CENTRAL DAIRY FARM versus GLINDIA LTD. AND ORS.

Citation: [2003] SUPP. 4 S.C.R. 710 · Decided: 14-10-2003 · Supreme Court of India · Bench: SHIVARAJ V. PATIL · Disposal: Dismissed

Judgment (excerpt)

A 
B 
CENTRAL DAIRY FARM 
v. 
GLINDIA LTD. AND ORS. 
OCTOBER 14, 2003 
[SHIVARAJ V. PATIL AND D.M. DHARMADHIKARI, JJ.] 
Uttar Pradesh Milk Act, 197 6-Section l J-Price fixation for supply 
of cream and paneer-Earlier judgment of High Court finally decided 
C dispute between same parties-Thereafter, respondent supplied cream to 
appellant on a mutually agreed rate, as per earlier judgment-Later 
Notification reduced price of cream, nullifying the effect of the earlier 
judgment-Respondent filed writ petition in High Court-Notification 
quashed holding that mutually agreed rate as per the earlier judgment 
would prevail-On appeal Held; power of price fixation could not be 
D invoked nullifying mutually agreed terms and conditions-The power is 
merely enabling one and State Governm~nt not obliged to fix prices in all 
circumstances-Earlier judgment settled controversy between parties and 
directions therein were binding-Notification rightly quashed as ii frustrated 
mutual agreement between parties arrived as per the earlier judgment-
E Companies Act, 1950-Section 434. 
State of Uttar Pradesh owns the appellant firm. The respondent 
started supplying surplus cream to the appellant on a mutually agreed 
rate, after the High Court finally settled the dispute betwe4m the parties 
F by way of a judgment in an earlier writ petition filed by th4~ respondent. 
On 12.1.1989 a Notification was issued under .Section 15 of the Uttar 
Pradesh Milk Act, 1976 fixing the price for supply of cream and paneer 
at a rate lesser than the mutually agreed rate between the parties. 
Another writ petition was filed by the respondent challenging the 
G notifications as a coercive measure to nullify the effect of the earlier 
judgment of the High Court. The notification was quashed by the High 
Court holding that the mutually agreed rate would prevail in view of 
its earlier judgment. The judgment entitled the respondents to recover 
about Rs. 42 lakhs from the appellant for which a notice for winding 
H up for non-payment of dues was already issued under S1ection 434 of 
710 
CENTRAL DAIRY FARM v. GLINDIA LTD. 
711 
the Companies Act. Hence this appeal. 
The appellant contended that the statutory power under Section 
15 of the Milk Act had been recognised in the earlier judgment; ancj 
that court should interfere in the ~omain of the executive authorities; 
which fix prices considering several relevant factors. 
Dismissing the appeal, the Court 
A 
B 
HELD : 1. The prices of cream and paneer to be supplied by the 
respondent to the appellant Dairy Farm were fixed under terms mutually 
settled through negotiations between the parties. The power of price C 
fixation under Section 15 of the Act could not have been invoked by the 
State Government to nullify the terms and conditions of the agreement 
on fixation of price reached between the parties. [719-A-B] 
2. The Statement of Objects and Reasons of the Act indicate the D 
legislation was found necessary 'to develop milk industry in a systematic 
and organised manner' in view of the limited yield of milk in the State. · 
It was found necessary in public interest to regulate and control 
production, supply and distribution of milk and milk products. To 
fulfil the objects of the Act the State Government has been empowered E 
under Section 15 of the Act to regulate and fix by notification prices 
for sale and supply of milk and milk products. The power of the State 
Government to fix prices of piilk and milk products by issuance of 
notification under Sec. 15 of the Act is merely an enabling one and it 
is not obligatory for State Government in all circumstances to fix the 
prices. In the instant case, the prices of cream and paneer were fixed F 
through mutual negotiations between authorised representatives of the 
two companies and with the assistance of the authorities of the State. 
Such binding terms of agreement reached between the two companies 
could not be frustrated by statutory intervention of the State by 
issuance of notification for fixation of prices under Section 15 of the G 
Act. [719-F-H, 720-A] 
3. In the earlier judgment of the High Court the power of the State 
Government to fix prices of milk and milk products under Section 15 
of the Act was recognised and it was held that the Additional Milk H 
712 
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R. 
A Commissioner as the licensing authority had no power to interfere in 
the matter of fixation of price of milk and milk products. 

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