BHOPAL SUGAR INDUSTRIES LTD. versus STATE OF M.P. & OTHERS

Citation: [1982] 3 S.C.R. 543 · Decided: 23-03-1982 · Supreme Court of India · Bench: V.D. TULZAPURKAR · Disposal: Dismissed

Judgment (excerpt)

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•. J 
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543 
A 
BHOPAL SUGAR iNDUSTRIES LTD. 
v. 
STATE OF M.P. & OTHERS 
March 23, 1982 
(V.D. TULZAPURKAR AND AMARENDRA NATH SBN, JJ.] 
• 
Madhya Pradesh Sugar Cane (Regulation of Supply & Purchase) Act, 
1958-S. 21-Levy of commission on purchase of cane from outside 'reserved area' 
or through Cane-growers' Cooperative Society-Whether legal? 
Section 21 (I) of the Madhya Pradesh Sugar Cane (Regulation of Supply & 
Purchase) Act, 1958, imposes an obligation upon an occupier of a factory to pay 
commission at prescribed rates on all its purchases of sugarcane. While in respect 
oC purchases made through fl. Cane-growers' Cooperative Society the commission 
is payable to that Society and the Cane Development Council under s. 21 (I) (a), 
in respect of purchases made directly from the cane growers the commission is 
payable to the Cane Development Council under s. 21 (I) (b). 
The appellant, a company which crushes sugar cane in its factory, purchas-
ed cane directly from the cuJtivators of 'reserved area' as well as of 'non-reserved 
area'. Resp"ndent No. 2, the Cane J)evelopment Council, demanded commission 
in respect of purchases made from both 'i"eserved
1 as well as 'non-reserved' areas. 
The appellant also purchased cane from Or through respondent No. 3, a Cane-
growers' Cooperative Society and in respect of those purchases, the demand for 
commission was made by that Society. 
The demands for payment of commission were challenged by the appellant 
by a petition under Art. 226 which was dismissed by the High Court . 
In appeal to this Court it was contended on behalf of the appellant that 
since the Cane Development Council had been established for the 'reserved area' 
of the appellant's factory so declared under s. 15 of the Act and its statutory 
functions and duties were confined to that area under s. 6 of the Act, its demand 
for commission on purchases made from 'non-reserved area' was illegal, there 
being no quid pro quo in the shape of rendering services in respect of purchases 
made from' non-reserved area'. As regards the demand of the Cane-growers' 
Cooperative Society for commission in respect of purchases made through it, the 
contention was that in everything being done by it, the Society was rendCring 
services to its own members and since no services resulting in any special benefit 
to the appellant were being rendered by it in terms of the decision of this Court 
in Kewal Krishan Puri'1 case, (1979] 3 SCR 1217, there was no quid pro quo and 
therefore no commission was legally recoverabl .. y the Society. 
B 
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S44 
sOP!tili.le coUilt llllPoRts 
[1982) 3 s.t.lt 
A 
Dismissing the appeal, 
HELD : I. The levy under s. 21 of the Act though called 'commission' 
is really in the nature of a fee and its imposition is supportable only on the basis 
of quid pro quo in the shape of rendition of services to a factory in the matter of 
cane purchased by it. [548 C-D] 
8 
Jaora Sugar Milla (P) Ltd. v. State of Madhya Pradesh and Ors. [1966] 1 
c 
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SCR 523, referred to. 
2. · The imposition of commission by the Cane Development Council on 
purchases of cane from 'non-reserved area' was proper and justified as there was 
quid pro quo in the form of rendering services in the m:tter of bettef cane pro-
duction, distribution and supply thereof. The area of operation or the 'zone' of 
the CounciJ could include areas outside the 'reserved area' of the factory as a 
Council could be established for a larger or smaller area "than the reserved area 
of a factory" under s. 5 of the Act, and its functions and duties under els. (a) to 
(g) of s. 6(1) included functions like considering and approving development 
progi'ammes for the zone. devising ways·and means for execution of development 
plan in a!J its essentials such as cane varieties, cane seed, sowing programme, 
fertilizers and manures, taking steps for preven.tion of diseases and pests and 
rendering all help in soil extension work, etc. Some of thCse functions mentioned 
in els. (b), (d) and (el of s. 6(1) are of general character and not confined to even 
the zone of the Council. Further, s. 21 of the Act does not contain any qualify-
ing words limiting the imposition of ~ommission to purchases of cane made by a 
factory from.
1reserved area' onJy; the imposition is on every maund of cane pur-
chased by a factory irrespective of the area from where such purchases might 
have been made. [549 A-Fl 
3. The contention that 

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