LexSHRI SITARAM SUGAR COMPANY LIMITED & ANR. ETC. versus UNION OF INDIA & ORS.
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-·( I 1 SHRI SITARAM SUGAR COMPANY LIMITED & ANR. ETC. v. UNION OF INDIA & ORS. MARCH 13, 1990 [SABYASACHI !viUKHARJI, CJ., K. JAGANNATHA SHETTY, T. KOCHU THOMMEN, A.M. AHMADI AND K.N. SAIKIA, JJ.] A B Essential Commodities Act, 1955: S. 3(3-C)-Government of India Notifications dated November 28, 1974 and July 11, 1975-Fixing C prices of levy sugar on zonal basis-Validity of-Whether legislative in character-Whether amenable to judicial review-Determination of price-Requirement of 'having regard to' Clauses (a) to (d)-Whether mandatory-Power delegated to fix different prices for different areas, different factories or different kindsof sugar-Nature and scope of- Whether matter of economic policy-Whether falls within purview of D court. Judicial review of State action-Legislative, executive or quasi- judicial-Nature and scope of. Administrative law-Delegation of legislative power-Judicial E review-Scope of-Courts 'riot to interfere with matters of economic policy. Administrative Law-Administrative action-Principles of natural justice-Observance of-Even if rule of audi alteram partem not attracted reasonableness and fair play in action must be observed. F Constitution of India, Article 14: Principle of equality must govern every State action. Clause (f) of sub-s. (2) of the Essential Commodities Act, 1955 empowers the Central Government to require any person dealing in any G essential commodity to sell the whole or specified part of such com- modity to it or the State Government or to a nominee of such Govern- ment. Sub-section (3) provides for payment to such a seller (a) tlie price agreed upon consistently with the controlled price, if any, fixed under the section; (b) the price calculated with reference to the controlled price, if any; and (c) where none of these applies, a price calculated at H 909 910 SUPREME COURT REPORTS [1990] 1 S.C.R. A the market rate prevailing in the locality at the date of the sale. Sub- section (3-A) deals with orders made with a view to controlling the rise in prices or preventing the hoarding of any foodstuff in any locality and determination of price for payment to the seller, notwithstanding any- thing contained in sub-s.(J}. Sub-section (3-C) lays down that where any producer is required by an order made with reference to B cl. (I) of sub-s. (2) to sell any kind of sugar and either no notification in respect of such sugar has been issued under sub-s. (3-A) or any such notification having been issued has ceased to remain in force by efflux of time, then notwithstanding anything contained in sub-s. (3), there shall be paid to that producer an amount therefor which shall be calculated wifo reference to such price of sugar as the Central Government may, by order, determine having regard to (a) the minimum price, if any, C fixed for sugarcane by Central Government under this section; (b) the manufaeturing cost of sugar; ( c) the duty or tax, if any, paid or payable thereon; and (d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar, and different prices may be determined from time to time for different areas or for different D factories or for different kinds of sugar. E The Central Government by notifications dated 28th November, 1974 and 11th July, 1975 issued in exercise of the power under sub-s. (3-C) of s. 3 of the Act fixed the prices of levy sugar for 1974-75 production. The petitioners, owners of sugar mills operating in the State of Uttar Pradesh in areas classified for the purpose of determining the price of levy sugar as West and East zones, challenged the validity of the said orders on the grounds that they were ultra vires the Act and viola- 't live of their fundamental rights as the prices of levy sugar had been F determined arbitrarily with reference to the average cost profiles of -( factories grouped together in zones without regard to their individual capacity and cost characteristics; that although the Government has the discretion to fix different prices for different areas or for different factories, or for different kinds of sugar, such wide discretion bas to be rta.sonably exer.cised, that the words 'having regard to' occurring in G sub-s. (3-C) is a mandatory requirement demanding strict compliance with clauses (a) to (d); that the ingredients of the said clauses should, therefore, have been examined with reference to each producer as a
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