. We allow the respondent-

C.A.No.3890 of 2010 etc.

8  Government  for withdrawal  of such  amount covered  by

deposit as well as bank guarantees and accrued interest

thereon.       

…………………………………………………………………….J                                  (MOHAN M. SHANTANAGOUDAR)

      ……………………………………………………………………J                                 (R. SUBHASH REDDY)

NEW DELHI; February 07,2020