GUPTA SUGAR WORKS versus STATE OF U.P. & ORS.

Citation: [1988] 1 S.C.R. 577 · Decided: 26-10-1987 · Supreme Court of India · Bench: B.C. RAY · Disposal: Dismissed

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Judgment (excerpt)

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GUPTA SUGAR WORKS 
v. 
STATE OF U.P. & ORS. 
OCTOBER 26, 1987 
[B.C. RAY AND K. JAGANNATHA SHETTY, JJ.] 
U.P. Khandsari Sugar (Levy) Order 1981: Levy Order-Validity 
of-Khandsari manufacturers required to surrender 50% of produc-
lion-Fixation of price for levy khandsari sugar-Whether valid-
Wheth~r colourable exercise of power. 
The U.P. Khandsari Sugar (Levy) Order, 1981 issued in exercise 
of powers under section 3 of the Essential Commodities Act, 1955, 
required Khandsarl manufacturing units to surrender levy or 50% of 
the production by solphitation units in the first process. The balance 
50% with the total production by subsequent process was left free to be 
sold In the open market by the manufacturing units. The price fixed for 
the levy Khandsari sugar was Rs. 320 per qolntal. 
In a writ petition, the petitioner challenged the price fixation on 
the ground; that the State Government had not taken into consideration 
the guidelines in-built in sob-section 3C or section 3 of the Essential 
Commodities Act, 1955, that the levy order was unreasonable or exces-
sive restriction on the fundamental rights guaranteed under Articles 
19(l)(g) and 14 of the Constitution, and that the levy was a colourable 
exercise of the power as the State Government sold the levy sugar by 
public auction realising large profit. 
Dismissing the Writ Petition, 
HELD: I.I The Court does not act like a Chartered Accountant 
nor acts like an Income-Tax Officer. The Court is not concerned with 
any individual case of any particular problem. The Court only 
examines whether the price determined was with doe regard to consi-
derations provided by the statute, and whether extraneous matters have 
been excluded from determination. (5801>-E] 
Union of India v. Cynamide India Ltd., AIR 1987 Sept, SC 1801 
at 1805, followed. 
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t.2 The primary consideration in the fixation of price would be 
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578 
SUPREME COURT REPORTS 
[1988) 1 S.C.R. 
the interest of consumers rather than that of producers. l581Fl 
Since the petitioners in the instant case, are allowed to sell freely 
at any rate they like, the remaining 50% of the Sugar (after excluding 
the 50% which they have to give for levy) as also the produce by the 
second and third process, the loss if any caused to the petitioners would 
be minimal. l581Gl 
New India Sugar Works v. State of Uttar Pradesh & Ors., [1981) 3 
SCR 29, relied .. 
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J.3 It is clear from the Preamble, that the primary object of the ~ 
Essential Commodities Act, 1955 was to control production, supply, 
and distribution of essential commodities, and to make such commo-
dities available at a reasonable price. The exercise provided under the 
Art was intended ultimately to serve the interest of consumers. It is 
fundamental in the entire scheme of the Act. But then, the interest of 
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the industry as a whole cannot be left out. It is also required to be borne 
in mind. The levy price of sugar should ensure reasonable return to the 
industry. That is one of the guidelines provided under sub-section 3C of 
section 3 of the Act. But that does not mean that the interest of pirodu· 
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cers should outweigh the interest of consumers. It would be tilting the 
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balance too.much. [582C-F) 
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1.4 There is no colourable exercise of power. There was every 
justification for the sale by public auction. The petitioner and some 
other producers delivered inferior quality of Khandsari, which was 
found to be unacceptable to consumers at Fair Price Shops. The State 
Officers accordingly reported to the Government, which issued instruc-
tions to distribute the levy sugar liberally through permits for 
marriages and religious functions. The consumers, however, could not 
come forward. The Government then directed the disposal of levy sugar 
by public auction. It was not with a view to earn profit, although inci-
dentally the Government made some profit. The levy sugar was brought 
to public sale only to prevent deterioration when the consumers refused 
to accept it. [583A-C) 
The Panipat Co-operative Sugar Mills v. Union of India, [1973] 2 
SCR 860 and Anakapalle Coop. Agrl. & Industrial Society Ltd. v. 
Union of India & Ors., 1197312 SCR 882, referred to. 
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GUPTA SUGAR WORKS v. STATE OF U.P. [SHETTY, J.] 
579 
ORIGINAL JURISDICTION: Writ Petition No. 7993 of 1982. 
(Under Article 32 of the Constitution of India). 
R.K. Jain and R.P. Singh for the Petitioner. 
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