ANAKAPALLE COOP. AGRL. & INDUSTRIAL SOCIETY LTD. ETC. ETC. versus UNION OF INDIA & OTHERS

Citation: [1973] 2 S.C.R. 882 · Decided: 06-11-1972 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Dismissed

Cited by 5 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

882 
ANAKAPALLE COOP. AGRL. & INDUSTRIAL SOCIETY 
. LID. ETC. ETC. 
v. 
UNION OF INDIA & OTHERS 
November 6, 1972 
[J. M. SHELAT, A. N. GROVER, K. K. MATHEW, 
A. K. MUKHERJEA AND Y. V. CHANDRACHUD, JJ.J 
Essential Commodities Act (10 of 1955) s. 3 (3C) and Levy Sugar 
S11pply Control Order, 1971r-Fixation of price of lev,y sugar-If correct 
principles applied-1972-0rder, if invalid. 
n 
The Levy Sugar Supply Control Order, 1972, fixing the price of levy 
C 
sugar was made under s. 3 of the Essential Commodities Act. Its vali-
dity was challenged in petitions under Art. 32. 
Dismissing the petitions, 
HELD: (1) (a) Sub-section 3(3C) of the Act is not conJined to levy 
sugar only. Fair price under tb.e sub-section has to be determined 
in 
respect of the entire produce, ensuring to the industry a reasonable return 
on the capital employed in the business of manufacturing sugar, and, in 
D 
considering whether a reason11ble return has been allowed the profit on 
the free sale of sugar can be taken into account. [887 A-BJ 
Panipat Co-operatfre Sugar Mills v. Union [1973] 2 S.C.R. 860 followed. 
(b) Section 3(3C) clearly envisages and contemplates the fixation of 
Jifferent prices for different areas. It hardly matters if areas are called 
zones. 
The constitution or zones for price fixation is not an innovation 
and goes back to 1959 when the Tariff Commission made a detailed report 
tin the cost structure of sugar and the fair price payable to the industry. 
[887 F-GJ 
(2) (a) Tfie Tariff Commission, 1969, however, recommended 
the 
constitution of 15 zones largely on State-\vise basis with exceptions 
in 
case of U.P., Bihar which \Vere divided into 3 and '.! zones respectively, 
after an elaborate inquiry into the \Vorking of the Zonal system. There 
'Vas thus -ample and abundant justification for Continuing and sustaining 
the zonal system. 
There is no basis for the contention that the 
price 
fixation has to be made \Vith reference to the cost of each 
individual 
unit in the z0ne. 
The basis of a fair price for sugar would have to be 
built on a reasonable efficient and representative cross-section 
on whose 
1'"0rking' cost-schedules will have to be worked out and price determined 
hy the Government under s. 3 (3C) of the Act. doing justice to the woak 
and strong alike. 
Any loss to the petitioners 1nay be due to mismanage-
n1ent, lack of efficiency and following a \vrong investment policy which 
have nothin_g to do \vith the zonal system. 
Not a single expert body coun-
tenanced the suggestion that price control should be unit-wise, and even 
before the Tariff Commission no such point of vie\v was pressed by the 
sugar industry. [892 E-F; 893 F-G; 894 D. F-G; 896 G-H] 
Panipat Co-operative Sugar Mill.< v. Union [19731 2 S.C.R. 860 1972, 
followed. 
(b) It is futile to sav that the zoning system should not have been 
done State-wise, especially when climatic and agro-econom'ic conditions 
have been taken into con~ideration 'vhile constituting the zones. 
If any 
E 
F 
c 
H 
A 
B 
c 
D 
E 
G 
H 
ANAKAPALLE COOP. SOCIETY V. UNION 
883 
other system had been followed it would have become impossible to work 
out a proper cost-schedule for the zone. It would have created several 
problems and difficulties particularly with reference to the tax.es, duties 
etc_ which are levied by each State and the wagzs which are pay&ble to 
the workers in the different States which vary from State to State_ [897 H; 
898 C-El 
(c) Jn the present cases, while classifying zones on geographical-cum-
agro-economic considerations, there has been no discrimination made nor 
does the price fixation according to each zone, taking into account all 
the relevant factors, give rise to any such i:liscrimination as would attract 
Art. :4. Once it is recognised that prices could be fixed according to the 
zones, the cost schedules that have been worked out by the Commission 
have necessarily to be different for each zone, because, the various items 
·vhich go into cost differ 'irom zooe to zone. [899 D-F] 
(3) (a) Sub-section (3C) lays down the various components for deter-
mining the price of sugar. 
Clauses (a), (b) and (c) relate to the total 
cost which consists of the minimum price of sugar cane as fixed by the 
Government, the manufacturing cost and the duty or tax. 
Clause (d) 
relates to the return on the capital employed. 
The very fact that cl. (a) 
provides that the minimum price fixed for sugar cane has to be taken 
into account shows

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