LexPREMIER AUTOMOBILES LTD. & ANR. ETC. versus UNION OF INDIA
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526 PREMIER AUTOMOBILES LTD. & ANR. ETC. v. UNION OF INDIA November 24, 1971 [K. S. HEGDE, A. N, GROVER AND H. R. KHANNA, JJ.] Motor Car (Distribution and Sale) Control (Amendment) Order 1969 passed under s. 18G Industries (Develop1nent and Regulation) Act, 1951- Fixation of ex- factory prices of motor cars produced in Jndia-Recom~ mendations of Commission of Inquiry-Production capacity deter1nination of-Expenses relating to warranty and bonus lvhether to he exc!Uded from the ex-works cost-Adoption of ·'historical method' by commission for fixing cost for September 1969, propriety of-Escalation clause, neces- sity of-Fair return, ·what is-DcpreciaNon of plant and machinery whether to be allowed on basis of originc..1 cost or replacemen( value. On the basis of the recommendation of the Tariff Commission the Government of India promulgated the Motor Car (Distribution and SaleJ Control· (Amendment) Order 1969 under s. lSG of the Industries (Deve' lopment and Regulation) Act, 1951. By this order the Government fixed the ex-factory Drices of the three cars manufactured in India namely Hindmtan Ambassador, Fiat 1100-D and Standard Herald 4 Door. These prices were inclusive of dealers' commission but did not include the. excise duties, Central Sales-tax and local taxes, if. any, and transport charges. The manufactnff~rs' or dealers \vere p'rohibited fro1n selling or offering for sa'le or otherwise transferring or disposing of thr~ motor C'1fS for a price exceeding th·~ price given in the ·Order. The manufacturers of these vehicles and two of their dealers fil:ed writ petitions in this Court under Art. 32 of the Constitution ch,.Uehging the price fixed. On May 5, 1970 this Court after partly hearing the pditione'rs recommended to the Government to appoint a commission for the purpose of suggesting a fair price fer the three cars by taking into consideration all. the relevant matters. The Governrn·~nt ac 1cordingly appointed a Commission of three members headed by a ntired High Court Judge ~nd by a notification dated June 5, 1970 all the provisions of the Commission of Enquiry Act !952 were made applicable to the Commission. The Commission decided to recommend a fair price for two J>'riods, (1) as in September 1969 and (2) as in July 1970. It was considered necessary to determine the price in September 1969 because the in1pugned crder \Vas pro:nul- gated at that time. For the September 1969 prices the computation was done accQrdinO' to the 'historical method', \Vhich n1eant th'3t not only th~ prices in Septe:imber 1969 were kept in view but also the value of pending stocks of raw materials and the r.v~'rnge of the prio:: at \vhich pt1rchages had bcc!1 effected at that "tin1e \Vere tiiken into account. The prices for July 1970 \vere computed on the basis of the actual cost obtaining in the month of July 1970. The report of the Con1n1ission suggesting fair_ price~ for the three cars in question was filed before the court. The findings ot the Conunission were criticised bv the \vrit 'C'~titioners on the folkn\"in_g grounds : ( 1) That the CommisSion ~a~ taken ~he production c.~p:-tcity at nn excessive figure and had thus arhflc1ally reduced the cost: (n) that -:ort nnd -expenses on account of \Varrnnty nnd st-:ltu.tory ~onus had b~en wrongly excluded from the ex-works cost: (iii) that m fixing the co:t tor Septen1ber 1969 even the actual ndmitted c?st found hv the C0nun1ss1?n had not been tuken into account and the price hild been fixed 011. th..: his- torical cost. \Vhercas in fixin~ the price for Julv 1970 the pro!e.c~~d :-tnd estimated cost for July 1970 had hccn ignored: (iv) that no rrom,011 had A B c D E F G H A B c fJ E F G ff PREMIER AUTOMOBILES LTD. v. UNION 527 been made for an escalation clause in order to ensure that the prices fixed would ensur< for a reasonable period of time; (v) that the return wbtch bad been allowed was wholly inadequate on the admitted and proved facts, and (vi) that the depreciation of plant and machinery had been allowed on the basis of original cost whereas it should have been allowed on the replacement value or on the peculiar facts of the c~se. It ~as common ground that deviation from the report of the Comnussion which was an expert body presided over by a former judge of a High Court should be directed only when it was shown that there bad been a depar- ture from established principles or the conclu
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