STATE OF MADHYA PRADESH versus JAORA SUGAR MILLS LTD. AND ORS. ETC.

Citation: [1996] SUPP. 7 S.C.R. 411 · Decided: 10-10-1996 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

STATE OF MADHYA PRADESH 
A 
v. 
JAORA SUGAR MILLS LTD. AND ORS. ETC. 
OCTOBR 10, 1996 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.) 
B 
Essential Commodities Act, 1955/Sugarcane Control Order, 1966/M.P. 
Sugarcane (Regulation of Supply and Purchase) Act, 1958: 
S.3/Rules 3 and 3A/Ss. 20,21-Sugarcane price-Recovery of-Interest C 
on delayed payment-Agreement between cane growers and f act01ies to pay 
price of sugarcane in excess of minimum price fixed by Government-Amount 
remained unpaid for more than 20 years---Government taking steps to recover 
the amount as mTears of land revenue-Action of Government challenged in 
writ petition be/ ore High Court-High Court holding that the liability could D 
not be en/ orced by way of arrears of land revenue and no interest would be 
charged-Held.~The Act regulates the recovery as arrears of land revenue--
The demands issued against the respondent-sugannills are in accordance with 
the provisions of the Act and they are liable to pay the same-The view of 
the High Court is clearly illegal-There was no statutory prohibition at the 
relevant time to agree to pay higher price than was [1.Xed under the Orde~The 
parties would always be at liberty to agree for payment of higher price than 
the minimum price f1.Xed by the Central Government and the contract will.be 
novation of the minimum price fl.Xed by the Central Government under Rule 
3( I) of the Orde~Therefore, the respondents are liable to pay interest on 
delayed payment under the Act read with the Orde1~As regards the sick mills 
taken ·over by the Government, the Government is directed to disburse the 
amount. 
Tw1gabhadra Sugar Works Ltd. v. State of Karnataka & Ors., (1994) 73 
E 
F 
STC 561, approved. 
· 
G 
State of Tamil Nadu v. Kothari Sugar & Chemicals Ltd., [1996) 7 SCC 
751, referred to. 
171irn Arooran Sugar Ltd. v. Dy. Commercial Tax Officer, (1988) 71 
STC 444, (Madras), disapproved. 
H 
411 
412 
SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1811-14 
B 
c 
of 1980. 
From the Judgment and Order dated 4.9.78 of the Madhya Pradesh 
High Court in Misc. P. No. 140 of 1977. 
U.N. Bachawat, B.S. Banthia and S.K. Agnihotri for the Appellant. 
S.K. Jain, A.P. Dhamija and K.K. Gogna for the Respondents. 
The following Order of the Court was delivered : 
These appeals by special leave are filed against the judgment and 
order dated September 1, 1978 and September 4, 1978 passed by the 
Madhya Pradesh High Court, Indore Bench in Misc. Petition Nos. 140, 139, 
43 and 44 of 1977. 
D 
These appeals arise from the Sugarcane Control Order, 1966 (for 
short, the "Order") and the M.P. Sugarcane (Regulation of Supply and 
Purchase) Act, 1959 {for short, the "Act"). It is rather unfortunate that the 
sugarcane growers who spent their sweat and blood in raising the sugar-
cane in the years 1974-75, 1975-76 had to wait for 20 years to receive the 
price of the sugarcane supplied by them to the respondents' factories .• The 
E respondent in C.A. No. 1813/80 is a Hindu Undivided Family represented 
by its Karta and respondents in other appeals are factories. The Central° 
Government had fixed the price of the sugarcane under Rule 3(1) of the 
Rules issued under Section 3(3)( c) of the Essential Commodities Act, 1955 
at Rs. 8.60 per quintal. Various meetings of the sugarcane growers and the 
p 
sugarcane factories and their associations, were convened by the Govern-
ment of Madhya Pradesh and ultimately the agreement got crystallised at 
the meeting held on March 21, 1976 to fix the final price of the sugarcane 
at Rs. 12 per quintal for the sugarcane supplied at the factory and Rs. 11.50 
per quintal for the sugarcane supplied at other supply centres. Though the 
sugarcane was supplied by the cane.-growers, since theirs amounts could 
G not be paid, the appellant-Government resorted to Section 21 of the Act 
to enforce the liability by recovering the same as arrears of land revenue. 
The respondents came to challenge the demands by filing the aforesaid writ 
petitions. The Division Bench of the High Court in the aforesaid judgments 
in three appeals has held that since no separate agreement was entered 
H into between the respondents and the sugarcane growers, the liability could 
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STATE v. JAORASUGAR MILLS LTD. 
413 
not be enforced by way of arrears of land revenue. In CA No. 1811/80 A 
involving the question of interest on account ()f delayed payment, it was 
held that since the amount
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