SHREE MEENAKSHI MILLS LTD. versus UNION OF INDIA

Citation: [1974] 2 S.C.R. 398 · Decided: 26-11-1973 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 6 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

• 
398 
SHREE MEENAKSHI MILLS LTD. 
v. 
UNION OF INDIA 
November 26, 1973 
[A. N. RAY, C.J., D. G. PALEKAR, Y. V. CHANDRACHUD, 
P. N. BHAGWATI AND V. R. KRISHNA IYER, JJ.] 
Cotton Textiles (Control) Order, 
1948-Clauses 
22, 
30-Notlfication-
Fixation of fair price of Cotton yarn-Validity-Clauses 22. 30 If ultra vlrts the 
powers conferred 
1by. s., 3 of the Essential Supp!les (Temporary Powers) 
Act, 
1946-Cotton yarn if 'Colton and Woollen tex11les''-Order, If co11linued under 
Essential Cofn111odilies Act, 1955-Fixarion of Fair price if arbitrary and un-
reasonable-Co11stitutio11 of /11dia, ' J 950-Artfrles 19(1) (/) and (g) and 301. 
A 
B 
EJ·sential Con11nodiries Act, 1955-Section 3 sub-secs. (3) 3(A) 
3(~) and 
C 
3(C)-Scope-Price fixation-Principles regarding. 
' 
· 
·' 
Constitution of /11dia, 1950-Articles 32, 358-lf executive 
action 
taken 
du ... fllf? nnergency has 110 aurhorily as a valid law its consthutionality can be 
challenged. 
Words and Phrases-Cotton yarn, if ''Cotton and Woollen textiles". 
Owing to the very low cotton crop there was unprecedented and phenorileD.al 
rise in cotton prices and there was a perceptible drop in yarn production. r:arty 
D 
in 1973 the yarn prices showed an upward trend in the fine and super fine 
counts. The power-loom and band-loom sectors which produced 47.1 pen.:ent 
of the total cloth production in the country, depended for the supply oi raw· 
material yarn on textile mills. 
Two thirds of the total yarn produced came 
from c-omposite mills. 
The composite mills competed 
with 
handloon1 
and 
power-loom sectors in the production of cloth. Even thou~h the question of 
control and fixation of fair price of cotton textiles had received the attention ot 
the Government in the past pursuant to the recommendations of the TaritI Com· 
E 
mission and the Tariff Board, no control over the production and sale Of yarn 
was imposed until March, 1973 when the Government decided to bring yarn 
under control in all respects, viz.1 prices, production and distribution and-issued 
the two impugned notifications. 
The first notification was issued by the Textile 
Commissioner under clause 22 of the Cotton Textile (Control) 
OnJer, 
1948. 
The notification determined the ex-factory price of count of yarn of 59s and 
below and count of yarn 60s and above. In the case of count of yarn of 59<; 
and below the price was to be the highest ex-mill price or the highest contracted 
price for delivery effected in :December, 1972. In the case of producers of 
F 
yam situated in States of Tamil Nadu and Pondicherry where the electricity 
cut exceeded 70% the relevant price as applicable was to be increased by 6 per 
cent. Jn the case of counts of yarn 60s and above the determined price was the 
regulated yarn price adopted for individual producers of yarn from the 1st day 
of August 1972~ increased by 6 per cent where there was no electricity power 
cut, and further increased according to the percentage of electricity cut. 
The 
term 'regulated price' under the notification meant the price calculated by tak-
ing the difference between the highest contract price as on June 1, 1972 or the 
G 
nearest date in case no sale was effected on June 1, 1972 and the highest price 
for the relevant count and form of packing during January, 1972 and allowing 
one half of the difference to be reduced from June 1, 1972 price. 
By a notifi-
cation dated March 31, 1973, the Textile Commissioner authorised the Deputy 
Commissioners and the District Collectors to specify the maximum price 
of 
yarn to be sold by dealers. The m1Ximum price was to be fixed after taking 
into consideration (a) invoice pri,.,.~ of yarn (b) incidental charges 
(c) 
such 
reasonable marginal profit not exceeding 2 per cent of the invoice price as the 
Deputy Commissioner or the District Collector may determine in each case, and 
H 
(d) any other relevant factor. 
The notification was not applicable to yarn sold 
to hosierv industry and to yarn on beams delivered under specified circums-
tances. The second impugned notification was made by the Textile Commis-
sioner 1n exercise of powers conferred under cl. 30(1)(b) of the 1948 
order. 
.A 
c 
£ 
H 
MEENAKSHI MILLS v. UNION (Ray, C./.) 
399 
The notification directed that no producer of yarn for civil consumption shall 
sell or deliver any such yarn produced by him except to such ~rson or persons 
and subject to such conditions as the Textile Commissioner tn1ght specify. The 
same nout

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