SALAR JUNG SUGAR MILLS LTD. ETC. versus STATE OF MYSORE & ORS.

Citation: [1972] 2 S.C.R. 228 · Decided: 01-11-1971 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Dismissed

Cited by 3 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

228 
SALAR JUNG SUGAR MILLS LTD. ETC. 
v. 
STATE OF MYSORE & ORS. 
November 1, 1971 
rs. M. SJICRI, c. J., J.M. SHELAT, A. N. RAY, I. D. DUA, 
S. C. ROY, 0. G. PALEKAR AND G. K. MITTER, JJ.] 
• Mysore Sales Tax Act, 1951 as amended by Mysore Act II of 1961-
Levy of purchase tax on sugarcane purchased by factories from grower.-
Purchase and supply of sugarcane regu/IJted by Central and State Control 
Orders-Transactions 
whether 
amounted to sale 
within 
meaning of 
1. 2(/) of Mysore Sales Tax Act-Mutual assent between purdiaser and 
seller whether present-Factories whether dealer within meaning 
of 
s. 2(k) of Act-Different rates of tax in different States whether vio/IJtit•e 
of Art. 14 of Constitution. 
By Mysore !\ct 11 of 1961 which came into force on October l, 1961 
sugarcane was included at Serial No.· 11-A in the Third Schedule to the 
Mysore Sales Tax Act, 1957. 
As a result of the amendment the appel-
lants were subjected to levy of tax on purchase of sugarcane. Their writ 
petitions challen&ing the levy were dismissed by the High Court. In appeals 
by certificate the appellants contended before this Court that : (i) on 
account of "the Central & State Control Orders applicable to the transa-
ctions there was no mutual assent by and between the appellants and the 
growers of sugarcane in regard to supply of sugarcane by the growers 
and the acceptance by the factories and therefore there was no purchase 
and sale of sugarcane; (ii) the appellants were not dealers within the 
meaning of s. 2(k) of the Mysore Sales Tax Act; (iii) the levy of tax 
on purchase of sugarcane at different rates in different Staie. was dis-
criminatory and in violation of Art. 14. 
HELD : (i) The decisions relating to 'compulsory sales' establish 
that statutory orders regulating the supply and distribution of gooda by 
and between the parties under the Control Orders in a State do not 
absolutely impinge on the freedom to enter into contract. 
Legislative 
measures or statutory provisions fixing the price, delivery, supply, restric-
ting areas for transactions are all within the realm of planning economic 
needs ensuring production and distribution of essential commodities and 
basic necessities. of community. 
The recent (rends in these legal rules 
delimit the variety of structure of rights and duties which individuals may 
create by such acts and transactions. 
The complexity of modem activi-
ties and the consequent difficulty ot providing for every eventuality have 
shaken fervour for fieedom of contract as there W'3S during the nineteenth 
century. 
The economic environment has changed. 
The individual free-
dom is to be reconciled with adequate performance by the Government 
of its functions in a highly organised society. Delimiting areas for transac-
tions or parties or denoting price for transaction are all within the area 
of individual freedom of contract with limited choice by reason of en-
suring the greatest good for the greatest number bv achie;ing proper 
supply at standard or fair prices to eliminate the evils of hoarding and 
scarcity on the one hand and availability on the other. (244 G-245 BJ 
In the present case the Control Orders are to be kept in the fore-
front for appreciating the true ch'.lracrer of transactions. It is apparent 
that the area is restricted. The parties are determined by the order. The 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
SALAR JUNG SUGAR MILLS V. MYSORE (Ray, J.) 
229 
minimum price is fixed. The minimum quantity of supply is also regulated. 
These features do not complete the picture. The entire transaction indi-
cates that the parties agree to buy and sell. The parties choose the terms 
ol delivery. The parties have choice witb regard to obtaining supply of 
a quantity higher than 95 per cent of the yield. The parties can stipulate 
for a price higher than the minimum. 
The parties can have terms for 
payment in advance as well in cash. 
A gro'l:'.er may not cultivate 
and 
there may not be any yield. A factory may be closed or wound up and 
·may not buy sugarcane. 
A 
factoi'y can reject goods 
after inspection. 
Inspection and appropriation of goods, which in the present case were 
unasccrtaincd goods indicates not only freedom in the formation but also 
in the performance of contracts. The combination of all these factors 
indicate' that thte parties entered into agreement with mutual assent and 
with volition for transfer of goods in consideration of price. [248 B·E; 
24

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