WEST U.P. SUGAR MILLS ASSOCIATION & ORS. versus THE STATE OF UTTAR PRADESH & ORS. on 22 April 2020

SUPREME COURT REPORTS

[2020] 9 S.C.R.

AWEST U.P. SUGAR MILLS ASSOCIATION & ORS.

v.

THE STATE OF UTTAR PRADESH & ORS.

(Civil Appeal No. 7508 of 2005)

BAPRIL 22, 2020

[ARUN MISHRA, INDIRA BANERJEE, VINEET SARAN,M. R. SHAH AND ANIRUDDHA BOSE, JJ.]

U.P. Sugarcane (Regulation of Supply and Purchase) Act,1953 – s.16 – Authority of State of U.P. to fix the State AdvisedCPrice (SAP) paid over and above the minimum price fixed by CentralGovernment – Matter referred by three Judge Bench having notedconflict between two Constitution Bench judgments, Ch. Tika Ramji& Others, Etc. v. The State of Uttar Pradesh & Others [1956] SCR 393and U.P. Cooperative Cane Unions Federations v. West U.P. Sugar MillsDAssociation and Others (2004) 5 SCC 430 – Held: Factual matrix andthe relevant provisions which fell for consideration in Tika Ramjiand in U.P. Coop. Cane Unions Federations case were altogetherdifferent – Concept of fixation of minimum price by Central Govt.vis-à-vis SAP to be fixed by State Government under the 1953 Act,never fell for consideration in Ch. Tika Ram – While, in U.P. Coop.ECane Unions Federations it was rightly held that there is noinconsistency or repugnancy in fixing the remunerative/advisedprice by the State Govt. and the “minimum price” fixed by CentralGovt. – And that if the price fixed by the State Govt. is higher thanthat fixed by the Central Govt., there will be no inconsistency orFrepugnancy as it is possible for both the orders to operatesimultaneously and to comply with both of them – View taken by theConstitution Bench in U.P. Coop. Cane Unions Federations is thecorrect law – No conflict between the two decisions in Tika Ramjiand U.P. Coop. Cane Unions Federations case – Matter not requiredto be referred to a larger Bench of seven Judges – U.P. SugarcaneG(Regulation of Supply and Purchase) Order, 1954 – Sugarcane(Control) Order, 1955 – Clause 3 – Essential Commodities Act, 1955– s.3(2)(c) – Sugarcane (Control) Order, 1966 – Clause 3 –Constitution of India – Art.254; List III of Seventh Schedule –Interpretation of Statutes.H

Constitution of India – List III of Seventh Schedule – Entries33 and 34 – Power to fix price of sugarcane – Held: By virtue ofEntries 33 and 34, List III, Seventh Schedule, both the CentralGovernment as well as the State Government have power to fix theprice of sugarcane – Central Government having exercised the powerand fixed the minimum price, the State Government cannot fix theminimum price of sugarcane – However, it is always open for theState Government to fix the advised price which is always higherthan the minimum price – U.P. Sugarcane (Regulation of Supplyand Purchase) Act, 1953 – s.16 – Sugarcane (Control) Order, 1966.

Sugarcane (Control) Order, 1966 – Held: 1966 Order issuedu/s.16, 1953 Act confers power upon the State Government to fixthe remunerative/advised price at which sugarcane can be boughtor sold – This price shall always be higher than the minimum pricefixed by Central Government – U.P. Sugarcane (Regulation ofSupply and Purchase) Act, 1953 – s.16.

U.P. Sugarcane (Regulation of Supply and Purchase) Act,1953 – s.16 – If repugnant to s.3(2)(c), 1955 Act and Clause 3 of1966 Order – Held: No – Essential Commodities Act, 1955 – s.3(2)(c)– Sugarcane (Control) Order, 1966 – Clause 3.

Constitution of India – Art.254; List III of Seventh Schedule– Repugnancy in laws – Held: Question of repugnancy in List III,Seventh Schedule, where both the Union and the States have thepower to enact a law, arises only where there is an actualirreconcilable conflict between the two laws.

Answering the reference, the Court

Conclusion

HELD: 1.1 From the legislative history and the relevantprovisions of Essential Commodities Act, 1955, U.P. Sugarcane(Regulation of Supply and Purchase) Act, 1953, U.P. Sugarcane(Regulation of Supply and Purchase) Order, 1954, Sugarcane(Control) Order, 1955, Sugarcane (Control) Order, 1966 whichfell for consideration by this Court in the case of Tika Ramji andU.P. Coop. Cane Unions Federations, it appears that as such therehas been a sea change in the law. [Para 9][562-C]

1.2 The question involved in Ch. Tika Ramji & Ors., etc.v. The State of Uttar Pradesh & Ors. AIR 1956 SC 676 was A

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Aconcerning the validity of the Uttar Pradesh Sugarcane(Regulation of Supply and Purchase) Act, 1953 and notificationsdated 27.9.1954 and 9.11.1955 issued by the Government of UttarPradesh thereunder. The notification dated 27.9.1954 was issuedin exercise of the powers/ conferred under sub-section 1(a) readwith sub-section 2(b) of Section 16 of the Act of 1953 whichBprovided that not less than 3/4 of the cane growers of the area ofoperation of a Cane Growers Cooperative Society to be membersof the society. The occupier of the factory for which the area isassigned shall not purchase or enter into an agreement topurchase cane grown by a cane grower except through such CaneCGrowers Co-operative Society. The notification dated 9.11.1955which was issued in exercise of the powers conferred by section15 of the Act of 1953, reserved or assigned to the sugar factoriesmentioned in column 2 of the Schedule annexed to it, the canepurchasing centers, with the authorities attached to them,specified against them in column 3 for the supply of sugarcaneDduring the crushing season 1955-56. Thus, it is apparent that thenotification dated 27.9.1954 related to the agency of supply ofsugar cane to the factories and the notification dated 9.11.1955related to the creation of the zones for particular factories werequestioned. [Paras 12, 13][577-G-H; 578-A-C]

E1.3 This Court held that the State of Uttar Pradesh had thelegislative competence to enact the Act, and there was norepugnancy of the Act of 1953 with the Act of 1951 or the EssentialCommodities Act, 1955. This Court upheld the validity of theAct and notifications and also held that there was no unreasonable Frestriction imposed. There was no violation of fundamental rightunder Article 19(1)(f) and (g) and Article 31 of the Constitution.The question of fixation of price by the State Government underthe Act of 1953 did not fall for consideration in Ch. Tika Ram.This Court noted that the Uttar Pradesh Government had never fixed the price of sugarcane to be purchased by the factories byGthe time the decision was rendered. While examining therepugnancy, passing reference has been made to the provisionscontained in the Act of 1954. During the pendency of petitions,the Sugar Control Order, 1955, was issued on 27.8.1955, whichwas referred to in the judgment. It was not even submission raisedHor considered that the power of regulation under Section 16 of the Act would include the power to fix the advised price ofsugarcane. The concept of fixation of minimum price by CentralGovernment vis a vis to State Advised Price to be fixed by StateGovernment, never fell for consideration of this Court in the saiddecision. The ratio of decision has to be considered in the lightof questions considered and answered. In Tika Ramji, it was heldthat there was no repugnancy in the Act of 1953 with Act of 1955or with the Act of 1951, and notifications which were impugneddid not infringe the fundamental rights. [Paras 15-17][578-G-H;579-A-D]

1.4 Thus, the factual matrix and the relevant provisionswhich fell for consideration before this Court in the case of TikaRamji and which fell for consideration by this Court in the case ofU.P. Coop. Cane Unions Federations were altogether different.Clause 3 of 1955 Order empowered the Central Government tofix “the price or the minimum price”. The aforesaid Clause 3 of1955 Order was under consideration by this Court in the case ofTika Ramji. However, subsequently, 1955 Order has beenrepealed by 1966 Order and Clause 3 of 1966 Order providesthat the Central Government may fix “the minimum price” of thesugarcane. Therefore, when the legislature consciously deletedthe word “the price” and retained the power with the CentralGovernment to fix “the minimum price”, some meaning has tobe given to such a deletion. The intention of the legislature isalso required to be considered when certain words in theprovisions of a statute are deleted or added and/or substituted.In the case of Tika Ramji, this Court though specifically observedand held that in the field of sugar and sugarcane, both, theParliament and the State legislature would have the concurrentJurisdiction as the same will fall under Entry 33 in the ConcurrentList of seventh Schedule. Considering the fact that the StateGovernment did not exercise the power of fixing the price, thoughthe powers were available and the Central Government fixed theprice/minimum price which came to be adopted by the StateGovernment, this Court in Tika Ramji’s case held that in such asituation there is no conflict and the question of repugnancy doesnot arise. Therefore, as such there is no apparent conflict betweenthe decisions in Tika Ramji’s case and U.P. Coop. Cane UnionsFederations, which require to be referred to a larger Bench of AB

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Aseven Judges. Under clause 3 of the 1966 order, the minimumprice can be fixed. Under Clause 3A of the said order, as amendedin 1978, the agreed price is to be mentioned in the agreement,which can be higher than the minimum price and not less thanthat. Under Clause 3(2), no person shall sell or agree to sellsugarcane to a producer of sugar or his agent, and no suchBproducer or agent shall purchase or agree to purchase sugarcaneat a price lower than that fixed under sub-clause (1). Thus, theprice fixed under Clause 3(1) has to be treated as a minimumprice. Under Clause 3(A), as inserted on 2.2.1978, agreement inwriting is required, and the price has to be paid as agreed toCwithin 14 days. [Paras 18, 19][579-D-H; 580-A-D]

1.5 Even otherwise and on merits, this Court is in completeagreement with the view taken in the case of U.P. Coop. CaneUnions Federations, which lays down that the inconsistency orrepugnancy will arise if the State Government fixed a price whichDis lower than that fixed by the Central Government. But, if theprice fixed by the State Government is higher than that fixed bythe Central Government, there will be no occasion for anyinconsistency or repugnancy as it is possible for both the ordersto operate simultaneously and to comply with both of them. Ahigher price fixed by the State Government would automaticallyEcomply with the provisions of Sub-clause (2) of Clause 3 of 1966Order. Therefore, any price fixed by the State Government whichis higher than that fixed by the Central Government cannot leadto any kind of repugnancy. [Para 20][580-E-F]

1.6 Question of repugnancy under Article 254 of theFConstitution:

1.6 Question of repugnancy under Article 254 of theFConstitution:

Concerning laws in List III of the Seventh Schedule of theConstitution of India, where both the Union and the States havethe power to enact a law, the question of repugnancy arises onlyin a case where there is an actual irreconcilable conflict betweenGthe two laws. Inconsistency between the two laws is irreconcilable,then the question of repugnancy arises. It is necessary to findthe dominant intention of both the legislatures, partial or incidentalcoverage of the same area in a different context, and to achieve adifferent purpose, does not attract the doctrine of repugnancy.HClause (1) of Article 254 of the Constitution gives primacy to central legislations in case of conflict with State laws whetherenacted before or after. The central law operates only in case ofrepugnancy and not in a case of mere possibility when such anorder might be issued under state law. [Paras 20.1, 20.3][580-G-H; 581-A; 584-C-D]

Rajiv Sarin v. State of Uttarakhand (2011) 8 SCC 708;M. Karunanidhi v. Union of India (1979) 3 SCC 431 :[1979] 3 SCR 254; Belsund Sugar Co. Ltd. v. State ofBihar & Ors. (1999) 9 SCC 620 : [1999] 1 Suppl. SCR146; Punjab Dairy Development Board & Anr. v.Cepham Milk Specialities Ltd. & Ors. (2004) 8 SCC621; Southern Petrochemicals Industries Ltd. v.Electricity Inspector and ETIO & Ors. (2007) 5 SCC447 : [2007] 6 SCR 955; Bharat Hydro PowerCorporation Ltd. & Ors. v. State of Assam & Anr. (2004)2 SCC 553 : [2004] 1 SCR 284 – relied on.

1.7 In U.P. Cooperative Cane Unions Federations,Constitution Bench has rightly opined that under section 16 ofthe Act of 1953, there is the power to fix a price with State, whichis State advised price. It cannot be said that the Central legislationoccupies the field, the Essential Commodities Act, 1955, and theOrder of 1966 issued thereunder deals with minimum price. TheCentral Government has the power to fix the minimum price inclause 3. The State Government is not denuded of the powerunder the Act of 1953 to fix the “State Advised Price” undersection 16 as held in U.P. Cooperative Cane Unions Federations.The power to regulate includes the power to fix the price. ButState advised price has to be higher than the minimum price fixedby Central Government. In a given case, the SAP price may bean agreed price. But the exercise of the power under section 16of the Act of 1953 to fix State Advised Price, cannot be said to beirreconcilable with the minimum price fixation under section3(2)(c) of the Essential Commodities Act, 1955 and clause 3 ofthe Sugarcane (Control) Order, 1966. The power of fixation ofState advised price under section 16 of the Act of 1953 cannot besaid to be arbitrary or illegal in any manner. [Paras 20.4][584-E-H; 585-A]

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A1.8 This Court took into consideration the effect, scopeand impact of Section 16 under the Act. This Court considered indetail Section 16 of the Act – the provision to regulate purchaseand supply of sugarcane in the reserved and assigned area, underwhich the State Government is vested with the power to regulatethe distribution, sale or purchase of sugarcane in any reservedBor assigned area and purchase of cane in any area other than areserved or assigned area by issuing an order to that effect.Thereafter, this Court has held that the power to regulate includesthe power to fix the SAP. This Court has also specifically observedand held that there was no repugnancy. This Court took intoCaccount the relevance, importance, purpose and object, its impact,implication and reasons for enacting Section 16 of the Act andafter taking into account all the relevant considerations this Courthas specifically held that the SAP is a price higher than thatdetermined by the Central Government which is known asStatutory Minimum Price (SMP). Thus, in the case of U.P.DCooperative Cane Unions Federations, this Court has specificallyupheld the power of the State Government to fix the SAP underSection 16 of the Act. [Paras 20.4.2, 20.4.3][585-D-G]1.9 The following factors are the relevant facts fordetermination of SAP.E

(i) The cost of cultivation of sugarcane.

(ii) The cost of transport of sugarcane by cane growers fromthe field to purchase center or to mill gate as the case may be.

(iii) A reasonable return on the aforesaid amount of hisFproduce to cane growers.

(iv) Availability of the cane area, demand of sugarcane byindustries, profitability of the industries by selling sugar, and otherbye products etc.

(v) The price of sugarcane paid by sugar factories in theGproceeding year.

(vi) The factors necessary to avoid diversion of sugarcanefrom sugar industries to other consumers like Kolhu andKhandsari Units.

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It appears that determination and fixation of the SAP is aCabinet decision which has been fixed after considering severalfactors, including the cost of cultivation/production of thesugarcane etc. and after taking into consideration the relevantfactors as above and including increasing of national economicgrowth, cost of production of sugarcane, increase in the cost ofseeds, fertilizers, labour charges, irrigation etc., including theprofit earned by sugar factories from the produces from bye-products, power projects etc. Thus it appears that authority isguided by all relevant factors while determining such price – SAP.[Para 20.5][585-H; 586-A-E]

1.10 In the 1966 Order the word “the price” has beendeleted and Clause 3 of 1966 Order provides that the CentralGovernment may fix “the minimum price” of the sugarcane to bepaid by the producer of sugar. There is a difference between “theprice” and “the minimum price”. The aforesaid shall be apparentfrom the relevant Clauses of the 1966 Order. The provision ofState advised price has been made to protect the interests of thesugarcane growers who are not in a position to negotiate. Clause3(1) empowers the Central Government to fix the minimum priceof sugarcane to be paid by the producers of sugar or their agentsfor the sugarcane purchased by them. Clause 3(2) provides thatno person shall sell or agree to sell sugarcane to a producer ofsugar or his agent, and no such producer or agent shall purchaseor agree to purchase sugarcane, at a price lower than that fixedunder sub-clause (1). As per Clause 3(3), where a producer ofsugar purchases any sugarcane from a grower of sugarcane orfrom a Sugarcane-grower’s Co-operative Society, the producershall, unless there is an agreement in writing to the contrarybetween the parties, pay within fourteen days from the date ofdelivery of the sugarcane to the seller or tender to him the priceof the cane sold at the rate agreed to between the producer andthe sugarcane- grower or Sugarcane- growers’ Co-operativeSociety or that fixed under sub-clause (1), as the case may be.Clause (3-A) provides that a producer of sugar or his agent shallpay, for the sugarcane purchased by him, to the sugarcane groweror the sugarcane growers’ coopearative society, either theminimum price of sugarcane fixed under Clause 3, or the priceagreed to between the producer or his agent and the sugarcanegrower or the sugarcane growers’ cooperative society, as the AB

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Acase may be (agreed price). Agreed Price to be paid under theAgreement may be even SAP fixed and/or determined by the StateGovernment. Clause (5-A) provides that where a producer ofsugar purchases sugarcane, from a sugarcane-grower during eachsugar year, he shall be liable to pay, in addition to the minimumsugarcane price fixed under Clause 3, an additional price. Sub-Bclause (2) of Clause 5-A authorizes the appropriate authority todetermine the additional price. Sub-clause (5) further providesthat no additional price determined under sub-clause (2) or sub-clause (3) is required to be paid by a producer of sugar who paysa price higher than the minimum price fixed under Clause 3 toCthe sugarcane-grower, provided that, “the price so paid is notless than the total price comprising the minimum sugarcane pricefixed under Clause 3 and the additional price determined undersub-clause (2) or sub-clause (3).” [Paras 20.7, 20.7.1, 20.7.2][588-A-C; 589-E-H; 590-A-D]

DSukhnandan Saran Dinesh Kumar & Ors. v. Union ofIndia & Ors. (1982) 2 SCC 150 : [1982] 3 SCR 371 –relied on.1.11 The State has the competence to determine and fixthe State Advised Price fixed under section 16 and thereforeEfixation of SAP by the State Government cannot be said to bebeyond the purview of legislative competence. Once the fixationof State Advised Price has been done, the Cane Commissionercan direct the parties to follow the same as held in U.P.Cooperative Cane Growers Federation. It cannot be said thatfixation of price under the regulatory measure provided in sectionF16 suffers from arbitrariness, nor can it be termed to beuncanalised power. Considering the entire scheme of 1966 Order,it provides for “the minimum price” and “the additional price”or “the advised price”. Considering the aforesaid provisionsunder 1966 Order, there cannot be any sugarcane price (advisedGprice) below “the minimum price”. As per the agreement enteredinto the “advised price” necessarily had to be higher than the“minimum price”. Thus, there is a difference between “the price”and the “the minimum price”. As per Clause 3 of 1966 Order, itempowers the Central Government to fix the “minimum price”and the State Government is authorized to fix the Advised PriceH

which as observed hereinabove is always higher than the“minimum price” fixed by the Central Government.[Paras 21, 22][590-E-H; 591-A]

1.12 Thus, it is held that the view taken by the ConstitutionBench of this Court in the subsequent decision in the case ofU.P. Coop. Cane Unions Federations is the correct law. There isno conflict between the two decisions of this Court in the case ofTika Ramji and in the case of U.P. Coop. Cane Unions Federationsand therefore, there is no necessity to refer the matter to thelarger Bench consisting of seven Judges. Final conclusions areas under:

a. By virtue of Entries 33 and 34 List III of seventhSchedule, both the Central Government as well as the StateGovernment have the power to fix the price of sugarcane.The Central Government having exercised the power andfixed the “minimum price”, the State Government cannotfix the “minimum price” of sugarcane. However, at the sametime, it is always open for the State Government to fix the“advised price” which is always higher than the “minimumprice”, in view of the relevant provisions of the Sugarcane(Control) Order, 1966, which has been issued in exerciseof powers under Section 16 of the U.P. Sugarcane(Regulation of Supply and Purchase) Act, 1953;

b. The Sugarcane (Control) Order, 1966 which has beenissued under Section 16 of the U.P. Sugarcane (Regulationof Supply and Purchase) Act, 1953 confers power upon theState Government to fix the remunerative/advised price atwhich sugarcane can be bought or sold which shall alwaysbe higher than the minimum price fixed by the CentralGovernment;

c. Section 16 of the U.P. Sugarcane (Regulation of Supplyand Purchase) Act, 1953 is not repugnant to Section 3(2)(c)of the Essential Commodities Act, 1955 and Clause 3 ofthe Sugarcane (Control) Order, 1966 as, as observedhereinabove, the price which is fixed by the CentralGovernment is the “minimum price” and the price which isfixed by the State Government is the “advised price” whichis always higher than the “minimum price” fixed by the AB

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ACentral Government and therefore, there is no conflict. Itis only in a case where the “advised price” fixed by theState Government is lower than the “minimum price” fixedby the Central Government, the provisions of the Centralenactments will prevail and the “minimum price” fixed bythe Central Government would prevail. So long as theB“advised price” fixed by the State Government is higherthan the “minimum price” fixed by the Central Government,the same cannot be said to be void under Article 254 of theConstitution of India.

d. The view taken by the Constitution Bench of this CourtCin the case of U.P. Cooperative Cane Unions Federationsvs. West U.P. Sugar Mills Association and Others is thecorrect law. [Para 23][591-D-H; 592-A-F]

U.P. Cooperative Cane Unions Federations v. West U.P.Sugar Mills Association and Others (2004) 5 SCC 430:D[2004] 2 Suppl. SCR 238 – held correct law.

Ch. Tika Ramji & Others, Etc. v. The State of UttarPradesh & Others AIR 1956 SC 676 : [1956] SCR393; State of Orissa v. M.A. Tulloch & Co. [1964] 4SCR 461; Dr. Preeti Srivastava v. State of M.P. (1999)E7 SCC 120 : [1999] 1 Suppl. SCR 249 – referred to.

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CIVIL APPELLATE ORIGINAL JURISDICTION: Civil AppealNo. 7508 of 2005.

From the Judgment and Order dated 07.10.2004 of the High Courtof Judicature at Allahabad in Civil Misc. Writ Petition No. 26291 of2004.

C.A. Nos. 7509-7510 of 2005, 150 of 2007, 2664 of 2007, 4026 of2009, 4014-4023 of 2009, 4024 of 2009, 4025 of 2009, 3911-3912 of2009, 3925 of 2009, 3996-3997 of 2009, 4764 of 2009, CONMT. PET.(C) Nos. 169 of 2006, 254 of 2007, 253 of 2007 in C.A. Nos. 7508/2005SLP (C) Nos. 18681 of 2008, 19183 of 2008, 20206 of 2008, 20205 of2008, 21576-21581 of 2008, 21585-21587 of 2008, 23202 of 2008, 26026of 2008, Contempt Petition (C) Nos. 263-264 of 2008, 267-268 of 2008in CA Nos. 3996-3997/2009 and 265-266 of 2008, T.C. (C) No. 96 of2013.

Jayant Bhushan, Krishnan Venugopal, Sr. Advs., Mahesh Agarwal,Shubham Kulshreshtha, Yojit Mehra, Amartya Bhushan, NarenderKumar Verma, Ms. Malvika Kapila, Apoorv Khator, Tushar Bhushan,Amritya Bhushan, Ms. Anushree Menon, Mithun S., Vikas Mehta, E. C.Agrawala, Rohit K. Singh, Uday Tiwary, P. N. Razdan, Mirza KayeshBegg, Ms. Saloni Tangri, Ms. Anshruta Maheshwari, Navpreet SinghAhluwalia, Salil Seth, Anuj Dhingra, Neeraj Malik, Umesh KumarKhaitan, Syed Shahid Husain Rizvi, Sanjeev Kumar Singh, Zeeshan Rizvi,Ms. Anas Rizvi, Syed Imtiyaz Ali, Piyush Beriwal, Padmesh Mishra,D. L. Chidananda, Ms. Binu Tamta, Nikhil Rohatgi, Arkaj Kumar,Amlendu Jha Kumar, Sandeep Lala, Raj Bahadur, Pratap Venugopal,Ms. Surekha Raman, Akhil Abraham Ray, Vijay Valsan (for M/s K. J.John & Co.), Ajay Majithia, Satyajit A. Desai, Ms. Anagha S. Desai,Sumit Goeol, Ishan Nagar, Manu Bajaj, Raghav Bansal, Ms. NikitaPandey (for M/s. Parekh & Co.), Amol Chitale, Ms. Pragya Baghel,G .N. Reddy, T. Vijaya Bhaskar Reddy, Digvijay Harichandan, Ms. RubySingh Ahuja, Vishal Gehrana, Nakul Gandhi, Shravan Sahny, Mrs. ManikKaranjawala (for M/s Karanjawala & Co.), Vikash S. Wagmare, HiteshKumar Sharma, Akhileshwar Jha, Ms. Meenakshi S., Praveen Kumar,Mr. Gunnam Venkateswara Rao, Y. Raja Gopala Rao, Y. Vismai Rao,Prashant Kumar (for M/s. Ap & J Chambers,), P. N. Gupta, ParijatSinha, Vishnu Sharma, Ms. Anupama Sharma, V. P. Pathak, KumarPrasoon Ranjan, Dr. Abhishek Atrey, Ms. Ambika Atrey, Ms. Vidyottma,S. S. Ray, Ms. Rakhi Ray, Amar Dave, P. S. Sudheer, Rishi Maheshwari, A

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AMrs. Mayuri Nayyar Chawla, Ms. Anne Mathew, Bharat Sood,Ms. Shruti Jose, Vishwajit Singh, Akshat Kumar, Gaurav Agrawal, PankajGupta, Pradeep Misra, Mrs. Bina Gupta, Jatinder Kumar Bhatia, K. R.Sasiprabhu, Vishnu Sharma, Ritesh Agrawal, Punit Dutt Tyagi, AbhishekAtrey, Ms. C. K. Sucharita, Prashant Kumar, Siddhartha Chowdhury,Mrs. V. D. Khanna, Bimal Roy Jad, V. K. Verma, Rohit K. Singh,BArdhendumauli Kumar Prasad, Ambhoj Kumar Sinha, Ravi PrakashMehrotra, Mrs. Anil Katiyar, Praveen Kumar, P. K. Bhalla, T. Mahipal,Akshat Kumar, P. I. Jose, Advs. for the appearing parties.

Petitioner-in-person.

CThe Judgment of the Court was delivered by

M. R. SHAH, J.

1. Having noted that there is a clear conflict between the twodecisions of this Court, one in the case of Ch. Tika Ramji & Others,Etc. vs. The State of Uttar Pradesh & Others [AIR 1956 SC 676 =D1956 SCR 393 = 1956 SCJ 625] and another subsequent decision inthe case of U.P. Cooperative Cane Unions Federations vs. West U.P.Sugar Mills Association and Others [(2004)5 SCC 430], a three JudgeBench of this Court has referred the matter to a larger Bench proposingthe following questions of law to be considered by the larger Bench,Epreferably of a Bench consisting of seven Judges of this Court:

(1) Whether by virtue of Article 246 read with Schedule VIIList III Entry 33 of the Constitution the field is occupied bythe Central legislation and hence the Central Governmenthas the exclusive power to fix the price of sugarcane?

F(2) Whether Section 16 or any other provision of the U.P.Sugarcane (Regulation of Supply and Purchase) Act, 1953confers any power upon the State Government to fix theprice at which sugarcane can be bought or sold?

(3) If the answer to this question is in the affirmative, then whetherGSection 16 or the said provision of the U.P. Sugarcane(Regulation of Supply and Purchase) Act, 1953 is repugnantto Section 3(2)(c) of the Essential Commodities Act, 1955and Clause 3 of the Sugarcane (Control) Order, 1966[hereinafter referred to as “1966 Order”]? And if so, theprovisions of the Central enactments will prevail over theH

provisions of the State enactment and the State enactmentto that extent would be void under Article 254 of theConstitution of India.

Statutes

(4) Whether the SAP fixed by the State Government in exerciseof powers under Section 16 of the U.P. Sugarcane (Regulationof Supply and Purchase) Act, 1953 is arbitrary, without anyapplication of mind or rational basis and is therefore, invalidand illegal?

(5) Does the State Advised Price (for short “SAP”) constitute astatutory fixation of price? If so, is it within the legislativecompetence of the State?

(6) Whether the power to fix the price of sugarcane is withoutany guidelines and suffers from conferment of arbitrary anduncanalised power which is violative of Articles 14 and19(1)(g) of the Constitution of India?

2. The core issue is whether the State of U.P. has the authority tofix the State Advised Price (SAP) [hereinafter referred to as “SAP”],which is required to be paid over and above the minimum price fixed bythe Central Government?

3. At the outset it is required to be noted that in Tika Ramji case(supra), a Bench of five Judges of this Court held as under:

(i) That, section 16 of the U.P. Sugarcane (Regulation of Supplyand Purchase) Act, 1953 [hereinafter referred to as “1953U.P. Act”] does not include the power to fix a price;

(ii) That, the price of cane fixed by the U.P. Government onlymean the price fixed by the appropriate Government whichwould be the Central Government, under Clause 3 of theSugarcane (Control) Order, 1955 [hereinafter referred toas “1955 Order”];

(iii) That, even the provisions in behalf of the agreementcontained in Clauses 3 and 4 of the U.P. Sugarcane(Regulation of Supply and Purchase) Order, 1954[hereinafter referred to as “1954 U.P. Order”] providedthat the price was to be the minimum price to be notified bythe Government subject to such deduction, if any, as maybe notified by the Government from time to time, meaning A

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thereby the Central Government, the State Government nothaving made any provision in that behalf at any timewhatsoever;

(iv) That, there is no power to fix a price for sugarcane underthe U.P. Sugarcane Act or Rules and the Orders madeBthereunder; It is to be noted that in Tika Ramji case(supra), this Court didnot comment on whether a power which the State Government exercisedunder Section 16 of the 1953 U.P. Act would be repugnant to the Centrallegislation, since this Court found no such power exercised by the StateCGovernment.

4. However, subsequently, another five Judges Bench of this Courtin the case of U.P. Coop. Cane Unions Federations (Supra) hasspecifically gone into the question of repugnancy and held that theinconsistency or repugnancy will rise if the State Government fixes aDprice which is lower than that fixed by the Central Government. But, ifthe price fixed by the State Government is higher than that fixed by theCentral Government, there will be no occasion for any inconsistency orrepugnancy as it is possible for both the orders to operate simultaneouslyand to comply with both of them. A higher price fixed by the StateGovernment would automatically comply with the provisions of clauseE3(2) of 1966 Order. Therefore, any price fixed by the State Governmentwhich is higher than that fixed by the Central Government cannot leadto any kind of repugnancy.

In the case of U.P. Coop. Cane Unions Federations (Supra),this Court held that the State Government has power to fix the priceFwhich may be higher than the minimum price fixed by the CentralGovernment.

This Court in the reference order observed that to the aforesaidextent there is a difference of opinion and/or conflict.

5. We have called upon the learned Counsel appearing on behalfGof the respective parties to first address on whether in fact there is anyconflict between the decisions of this Court in the case of Tika Ramji(Supra) and U.P. Coop. Cane Unions Federations (Supra) or not andwhether there is a need to refer the matter to a larger Bench of sevenJudges?H

6. Shri Jayant Bhushan, learned Senior Advocate appearing onbehalf of the appellants has submitted that this case raises the followingimportant issues.

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(1) Whether the State Government / Cane Commissioner hasany power or authority under the 1953 U.P. Act or the Rulesand the Orders made thereunder to fix the sugarcane price?

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(2) If the State of U.P. had such a power, would such legislationbe repugnant to the Central legislation i.e. EssentialCommodities Act and the 1966 Order?

(3) Whether there is any conflict between the ConstitutionCBench judgment of this Court in the case of Tika Ramji(Supra) and in the case of U.P. Coop. Cane UnionsFederations (Supra)?

6.1 So far as the question No.1 is concerned, it is submitted thatthe power to regulate the distribution, sale or purchase of cane underSection 16 of the 1953 U.P. Act does not include the power to fix theprice. It is submitted that this aspect has been comprehensively dealtwith in the case of Tika Ramji (Supra) which analyzed the legislativehistory of laws relating to sugar and sugarcane both Central and Stateand came to the specific conclusion that the power reserved to the StateGovernment to fix the minimum price of sugarcane which existed inU.P. Act 1 of 1938 was deleted from the 1953 U.P. Act since that powerwas being exercised by the Centre under Clause 3 of Sugar and GurControl Order, 1950. Reliance is placed upon paragraph 34 of decisionin the case of Tika Ramji (Supra).

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6.1.1 It is submitted that in the aforesaid decision it has specificallybeen held that the 1953 U.P. Act or the Rules and the Orders madethereunder made no provision for fixation of price of sugarcanewhatsoever and therefore, there was no question of repugnancy withthe Central law. It is submitted that in the case of U.P. Coop. CaneUnions Federations (Supra), this Court did not quote paragraph 34and relevant paragraphs of the decision in the case of Tika Ramji (Supra)and erroneously holds that Tika Ramji (Supra) only held that the Statedid not in fact exercise the power to fix the price.

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6.1.2 It is submitted that the argument that Tika Ramji (Supra)only hold that the State Government did not fix the price as this wasfixed for the first time in 1973, is totally misplaced. It is submitted that H

ATika Ramji case has specifically held that there was no power to fix theprice for sugarcane under the 1953 U.P. Act or the Rules and the Ordersmade thereunder. It is submitted that although the judgment in Tika Ramji(Supra) does not specifically quote section 16 of the 1953 U.P. Act, it isclear from the judgment that every section and every Rule was examinedto see whether there was any power to fix cane price or any provisionBrelating to price of cane. It is urged that the only provision that wasfound on detailed scrutiny of the 1953 U.P. Act and the Rules was Rule94 which provided for a notice showing the minimum price fixed by theGovernment, which was held by the Constitution Bench to mean pricefixed by the Central Government.C6.2 Now, so far as question No.2 is concerned, it is argued thateven if such a power exists under Section 16 of the 1953 U.P. Act, suchpower would be totally repugnant to the power of Central Governmentto fix the minimum price under Clause 3 of the 1955 Order and thereafterunder 1966 Order. It is submitted that although Tika Ramji case (supra)Dhas not commented on whether such a power with the State Governmentwould be repugnant to the Central Legislation, since it found no suchpower exercised by the State Government, the majority in the laterConstitution Bench judgment in the case of U.P. Coop. Cane UnionsFederations (Supra) held that this would not be repugnant to the CentralLegislation. It is argued that basis for holding that there is no repugnancyEis that it is possible for both the orders to operate simultaneously and tocomply with both of them. It is argued that in the case of U.P. Coop.Cane Unions Federations (Supra), subsequently it is held that anyprice fixed by the State Government which is higher than that fixed bythe Central Government cannot lead to any kind of repugnancy. It is Fargued that this conclusion and its use for determining repugnancy isincorrect and contrary to the earlier Constitution Bench judgment includingin the case of Tika Ramji (Supra). It is argued that therefore this issuealso needs to be referred to a larger Bench to resolve the conflict. Relianceis placed on some of the observations in the case of Tika Ramji (Supra);in the case of State of Orissa vs. M.A. Tulloch & Co. [1964 (4) SCRG461] and in the case of M. Karunanidhi vs. Union of India [(1979)3SCC 431].

6.2.1 It is argued that therefore there cannot be two minimumprices, one fixed by the Central Government as minimum price and otherfixed by the State Government as SAP, which is also a minimum price.H

It is submitted that once the Centre has fixed a minimum price, anyother price whether minimum price or SAP would be repugnant to theCentre’s decision and the Centre’s power and such power of the StateGovernment would therefore have to yield to the Central legislation underArticle 254 of the Constitution, both legislations being under theConcurrent List.

6.3 It is urged that there is a direct conflict between the ConstitutionBench Judgment of this Court in the case of Tika Ramji (Supra) onone hand and the later Judgment also of the Constitution Bench in thecase of U.P. Coop. Cane Unions Federations (Supra), which needsto be referred to the larger Bench of seven Judges.

7. On the other hand, Shri Krishnan Venugopal, learned SeniorAdvocate appearing on behalf of the State of U.P. has vehemently arguedthat as such there is no apparent conflict between the two decisions ofConstitution Bench of this Court in the case of Tika Ramji (Supra) andU.P. Coop. Cane Unions Federations (Supra). In support, he has madethe following submissions.

(1) That, there is a sea change in the law prevailing andconsidered by this Court in the case of Tika Ramji (Supra)and thereafter in the case of U.P. Coop. Cane UnionsFederations (Supra);

(2) That, by the time of the challenge to the 1953 U.P. Act andthe 1954 U.P. Order made under Section 16 of the 1953U.P. Act in the U.P. Coop. Cane Unions Federations(Supra), there was a fundamental change in the substratumon which Tika Ramji case was decided to the extent thatthe Central Government had repealed and substituted the1955 Order by the 1966 Order. The 1966 Order issued underSection 3 of the Essential Commodities Act, 1955 expresslyleft room for the State to advise a price higher than theminimum price fixed by the Central Government underClause 3(1) of the 1966 Order at which agreements forcane procurement could be reached between farmers orcooperative societies, especially in the context of thereservation of cane-growing areas for exclusiveprocurement by sugar factories.

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A(3)That, the ratio of Tika Ramji (Supra) is not premised solelyon the complete absence of power under the 1953 U.P. Actto fix prices. It is submitted that if so, there was no need forthis Court to hold premise its reasoning on the “fact” thatthe State of U.P. had not actually fixed the price forsugarcane.

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(4) That, in the case of Tika Ramji (Supra), though there is abrief mention of section 16 of the impugned 1953 U.P. Act,neither was the issue raised and the issue No.(iii) waswhether section 16 of the Essential Commodities Act readwith clause 7 of 1955 Order could have purported to repealCSection 16 of the 1953 U.P. Act and the 1954 U.P. Order inlight of the proviso to Article 254(2) of the Constitution ofIndia, neither was the issue raised nor was there anyargument or discussion on the effect or implications ofsection 16 of the 1953 U.P. Act on the fixation of theD“minimum price” under the 1955 Order in the context ofthe discussion of repugnancy of 1953 U.P. Act.

(5) That, there has been a sea change in the law relating torepugnancy between Central law and State law in thecontext of laws made under the Concurrent List, List III inEthe VII Schedule to the Constitution of India, where both,the Union and the States have power to make law.

(6) That, being fully aware of the judgment of this Court in thecase of Tika Ramji (Supra), the Central Governmentretreated from the field of fixing “the price” of sugarcaneFand only retain the power to fix “the minimum price” whilepermitting an agreement for fixing higher price forsugarcane. It is submitted that therefore, the CentralGovernment left it open for the State to fix the price abovethe minimum price for purposes of the agreement to bereached between the sugarcane growers and sugarcaneGcooperative society, on the one hand, and the sugarcanefactories, on the other. It is submitted that therefore theCentral Government expressly indicated its intent to vacatea particular portion of the field of price fixation in relationto sugarcane and left it open to the State, the doctrine ofHoccupied field has no application whatsoever.

(7) It is submitted that the reliance placed upon the decision ofAthis Court in the case of M.A. Tulloch & Co. (Supra) onthe occupied field doctrine shall not be applicable to thefacts of the case on hand as that case relates to regulationof mines and mineral development and the regulation whichinvolves the relationship between the Entry 23 in List IIBand Entry 54 in List I of the Seventh Schedule, both ofwhich make it clear that the field of legislation can be takenover by Parliament by making the declaration to that effect.

7.1 Shri Venugopal, learned Senior Advocate appearing for therespondent - State of U.P. has made following submissions in support ofhis submission that there has been a fundamental change in the provisionsof the 1955 Order to the extent that it was repealed by the 1966 Order.

(1) That, Clause 3 of the 1955 Order empowered the CentralGovernment to fix “the price or the minimum price” to bepaid by a producer of sugar for sugarcane purchased byhim. The 1955 Order has been repealed by the 1966 Orderand clause 3 of the 1966 Order provides that the CentralGovernment may fix “the minimum price” of sugarcane tobe paid by producers of sugar.

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(2) That, there is a difference between “the price” which is afixed amount and “the minimum price” which only indicatesthe lowest-permissible rate. The 1966 Order was furtheramended in 1976 and 1978 and clauses 3(3) and 3-A wereintroduced, which now contemplated an “agreed price”. Inview of the prohibition in clause 3(2) on transacting belowthe minimum price, the “agreed price” necessarily had tobe higher than the “minimum price” fixed under clause 3(1).

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(3) That, it is evident from the amended provisions of the 1966Order, as amended in 1976 and again in 1978, that the CentralGovernment intentionally vacated space in favour of theState Legislature to regulate the price at which agreementscould be reached between sugarcane farmers andcooperative societies of sugarcane farmers for procurementof sugarcane, especially in the context of reservation ofareas for procurement by sugar factories.

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A(4)That, therefore, it is clear that as long as the State AdvisedPrice fixed by the State Government of Uttar Pradesh byexercising powers under Section 16 of the 1953 U.P. Actremains over and above the minimum price fixed by theCentral legislature under the 1966 Order, there is norepugnancy to the extent that both laws can be obeyedBwithout infringing the other.

7.2 It is further argued that in the case of U.P. Coop. Cane UnionsFederations (Supra), this Court has rightly observed and held that solong both, the Union law and the State law can be obeyed, the State lawdoes not become repugnant to the Union law when both the laws canCoperate in the same field without conflict. In support, heavy reliance hasbeen placed upon the decision of this Court in the case of Dr. PreetiSrivastava vs. State of M.P. [(1999) 7 SCC 120].

7.3 It is further argued that in the case of M. Karunanidhi(Supra), while examining the issue of repugnancy with respect to StateDenactment of Tamil Nadu Public Men (Criminal Misconduct) Act, 1973in light of the Central enactments of Indian Penal Code, 1860, Preventionof Corruption Act, 1988 and the Criminal Law (Amendment) Act, 1952and after considering the relevant Entries in List I, List II and ConcurrentList – List III and Article 254 of the Constitution of India, it is held thatEso far as Clause (1) of Article 254 is concerned, it clearly lays down thatwhere there is a direct collision between a provision of a law made bythe State and that made by the Parliament with respect to one of thematters enumerated in the Concurrent List, then, subject to the provisionsof clause (2), the State law would be void to the extent of the repugnancy.It is submitted that it is further held that so far as the Concurrent List isFconcerned, both, Parliament and the State Legislatures are entitled tolegislate in regard to any of the Entries appearing therein, but that issubject to the condition laid down by Article 254(1). It is submitted thatin the aforesaid decision it is held that (1)Where the provisions of aCentral Act and a State Act in the Concurrent List are fully inconsistentGand are absolutely irreconcilable, the Central Act will prevail and theState Act will become void in view of the repugnancy; (2) Where,however a law passed by the State comes into collision with a law passedby the Parliament on an Entry in the Concurrent List, the State Act shallprevail to the extent of the repugnancy and the provisions of the CentralAct would become void provided the State Act has been passed inH

accordance with clause (2) of Article 254; (3) Where, a law passed bythe State Legislature while being substantially within the scope of theentries in the State List entrenches upon any of the Entries in the CentralList the constitutionality of the law may be upheld by invoking the doctrineof pith and substance if on an analysis of the provisions of the Act itappears that by and large the law falls within the four corners of theState List an entrenchment, if any, is purely incidental or inconsequential;(4) Where, however, a law made by the State Legislature on a subjectcovered by the Concurrent List is inconsistent with and repugnant to aprevious law made by Parliament, then such a law can be protected byobtaining the assent of the President under Article 254(2) of theConstitution. The result of obtaining the assent of the President wouldbe that so far as the State Act is concerned, it will prevail in the Stateand overrule the provisions of the Central Act in their applicability to theState only. Such a state of affairs will exist only until Parliament may atany time make a law adding to, or amending, varying or repealing thelaw made by the State Legislature under the proviso to Article 254.

7.4 It is submitted that therefore applying the law laid down bythis Court in the case of M. Karunanidhi (Supra) to the facts of thecase on hand, it is clear that in the present case, as the EssentialCommodities Act and the 1966 Order, on the one hand, and 1953 U.P.Act and the 1954 U.P. Order, have both been enacted under theConcurrent List, and there is no direct conflict between the fixation ofthe minimum price by the Central Government under Clause 3 of the1955 Order and the fixation of a higher SAP by the State of U.P., thereis no real and irreconcilable conflict between the provisions of the twoActs to the extent that both can be obeyed without violating the order.

Therefore, it is submitted that the decision of this Court in thecase of U.P. Coop. Cane Unions Federations (Supra) must be upheldas there is no conflict with the decision in the case of Tika Ramji (Supra).

8. While considering whether there is any apparent conflictbetween the decisions of the Constitution Bench of this Court in thecase of Tika Ramji (Supra) and U.P. Coop. Cane Unions Federations(Supra) and whether the matter requires to be referred to the largerBench of seven Judges, the legislative history as well as the chronologyof lists and events which led to the controversy in the case of TikaRamji (Supra) and U.P. Coop. Cane Unions Federations (Supra)and the relevant provisions which fell for consideration before this Court AB

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Aare required to be referred to, which are noted in U.P. Coop. CaneUnions Federations (Supra) , as under:

a.On 8[th] April, 1932, the Central Legislature, in the then BritishIndia, passed the Sugar Industry (Protection) Act, 1932 [Act13 of 1932] to provide for the fostering and development ofBSugar Industry in India. This led to a large number of farmerstaking up sugarcane cultivation and the establishment of anumber of sugar factories coming up, particularly in thethen Province of U.P. To protect the interest of thesugarcane-growers’, and for the purpose of assuring thema fair price, the Central Legislature enacted on 1[st] May,C1934 the Sugarcane Act, 1934, 1934 [Act 15 of 1934] toregulate the price at which sugarcane intended formanufacture of sugar could be purchased by or for thefactories. Since, sugarcane was grown in various Provincesand the Sugarcane Act, 1934 left the declaration ofDcontrolled areas and the fixing of minimum price for thepurchase of sugarcane in any controlled area to thediscretion of the Provincial Governments, the ProvincialGovernments were also empowered to make rules for thepurpose of carrying into effect the objects of the Act.

Eb.As a result of the Government of India Act, 1935, therewas a distribution of legislative powers between theDominion Legislature and the Provincial Legislatures.Consequently, the entire subject matter of Act 15 of 1934fell within the Provincial Legislative List. It was felt thatAct 15 of 1934 was not sufficiently comprehensive forFdealing with the problems of the sugar industry. TheGovernments of U.P. and Bihar decided to introducelegislation on similar lines in both the provinces since,between them, they accounted for nearly 85% of productionof sugar in India.

Gc.The U.P. Legislature enacted on 10th February, 1938 theU.P. Sugar Factories Control Act, 1938 [U.P. Act I of 1938].This Act provided for (i) licensing of sugar factories, (ii)regulation of the supply of sugarcane intended for use insuch factories, (iii) the minimum price for sugarcane, (iv)Hthe establishment of Sugar Control Board and Advisory Committee, and (v) a tax on the sale of sugarcane intendedfor use in factories. Though this Act was to remain in forceinitially until 30[th] June, 1947, its life was extended from timeto time and finally up to 30[th] June 1952. Paralleldevelopments during this period were the outbreak of theSecond World War and the legislative measures taken tomeet the situation by the then Government of India forcontrolling the production, regulation of distribution andsupply of essential commodities. The Dominion Legislatureacquired the power to make laws for the Provinces withrespect to any of the matters enumerated in the ProvincialLegislative List. Under the Defence of India Act, sugarwas made a controlled commodity in the year 1942 and itsproduction and distribution as well as the fixation of sugarprices were regulated by the Sugar Controller. Theproclamation of emergency was revoked by the GovernorGeneral on 1[st] April 1946. Simultaneously, the laws madeby the Dominion Legislature in the field of the ProvincialLegislative List were to cease to be effective after 30thSeptember 1946.

d.On 26[th] March 1946, the British Parliament enacted theIndia (Central Government and Legislature) Act, 1946 [9& 10 Geo.6, Chapter 39] which provided that,notwithstanding anything in the Government of India Act,1935, the Indian Legislature shall during the periods specifiedin Section 4 of the Act have the power to make laws withrespect, inter alia, to “foodstuffs”. Though the periodprovided in Section 4 was one year from the expiration ofthe declaration of the emergency by the Governor General,this period was extended from time to time and would haveended on 31[st] March 1948.

e.On 18[th] July 1947, the Indian Independence Act came to bepassed leading to the Indian (Central Government andLegislature) Act, 1946 which by way of adaptation providedthat the powers of the Dominion Legislature shall beexercised by the Constituent Assembly. With the Constitutioncoming into force on 26[th] January 1950, Article 369 investedParliament with the power for a period of 5 years from the ABC

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commencement of the Constitution to make laws withrespect to some of the matters as if they were enumeratedin the Concurrent List. One such matter was “trade andcommerce within a State in, and the production, supply anddistribution of, .....foodstuffs (including edible oil seeds andoil), ......”

On 7[th] October 1950, the Central Government, in exerciseof the powers conferred upon it by Section 3 of the Act,promulgated the Sugar and Gur Control Order, 1950 which,inter alia, empowered it to prohibit movement of sugarcanefrom any area and also to direct that no gur or sugar shouldbe manufactured from sugarcane except under and inaccordance with a licence issued by it. Power was alsogiven to the Central Government to fix the minimum priceof sugarcane and no person was to sell or agree to sellsugarcane to a producer and no producer was to purchaseor agree to purchase sugarcane at a price lower than thatnotified. This power of fixing the price of sugarcane wasexercised by the Central Government from time to time byissuing notifications which fixed the minimum price to bepaid by the producer of sugar by vacuum pan process. AnAct for similar purposes, by name, Bihar Sugar FactoriesControl Act 7 of 1937 came to be enacted in the State ofBihar. As a result of the recommendations of the KhaitanCommittee, the report of the Indian Tariff Board in the year1938 and the U.P. Sugar Industry Enquiry Committee, 1951[Swaminathan Committee], it was desired that the U.P. ActI of 1938 should be amended in order to make regulation ofthe supply of sugarcane possible.

The Industries (Development and Regulation Act, 1951[Act 65 of 1951] was brought into effect from 8[th] May1952. In view of this Act coming into force, certainprovisions of the U.P. Act I of 1938 became inoperative.The U.P. Legislature passed on 29[th] June, 1952, the U.P.Sugar Factories Control (Amendment) Act, 1952, deletingthose provisions and putting the amended Act permanentlyon the Statute Book. The U.P. Act I of 1938, thus amended,continued in force till it was repealed by the U.P. Sugarcane Act, 1953. The object of the enactment of the 1953 Act isstated thus:

“With the promulgation of the Industries (Developmentand Regulation Act, 1951 with effect from 8[th] May 1952,the regulation of the sugar industry has becomeexclusively a Central subject. The State Governmentsare now only concerned with the supply of sugarcane tothe sugar factories. The Bill is being introduced in orderto provide for a rational distribution of sugarcane tofactories, for its development on organised scientific lines,to protect the interests of the cane-growers and of theindustry and to put the new Act permanently on theStatute Book”

In exercise of the rule making power conferred by Section28 of the Act, the U.P. Government made the U.P. SugarcaneRules, 1954 and also in exercise of the powers conferredby Section 16 of the Act, promulgated the U.P. SugarcaneOrder, 1954.

h.On 1[st] April 1955, Parliament enacted the EssentialCommodities Act, 1955 [Act 10 of 1955] to provide in theinterests of the general public “for the control of production,supply and distribution of, and trade and commerce in,certain commodities”. This Act defines “essentialcommodity” in Section 2(a)(v) to be any “foodstuffs,including edible oilseeds and oils”. By clause (b), “food-crops” is defined to include crops of sugarcane. By clause(a)(xi), the definition of “essential commodity” extends toany other class of commodity which the Central Governmentmay declare to be an essential commodity for the purposeof the Act, being a commodity with respect to whichParliament has power to make laws by virtue of Entry 33in List III in the Seventh Schedule to the Constitution.

i.Section 3(1) empowers the Central Government, ifnecessary or expedient to do so “for maintaining orincreasing the supplies of any essential commodity or forsecuring their equitable distribution and availability at fairprices”, by an order to provide “for regulating or prohibiting AB

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the production, supply and distribution thereof and tradeand commerce therein.” Under clause (c) of sub-section(2) of Section 3, such an order may provide for controllingthe price at which essential commodity may be bought orsold.

Bj.In exercise of the powers conferred by Section 3 of theEssential Commodities Act, the Central Governmentpromulgated on 27[th] August 1955, the Sugar Control Order,1955 and the Sugarcane Control Order, 1955. Clause 3(a)of the Sugarcane Control Order, 1955 empowers the CentralGovernment, after consultation with appropriate authorities,Cto fix in respect of any area ‘the price or the minimumprice’ to be paid by a producer of sugar for sugarcanepurchased by him in that area. It also empowers fixation ofdifferent prices for different areas or different qualities ofsugarcane or on the basis of recovery of sugar fromDsugarcane having regard to various factors enumeratedtherein. Clause 3(2) provides that no person shall sell oragree to sell sugarcane to a producer of sugar or factoryand no producer or factory shall purchase or agree topurchase sugarcane at a price lower than that notified underthis clause. Clause (4) empowers the Central Government D

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to prohibit or restrict or otherwise regulate the export ofsugarcane from any area for supply to different factoriesand also to direct that no gur or sugar shall be manufacturedfrom sugarcane except under and in accordance with theconditions specified in a licence issued in this behalf. Clause

(5) requires every producer or factory to comply with thedirections made under the order. By clause (7) of this order,the Sugar and Gur Control Order, 1950 was repealed.

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k.On 16[th] July, 1966, the Central Government notified theSugarcane (Control) Order, 1966. Clause 2(g) defines“price” to mean the price or the minimum price fixed bythe Central Government, from time to time, for sugarcanedelivered, inter alia, to a sugar factory. Clauses 3 and 3-Abear reproduction and read thus :- G

“3: Minimum price of sugarcane payable byproducer of sugar- (1) The Central Government may, H

after consultation with such authorities, bodies orassociations as it may deem fit, by notification in theofficial Gazette, from time to time, fix the minimum priceof sugarcane to be paid by producers of sugar or theiragents for the sugarcane purchased by them, havingregard to - (a) the cost of production of sugarcane; (b) the return to the grower from alternative crops andthe general trend of prices of agricultural commodities;

(c) the availability of sugar to the consumer at a fairprice; (d) the price at which sugar produced from sugarcaneis sold by producers of sugar; and (e) the recovery of sugar from sugarcane :

Provided that the Central Government or, with theapproval of the Central Government, the State Government,may, in such circumstances and subject to such conditions asspecified in Clause 3-A, allow a suitable rebate in the price sofixed.]

Explanation - (1) Different prices may be fixed for differentareas or different qualities or varieties of sugarcane. (2) Noperson shall sell or agree to sell sugarcane to a producer ofsugar or his agent, and no such producer or agent shall purchaseor agree to purchase sugarcane, at a price lower than thatfixed under sub-clause (1). (3) Where a producer of sugarpurchases any sugarcane from a grower of sugarcane or froma Sugarcane-grower’s Co-operative Society, the producer shall,unless there is an agreement in writing to the contrary betweenthe parties, pay within fourteen days from the date of deliveryof the sugarcane to the seller or tender to him the price of thecane sold at the rate agreed to between the producer and thesugarcane- grower or Sugarcane- growers’ Co-operativeSociety or that fixed under sub-clause (1), as the case may be,either at the gate of the factory or at the cane collection centreor transfer or deposit the necessary amount in the bank accountof the seller or the co-operative society, as the case may be.

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[Subs. by G.S.R. 945, dated 18.5.1968] (3-A). Where aproducer of sugar or his agent fails to make payment for thesugarcane purchased within 14 days of the date of delivery, heshall pay interest on the amount due at the rate of 15 per centper annum for the period of such delay beyond 14 days. Wherepayment of interest on delayed payment is made to a cane-growers’ society, the society shall pass on the interest to thecane-growers concerned after deducting administrativecharges, if any, permitted by the rules of the said society. [Ins.by G.S.R. 62(E) dated 2.2.1978].

(4) Where sugarcane is purchased through an agent, theproducer or the agent shall pay or tender payment of suchprice within the period and in the manner aforesaid and if neitherof them has so paid or tendered payment, each of them shallbe deemed to have contravened the provisions of this clause.

(5) At the time of payment at the gate of the factory or at thecane collection centre, receipts, if any, given by the purchaser,shall be surrendered by the cane-grower or co-operativesociety. (6) Where payment has been made by transfer ordeposit of the amount to the bank account of the seller or theco-operative society as the case may be, the receipt given bythe purchaser, if any, to the grower or the co- operative societyif not returned to the purchaser, shall become invalid. (7) Incase, the price of the sugarcane remains unpaid on the lastday of the sugar year in which cane supply was made to thefactory on account of the suppliers of cane not coming forwardwith their claims therefore or for any other reason, it shall bedeposited by the producer of sugar with the Collector of thedistrict in which the factory is situated, within three months ofthe close of the sugar year. The Collector shall pay, out of theamount so deposited, all claims, considered payable by himand preferred before him within three years of the close of thesugar year in which the cane was supplied to the factory. Theamount still remaining undisbursed with the Collector, aftermeeting the claims from the suppliers, shall be credited by himto the Consolidated Fund of the State, immediately after theexpiry of the time limit of 3 years within which claims thereforecould be preferred by the suppliers. The State Government shall, as far as possible, utilise such amounts, for developmentof sugarcane in the State.

3-A. Rebate that can be deducted from the price paid forsugarcane - A producer of sugar or his agent shall pay, for thesugarcane purchased by him, to the sugarcane-grower or thesugarcane- growers’ co-operative society, either the minimumprice of sugarcane fixed under Clause 3, or the price agreed tobetween the producer or his agent and the sugarcane-groweror the sugarcane-growers’ co-operative society, as the casemay be (hereinafter referred to as the agreed price)*** [Ins.by G.S.R. 815(E) dated 24.9.1976]”

Clause 4 empowers the Central Government “or a StateGovernment, with the concurrence of the CentralGovernment”, to fix the minimum price or the price of sugarcaneto be paid by producers of the khandsari sugar for thesugarcane purchased by them with the proviso that theminimum price or the price of sugarcane so fixed shall notexceed the minimum price of sugarcane fixed by producers ofsugar in the region with a further proviso that no person shallsell or agree to sell sugarcane to a producer of khandsari sugaror his agent, and no such producer or his agent shall purchaseor agree to purchase sugarcane, “at a price lower than thatfixed under clause (4)”.

Clause 5-A provides that where a producer of sugar purchasessugarcane, from a sugarcane-grower during each sugar year,he shall be liable to pay, in addition to the minimum sugarcaneprice fixed under Clause 3, an additional price, if found due inaccordance with the formula enumerated in Second Scheduleto the Order.

Under sub-clause (2) of Clause 5-A, an appropriate authoritymay be authorised to determine the additional price payableunder sub- clause (1) who shall intimate the same in writing tothe producer of sugar and the sugarcane-grower.

Under sub-clause (4), the manner of payment of the additionalprice may be prescribed as directed by the Central Governmentor the State Government, from time to time.

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Under sub-clause (5), no additional price determined undersub- clause (2) or sub-clause (3) is required to be paid by aproducer of sugar who pays a price higher than the minimumprice fixed under Clause 3 to the sugarcane-grower, providedthat, “the price so paid is not less than the total price comprisingthe minimum sugarcane price fixed under Clause 3 and theadditional price determined under sub-clause (2) or sub-clause(3).”

Under sub-clause (6), it is provided that any extra price paidby the producer of sugar to the sugarcane-grower over andabove the minimum sugarcane price fixed under Clause 3, shallbe adjusted against the additional sugarcane price determinedunder sub-clause (2) or sub-clause (3) and the balance, if any,shall be paid to the sugarcane- grower.

Sub-clause (7) provides that, additional price shall be payableto the sugarcane-grower if he, in performance of his agreementwith a producer of sugar, has supplied not less than 85% of thesugarcane so agreed.

Clause 6 empowers the Central Government to: (i) reserveareas where sugarcane is grown to determine the quantity ofsugarcane which a factory will require for crushing during anyyear; (ii) to fix, with respect to any specified sugarcane-groweror sugarcane-growers generally in a reserved area, the quantityor percentage of sugarcane which he by himself or as a memberof a co-operative society of sugarcane-growers operating insuch area, shall supply to the factory concerned; (iii) direct asugarcane-grower or a sugarcane-growers’ co- operativesociety, supplying sugarcane to a factory, and the factoryconcerned, to enter into an agreement to supply or purchasethe quantity of sugarcane fixed; (iv) direct that no gur orkhandsari sugar shall be manufactured from sugarcane exceptin accordance with the conditions specified in the licence; and(v) “prohibit or restrict or otherwise regulate” the export ofsugarcane from any area (including a reserved area) exceptunder and in accordance with a permit issued in his behalf.Sub-clause (2) makes it obligatory on every sugarcane- grower,Sugarcane-growers’ Co-operative Society and factory, to whoman order is issued under sub-clause (1), to supply or purchase the quantity of sugarcane covered by the agreement enteredinto. Any wilful failure on the part of the sugarcane-grower,sugarcane-growers’ co- operative society and factory to doso, is constituted a breach of the provisions of the Order.

Under Clause 11, the powers under the Order shall, subject tospecified conditions, be exercisable also by an officer orauthority of the Central Government and the State Government or any officer or authority of the State Government.

8.1 The provisions of Section 16 of the Act of 1953 read as under:

16. Regulation of purchase and supply of cane in the reservedand assigned areas –(1) The State Government may, for maintainingsupplies, by order, regulate- (a) the distribution, sale or purchase of any case in any reservedor assigned area; and (b) purchase of cane in any area other than a reserved or assignedarea.

(2) Without prejudice to the generality of the foregoing powerssuch order may provide for- (a) the quantity of cane to be supplied by each Cane-grower orCane-growers’ Co-operative Society in such area to the factoryfor which the area has so been reserved or assigned; (b) the manner in which cane grown in the reserved area or theassigned area, shall be purchased by the factory for which thearea has been so reserved or assigned and the circumstance inwhich the cane grown by a cane-grower shall not be purchasedexcept through a Cane-growers’ Co-operative Society;

(c) the form and the terms and conditions of the agreement to beexecuted by the occupier or manager of the factory for which anarea is reserved or assigned for the purchase of cane offered forsale; (d) the circumstances under which permission may be granted-

(i) for the purchase of cane grown in reserved or assignedarea by a [Gur, Rab or Khandsari Manufacturing Unit or anyperson or factory](Substituted by UP ACT IV of 1964) other A

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Athan the factory for which area has been reserved or assigned;and

(ii) for the sale of cane grown in a reserved or assigned areato a [Gur, Rab or Khandsari Manufacturing Unit or any personor factory] (Substituted by UP ACT IV of 1964) other thanBthe factory for which the area is reserved or assigned; (e) such incidental and consequential matters as may appear tobe necessary or desirable for this purpose.

9. Thus, from the legislative history and the relevant provisions ofEssential Commodities Act, 1953 U.P. Act, 1954 U.P. Order, 1955 Order,C1966 Order which fell for consideration by this Court in the case of TikaRamji (Supra) and U.P. Coop. Cane Unions Federations (Supra), itappears that as such there has been a sea change in the law and therelevant provisions which can be summarized as under:

a. That, the Central Government repealed and substituted the 1955DOrder by 1966 Order;

b. That, in the 1966 Order issued under Section 3 of the EssentialCommodities Act, from the word “price and the minimumprice”, word “price” came to be deleted and the power to fix“minimum price” came to be retained;Ec. Clause 3 of the 1955 Order empowered the Central Governmentto fix “price” or “minimum price” to be paid by the producer ofsugar for sugarcane purchased by him. However, 1955 Ordercame to be repealed by the 1966 Order and Clause 3 of 1966Order provides that the Central Government may fix theF“minimum price” of sugarcane to be paid by the producers ofthe sugar; d. That, 1966 Order came to be further amended in 1976 and1978 and Clauses 3(3) and 3-A came to be introduced whichnow contemplates “agreed price”;G9.1 Considering the Clause 3 of the 1955 Order by which theCentral Government was empowered to fix “price” or the “minimumprice” which fell for consideration by this Court in the case of TikaRamji (Supra) and as even the time when the matter was decided bythis Court in the case of Tika Ramji (Supra), no price was determinedHand/or fixed by the State and therefore, having felt there is no repugnancy and/or conflict, this Court in the case of Tika Ramji (Supra) did not assuch enter into the question of repugnancy. Therefore, as such in thecase of Tika Ramji (Supra), this Court considered Clause 3 of 1955Order which specifically empowered the Central Government to fix the“price or minimum price” and also considered that the State Governmenthas not exercised the power by fixing the price and therefore, the questionof conflict does not arise. However, in the case of U.P. Coop. CaneUnions Federations (Supra), this Court was considering the subsequentchange in law more particularly the 1966 Order and Clause 3 of the1966 Order and other relevant Clauses of 1966 Order.

10. The relevant observations and findings recorded by this Courtin the case of Tika Ramji (Supra) and in the case of U.P. Coop. CaneUnions Federations (Supra) are as under:

10.1RELEVANT EXTRACTS AND OBSERVATIONS INTHE CASE OF TIKA RAMJI

“..…It is clear, therefore, that all the Acts and thenotifications issued thereunder by the Centre inregard to sugar and sugarcane were enacted inexercise of the concurrent jurisdiction. The exerciseof such concurrent jurisdiction would not deprive theProvincial Legislatures of similar powers which they hadunder the Provincial Legislative List and there would,therefore, be no question of legislative incompetence quathe Provincial Legislatures in regard to similar pieces oflegislation enacted by the latter. The ProvincialLegislatures as well as the Central Legislature wouldbe competent to enact such pieces of legislation andno question of legislative competence would arise. Italso follows as a necessary corollary that, even thoughsugar industry was a controlled industry, none of these Actsenacted by the Centre was in exercise of its jurisdictionunder Entry 52 of List I. Industry in the wide sense of theterm would be capable of comprising three different aspects:(1) raw materials which are an integral part of the industrialprocess, (2) the process of manufacture or production, and(3) the distribution of the products of the industry. The rawmaterials would be goods which would be comprised inEntry 27 of List II. The process of manufacture or AB

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production would be comprised in Entry 24 of List II exceptwhere the industry was a controlled industry when it wouldfall within Entry 52 of List I and the products of the industrywould also be comprised in Entry 27 of List II except wherethey were the products of the controlled industries whenthey would fall within Entry 33 of List III. This being theposition, it cannot be said that the legislation whichwas enacted by the Centre in regard to sugar andsugarcane could fall within Entry 52 of List I. Beforesugar industry became a controlled industry, both sugar andsugarcane fell within Entry 27 of List II but, after adeclaration was made by Parliament in 1951 by Act LXVof 1951, sugar industry became a controlled industry andthe product of that industry, viz., sugar was comprised inEntry 33 of List III taking it out of Entry 27 of List II. Evenso, the Centre as well as the Provincial Legislatures hadconcurrent jurisdiction in regard to the same. In no eventcould the legislation in regard to sugar and sugarcanebe thus included within Entry 52 of List 1. The pithand substance argument also cannot be imported herefor the simple reason that, when both the Centre aswell as the State Legislatures were operating in theconcurrent field, there was no question of anytrespass upon the exclusive jurisdiction vested in theCentre under Entry 52 of List 1, the only questionwhich survived being whether, putting both the piecesof legislation enacted by the Centre and the StateLegislature together, there was any repugnancy, acontention which will be dealt with hereafter.

“…..A more effective answer is furnished bycomparison of the terms of the U.P. Act I of 1938 withthose of the impugned Act. Whereas the U.P. Act I of 1938covered both sugarcane and sugar within its compass, theimpugned Act was confined only to sugarcane, thusrelegating sugar to the exclusive jurisdiction of the Centrethereby eliminating all argument with regard to theencroachment by the U.P. State Legislature on the fieldoccupied by the Centre. The U.P. Act I of 1938 providedfor the establishment of a Sugar Control Board, the Sugar

Commissioner, the Sugar Commission and the CaneCommissioner. The impugned Act provided for theestablishment of a Sugarcane Board. The SugarCommissioner was named as such but his functions underrules 106 and 107 were confined to getting informationwhich would lead to the regulation of the supply andpurchase of sugarcane required for use in sugar factoriesand had nothing to do with the production or the disposal ofsugar produced in the factories. The Sugar Commissionwas not provided for but the Cane Commissioner was theauthority invested with all the powers in regard to the supplyand purchase of sugarcane. The Inspectors appointed underthe U.P. Act I of 1938 had no doubt powers to examinerecords maintained at the factories showing the amount ofsugarcane purchased and crushed but they were there witha view to check the production or manufacture of sugarwhereas the Inspectors appointed under the impugned Actwere, by rule 20, to confine their activities to the regulationof the supply and purchase of sugarcane without havinganything to do with the further process of the manufactureor production of sugar. Chapter 3 of U.P. Act I of 1938,dealing with the construction and extension of sugarfactories, licensing of factories for crushing sugarcane, fixingof the price of sugar, etc., was deleted from the impugnedAct. The power of licensing new industrial undertakingswas thereafter exercised by the Centre under Act LXV of1951 as amended by Act XXVI of 1953, vide sections 11(a),12 and 13, and the power of fixation of price of sugarwas exercised by the Centre under section 3 of ActXXIV of 1946 by issuing the Sugar Control Order,1950. Even the power reserved to the State Governmentto fix minimum prices of sugarcane under Chapter V ofU.P. Act I of 1938 was deleted from the impugned Act thesame being exercised by the Centre under clause 3 of Sugarand Gur Control Order, 1950, issued by it in exercise of thepowers conferred under section 3 of Act XXIV of 1946.The prices fixed by the Centre were adopted by the StateGovernment and the only thing which the State Governmentrequired under rule 94 was that the occupier of a factory or ABC

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the purchasing agent should cause to be put up at eachpurchasing centre a notice showing the minimum price ofcane fixed by the Government meaning thereby the centre.The State Government also incorporated these prices whichwere notified by the Centre from time to time in the formsof the agreements which were to be entered between thecane growers, the cane growers co-operative societies, thefactories and their purchasing agents for the supply andpurchase of sugarcane as provided in the U.P. SugarcaneSupply and Purchase Order, 1954. The only provision whichwas retained by the State Government in the impugned Actfor the protection of the sugarcane growers was thatcontained in section 17 which provided for the payment ofprice of sugarcane by the occupier of a factory to thesugarcane growers. It could be recovered from suchoccupier as if it were an arrear of land revenue. Thiscomparison goes to show that the impugned Act merelyconfined itself to the regulation of the supply and purchaseof sugarcane required for use in sugar factories and did notconcern itself at all with the controlling or licensing of thesugar factories, with the production or manufacture of sugaror with the trade and commerce in, and the production,supply and distribution of, sugar. If that was so, there wasno question whatever of its trenching upon the jurisdictionof the Centre in regard to sugar industry which was acontrolled industry within Entry 52 of List I and the U.P.Legislature had jurisdiction to enact the law with regard tosugarcane and had legislative competence to enact theimpugned Act.”

“..…It was next contended that the provisions of theimpugned Act were repugnant to the provisions of Act LXVof 1951 and Act X of 1955 which were enacted byParliament and, therefore, the law made by Parliamentshould prevail and the impugned Act should, to the extentof the repugnancy, be void. Before dealing with thiscontention it is necessary to clear the ground by definingthe exact connotation of the term “repugnancy”.Repugnancy falls to be considered when the law made byParliament and the law made by the State Legislature occupy the same field because, if both these pieces oflegislation deal with separate and distinct matters though ofa cognate and allied character, repugnancy does not arise.”

“…..We are concerned here with the repugnancy, if any,arising by reason of both Parliament and the StateLegislature having operated in the same field in respect ofa matter enumerated in the Concurrent List, i.e., foodstuffscomprised in Entry 33 of List III.”

“…..The Calcutta High Court in G. P. Stewart v. B. K. RoyChaudhury had occasion to consider the meaning ofrepugnancy and B. N. Rau, J. who delivered the judgmentof the Court observed at page 632:

“It is sometimes said that two laws cannot be said to beproperly repugnant unless there is a direct conflictbetween them, as when one says ‘do” and the other“don’t”, there is no true repugnancy, according to thisview, if it is possible to obey both the laws. For reasonswhich we shall set forth presently, we think that this istoo narrow a test: there may well be cases of repugnancywhere both laws say “don’t” but in different ways. Forexample, one law may say, “No person shall sell liquorby retail, that is, in quantities of less than five gallons ata time” and another law may say, “No person shall sellliquor by retail, that is, in quantities of less than ten gallonsat a time”. Here, it is obviously possible to obey bothlaws, by obeying the more stringent of the two, namelythe second one; yet it is equally obvious that the twolaws are repugnant, for to the extent to which a citizenis compelled to obey one of them, the other, though notactually disobeyed, is nullified”.

The learned Judge then discussed the various authorities whichlaid down the test of repugnancy in Australia, Canada, and England andconcluded at page 634:

“The principle deducible from the English cases, as fromthe Canadian cases, seems therefore to be the same asthat enunciated by Isaacs, J. in the Australian 44 hourcase (37 C.L.R. 466) if the dominant law has expressly ABC

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or impliedly evinced its intention to cover the whole field,then a subordinate law in the same field is repugnantand therefore inoperative. Whether and to what extentin a given case, the dominant law evinces such anintention must necessarily depend on the language ofthe particular law”.

“…..In the instant case, there is no question of any inconsistencyin the actual terms of the Acts enacted by Parliament and theimpugned Act. The only questions that arise are whetherParliament and the State Legislature sought to exercise theirpowers over the same subject-matter or whether the laws enactedby Parliament were intended to be a complete exhaustive codeor, in other words, expressly or impliedly evinced an intention tocover the whole field.”

“…..Act X of 1955 included within the definition of essentialcommodity food stuffs which we have seen above would includesugar as well as sugarcane. This Act was enacted by Parliamentin exercise of the concurrent legislative power under Entry 33 ofList III as amended by the Constitution Third Amendment Act,1954. Foodcrops were there defined as including crops ofsugarcane and section 3(1) gave the Central Government powersto control the production, supply and distribution of essentialcommodities and trade and commerce therein for maintaining orincreasing the supplies thereof or for securing their equitabledistribution and availability at fair prices. Section 3(2)(b)empowered the Central Government to provide inter alia forbringing under cultivation any waste or arable land whetherappurtenant to a building or not for growing thereon of foodcropsgenerally or specified foodcrops and section 3(2)(c) gave theCentral Government power for controlling the price at which anyessential commodity may be bought or sold. These provisions wouldcertainly bring within the scope of Central legislation the regulationof the production of sugarcane as also the controlling of the priceat which sugarcane may be bought or sold, and in addition to theSugar Control Order, 1955 which was issued by the CentralGovernment on 27th August, 1955, it also issued the SugarcaneControl Order, 1955, on the same date investing it with the powerto fix the price of sugarcane and direct payment thereof as alsothe power to regulate the movement of sugarcane.”

“…..Parliament was well within its powers in legislating inregard to sugarcane and the Central Government was alsowell within its powers in issuing the Sugarcane ControlOrder, 1955 in the manner it did because all this was inexercise of the concurrent power of legislation under Entry33 of List III. That, however, did not affect the legislativecompetence of the U. P. State Legislature to enact the lawin regard to sugarcane and the only question whichremained to be considered was whether there was anyrepugnancy between the provisions of the Centrallegislation and the U. P. State legislation in this behalf. Aswe have noted above, the U. P. State Government. did notat all provide for the fixation of minimum prices forsugarcane nor did it provide for the regulation of movementof sugarcane as was done by the Central Government inclauses (3) and (4) of the Sugarcane Control Order, 1955.The impugned Act did not make any provision for the sameand the only provision in regard to the price of sugarcanewhich was to be found in the U. P. Sugarcane Rules, 1954,was contained in Rule 94 which provided that a notice ofsuitable size in clear bold lines showing the minimum priceof cane fixed by the Government and the rates at which thecane is being purchased by the centre was to be put up byan occupier of a factory or the purchasing agent as the casemay be at each purchasing centre. The price of cane fixedby Government here only meant the price fixed by theappropriate Government which would be the CentralGovernment, under clause 3 of the Sugarcane ControlOrder, 1955, because in fact the U. P. State Governmentnever fixed the price of sugarcane to be purchased by thefactories. Even the provisions in behalf of the agreementscontained in clauses 3 and 4 of the U. P. SugarcaneRegulation of Supply and Purchase Order, 1954, providedthat the price was to be the minimum price to be notifiedby the Government subject to such deductions, if any, asmay be notified by the Government from time to timemeaning thereby the Central Government, the StateGovernment not having made any provision in that behalfat any time whatever. The provisions thus made by the ABC

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ASugarcane Control Order, 1955, did not find their placeeither in the impugned Act or the Rules made thereunderor the U.P. Sugarcane Regulation of Supply and PurchaseOrder, 1954, and the provision contained in section 17 ofthe impugned Act in regard to the payment of sugarcaneprice and recovery thereof as if it was an arrear of landBrevenue did not find its place in the Sugarcane ControlOrder, 1955. These provisions, therefore, were mutuallyexclusive and did not impinge upon each other there beingthus no trenching upon the field of one Legislature by theother. Our attention was drawn to the several provisionsCcontained in the Sugarcane Control Order, 1955 and theU.P. Sugarcane Regulation of Supply and Purchase Order,1954 and the agreements annexed thereto and it was pointedout that they differed in material particulars, the provisionsof the latter being more stringent than those of the former.It is not necessary to refer to these provisions in any detail.DSuffice it to say that none of these provisions do overlap,the Centre being silent with regard to some of the provisionswhich have been enacted by the State and the State beingsilent with regard to some of the Provisions which havebeen enacted by the Centre. There is no repugnancyEwhatever between these provisions and the impugned Actand the Rules framed thereunder as also the U.P. SugarcaneRegulation of Supply and Purchase Order, 1954 do nottrench upon the field covered by Act X of 1955. There beingno repugnancy at all, therefore, no question arises of theoperation of article 254(2) of the Constitution and noFprovision of the impugned Act and the Rules madethereunder is invalidated by any provision contained in ActLXV of 1951 as amended by Act XXVI of 1953 or Act X of1955 and the Sugarcane Control Order, 1955 issuedthereunder.”

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11. RELEVANT EXTRACTS AND OBSERVATIONS INTHE CASE OF U.P. COOPERATIVE CANE UNIONSFEDERATIONS:

“27. It has been urged by learned counsel for therespondents that the expression “at the minimum price notified by H

Government” used in the proforma of the agreement which is tobe executed between a cane-grower and the occupier of thefactory as given in Form B and that which is to be executedbetween a cane-growers’ cooperative society and the occupierof the factory as given in Form C in the appendix to the 1954Order indicates that it is only the minimum price fixed by theCentral Government which can be the consideration or price forthe sale of sugarcane to the sugar factory. Strong reliance in supportof this submission has been placed upon certain observations madeby this Court in Tika Ramji v. State of U.P. The proforma ofagreement viz. Forms B and C are contained in the appendix toU.P. Sugarcane Supply and Purchase Order, 1954. This Orderhas been made by U.P. Government in exercise of the powerconferred by Section 16 of the 1953 Act, which provides that theState Government may for maintaining supplies by Order regulatethe distribution, sale or purchase of cane in any reserved orassigned area, etc. The Order having been made by the StateGovernment in exercise of a power conferred by an Act made byU.P. legislature, the only logical inference which can be drawn isthat the word “Government” refers to State Government. Thereis no indication in the proforma of the agreement or in the 1954Order that the word “Government” would refer to CentralGovernment. If the State Government is prescribing a proformaof an agreement which is to be executed by a cane-grower or acane-growers’ cooperative society and the occupier of the factoryregarding sale and purchase of sugarcane wherein the word“Government” is used, it can only mean the State Governmentand not the Central Government unless there is clear indication tothe contrary.

28. The observations made in Tika Ramji, strong relianceon which is placed by learned counsel for the respondents, haveto be understood in the context in which they were made. It maybe noted that the writ petitions in the said case were filed in thisCourt in the year 1954 and the judgment was delivered on 24-4-1956. At the relevant time, it was the Sugarcane (Control) Order,1955 which was in operation. Clause 3 of this Order empoweredthe Central Government to fix the price or the minimum price tobe paid by a producer of sugar for sugarcane purchased by him.The 1955 Order has been repealed by Sugarcane (Control) Order, ABC

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1966 and Clause 3 of this Order provides that the CentralGovernment may fix the minimum price of sugarcane to be paidby producers of sugar. There is a difference between “the price”which is a fixed amount and “the minimum price” which onlyindicates the lowest-permissible rate. The 1966 Order which itselfwas made by the Central Government more than a decade afterthe judgment was rendered in Tika Ramji was amended in 1978and Clauses 3(3) and 3-A thereof contemplate an “agreed price”which in view of the mandate of Clause 3(2) is bound to be higherthan the “minimum price” fixed under Clause 3(1). Naturally it isthis “agreed price” which is to be mentioned in the agreementsfor sale and purchase of sugarcane in Forms B and C otherwisethe very purpose of entering into agreements would be defeated.The State Government had not fixed any price for the sugarcaneunder its regulatory power by the time Tika Ramji was decidedby this Court in April, 1956 and only the Central Government hadtaken a step for fixing the price. It was in these circumstancesthat it was observed that the “price fixed by the Government”would mean “the Central Government”. The observations reliedupon by the learned counsel for the respondents were made whileconsidering the question whether there was any repugnancybetween the provisions of the Sugarcane Control Order 1955 andthe 1953 Act, the Rules and 1954 Order and they should beunderstood in that context. The relevant portion of the judgmenton SCR p.434 is being reproduced below:

(AIR p.704, para 36)

“The price of cane fixed by Government here only meantthe price fixed by the appropriate Government which wouldbe the Central Government, under clause 3 of the SugarcaneControl Order, 1955, because in fact the U.P. StateGovernment never fixed the price of sugarcane to bepurchased by the factories. Even the provisions in behalf ofthe agreements contained in clauses 3 and 4 of the U.P.Sugarcane Regulation of Supply and Purchase Order, 1954,provided that the price was to be the minimum price to benotified by the Government subject to such deductions, if any,as may be notified by the Government from time to timemeaning thereby the Central Government, the State Government not having made any provision in that behalfat any time whatever.

The provisions thus made by the Sugarcane ControlOrder, 1955, did not find their place either in the impugned Actor the Rules made thereunder or the U.P. Sugarcane Regulationof Supply and Purchase Order, 1954; and the provision containedin Section 17 of the impugned Act in regard to the payment ofsugarcane price and recovery thereof as if it was an arrear ofland revenue did not find its place in the Sugarcane ControlOrder, 1955.”

“28.1 Having regard to the factual situation then existingthat U.P. Government had not fixed the price of the sugarcane, itwas held that the price of the cane fixed by the Government couldonly mean “Central Government”. It has not been laid down as aprinciple of law that the words “minimum price notified byGovernment” must necessarily mean the minimum price fixed bythe Central Government or that under no circumstances it canmean the price fixed by the State Government.

“34. Learned Senior Counsel for the respondents hasstrenuously urged that the Central Government having made the1966 Order which contains a specific provision for fixation ofprice of sugarcane, under Clause 3(1) thereof, the regulatorypower under the 1953 Act cannot embrace within its fold thesame power of fixation of price as this will be clearly repugnantto a law made by the Parliament and would be void in view ofArticle 254(1) of the Constitution. In Tika Ramji it has been heldthat the EC Act under which the Central Government made the1966 Order and the 1953 Act made by U.P. Legislature havebeen enacted with reference to Entry 33 of List III of the SeventhSchedule. The constitutional validity of the 1953 Act was upheldby the Constitution Bench in the said decision. On p. 437 of theReports (SCR) the Court quoted with approval the followingpassage from the judgment of Sulaiman J. in Shyamakant Lal v.Rambhajan Singh (FCR at p. 212 : AIR at p. 83) for the principleof construction in regard to repugnancy : (AIR p. 700, para 32)

“When the question is whether a Provincial legislationis repugnant to an existing Indian law, the onus of showing its AB

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repugnancy and the extent to which it is repugnant should beon the party attacking its validity. There ought to be apresumption in favour of its validity, and every effort should bemade to reconcile them and construe both so as to avoid theirbeing repugnant to each other; and care should be taken to seewhether the two do not really operate in different fields withoutencroachment. Further, repugnancy must exist in fact, andnot depend merely on a possibility:”

(Emphasis supplied)

And then went to hold : (AIR p. 700, para 33)

“33. In the instant case, there is no question of anyinconsistency in the actual terms of the Acts enacted byParliament and the impugned Act. The only questions that ariseare whether Parliament and the State Legislature sought toexercise their powers over the same subject-matter or whetherthe laws enacted by Parliament were intended to be a completeexhaustive code or, in other words, expressly or impliedlyevinced an intention to cover the whole field.”

35. In M. Karunanidhi v. Union of India, the principlesto be applied for determining repugnancy between a law made byParliament and law made by State legislature were considered bya Constitution Bench. In pursuance of an FIR lodged against ShriM. Karunanidhi the CBI after investigation had submittedchargesheet against him under Section 161, 468 and 471 IPC andSection 5(2) read with Section 5(1)(d) of the Prevention ofCorruption Act. The Madras Legislature had passed an Act knownas Tamil Nadu Public Men (Criminal Misconduct) Act, 1973 whichhad received the assent of the President. It was contended thatby virtue of Article 254(2) of the Constitution, the provisions ofIndian Penal Code, Prevention of Corruption Act and CriminalLaw Amendment Act stood repealed. After review of all the earlierauthorities Court laid down the following tests : (SCC pp.448-49,para 35)

“35. 1. That in order to decide the question ofrepugnancy it must be shown that the two enactments containinconsistent and irreconcilable provisions, so that they cannotstand together or operate in the same field.

2. That there can be no repeal by implication unless theinconsistency appears on the face of the two statutes.

3. That where the two statutes occupy a particular field, but thereis room or possibility of both the statutes operating in the samefield without coming into collision with each other, no repugnancyresults.

4. That where there is no inconsistency but a statute occupyingthe same field seeks to create distinct and separate offences, noquestion of repugnancy arises and both the statutes continue tooperate in the same field.”

“37. Under Sub-section (1) of Clause 3 of the 1966 Order,the Central Government can only fix a minimum price ofsugarcane. This clause should be read along with Sub-clause (2)which creates an embargo or prohibition that no person shall sellor agree to sell sugarcane to a producer of sugar and no suchproducer shall purchase or agree to purchase sugarcane at a pricelower than that fixed under Sub-clause (1). The inconsistency orrepugnancy will arise if the State Government fixed a price whichis lower than that fixed by the Central Government. But, if theprice fixed by the State Government is higher than that fixed bythe Central Government, there will be no occasion for anyinconsistency or repugnancy as it is possible for both the orders tooperate simultaneously and to comply with both of them. A higherprice fixed by the State Government would automatically complywith the provisions of Sub-clause (2) of Clause 3 of 1966 Order.Therefore, any price fixed by the State Government which is higherthan that fixed by the Central Government cannot lead to anykind of repugnancy.”

“39.…..that under the 1966 Order the CentralGovernment only fixes the minimum price and it is always open tothe State Government to fix a higher price. Under the enactmentsmade by the State Legislatures areas are reserved for the sugarfactories and the cane-growers therein are compelled to supplysugarcane to them and therefore the State Government hasincidental power to fix the price of sugarcane which will also bestatutory price. They further lay down that the Cane Commissionercan direct the cane-growers and the sugar factories to enter into AB

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agreements for purchase of sugarcane at a price fixed by theState Government and such agreements cannot be branded ashaving been obtained by force or compulsion.”

“43. One of the main reasons given by the High Court forallowing the writ petition and quashing the order of fixation ofState Advised Price is that power to fix sugarcane price had beengiven to the State Government under the Sugarcane Act, 1934and hence it would be redundancy to say that the same power tofix cane price also flows from Section 16 of the 1953 Act. TheHigh Court has also held that when the 1953 Act was enactedthere was already a law, viz., the Sugarcane Act, 1934, whichenabled the State Government to fix the minimum cane price andhence, it could not have been the intention of the U.P. Legislaturewhile enacting 1953 Act that Section 16 thereof would include thepower to fix the minimum cane price as such a power was alreadythere with the State Government under Section 3(2) of theSugarcane Act, 1934. The High Court, therefore, concluded thatSection 16 of the 1953 Act only gave power to the StateGovernment to regulate the supply and purchase of sugarcane inthe narrower sense and not in the wider sense so as to include thepower to fix the minimum price. This reasoning of the High Courtproceeds on the footing that the Sugarcane Act, 1934 was inexistence and was in operation when the 1953 Act was enactedby U.P. Legislature. It appears that the correct legal position wasnot brought to the notice of the learned judges. The SugarcaneAct, 1934 was repealed by U.P. Sugar Factories Control Act,1938 (UP Act 1 of 1938). Section 26 of U.P. Sugarcane (Regulation

of Supply & Purchase) Act, 1953 repealed the U.P. SugarFactories Control Act, 1938. With the enforcement of theGovernment of India Act, 1935, there was distribution of legislativepowers between the Dominion Legislature and the ProvincialLegislature and the entire subject matter of Sugarcane Act, 1934fell within the Provincial Legislative list. It was in thesecircumstances that the U.P. Legislature enacted the U.P. SugarFactories Control Act, 1938 which repealed the Sugarcane Act,1934 in its application in the State of U.P. This position has beennoticed in Tika Ramji v. State of U.P., SCR at pp. 400, 401 and417. Therefore, the aforesaid reasoning given by the High Courthas no legal basis.”

“44. The second reasoning given by the High Court is thateven if the State Government had the power to fix the minimumcane price under Section 16 of the 1953 Act, this power came toan end in view of Article 254(1) of the Constitution on theenactment of the EC Act and the promulgation of the SugarcaneControl Order, 1955 (later replaced by the 1966 Order), whichnow gives exclusive power to the Central Government to fix theminimum price. As discussed earlier we are not in agreementwith the aforesaid reasoning as the question of repugnancy doesnot arise. The High Court has also held that the CentralGovernment, while fixing the price of the sugar under Section3(3-C) of the EC Act, takes into consideration the minimum priceof sugarcane fixed under 1966 Order and if the sugar mills arecompelled to pay a higher price than that fixed by the CentralGovernment, it will disturb the price of the levy sugar and such aneventuality could not have been contemplated by the legislature.Over a period of time, the quota of levy sugar has gone downfrom 40 per cent to 10 per cent of the total production of sugarand the sugar mills are now free to sell 90 per cent of theirproduction in open market. Under Section 3(3-C) of the EC Act,the Central Government has to determine the price of the levysugar having regard to several factors enumerated in the sub-section and the minimum price fixed under 1966 Order is only oneof the factors. The manufacturing cost of sugar and securing ofreasonable return on the capital employed in the business ofmanufacturing sugar are also relevant factors under Clauses (b)and (d) of Section 3(3-) EC Act and, therefore, the fixation ofhigher price for sugarcane by the State Government by itself cannothave any major or substantial impact on the fixation of the priceof the levy sugar by the Central Government.”

12. The question involved in Ch. Tika Ramji & Ors., etc. v. TheState of Uttar Pradesh & Ors. AIR 1956 SC 676 was concerning thevalidity of the Uttar Pradesh Sugarcane (Regulation of Supply andPurchase) Act, 1953 (for short, “Act of 1953”) and notifications dated27.9.1954 and 9.11.1955 issued by the Government of Uttar Pradeshthereunder. The notification dated 27.9.1954 was issued in exercise ofthe powers/ conferred under sub-section 1(a) read with sub-section 2(b)of Section 16 of the Act of 1953 which provided that not less than 3/4 ofthe cane growers of the area of operation of a Cane Growers Cooperative AB

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ASociety to be members of the society. The occupier of the factory forwhich the area is assigned shall not purchase or enter into an agreementto purchase cane grown by a cane grower except through such CaneGrowers Co-operative Society.

13. The notification dated 9.11.1955 which was issued in exerciseBof the powers conferred by section 15 of the Act of 1953, reserved orassigned to the sugar factories mentioned in column 2 of the Scheduleannexed to it, the cane purchasing centers, with the authorities attachedto them, specified against them in column 3 for the supply of sugarcaneduring the crushing season 1955-56. Thus, it is apparent that thenotification dated 27.9.1954 related to the agency of supply of sugarCcane to the factories and the notification dated 9.11.1955 related to thecreation of the zones for particular factories were questioned. Varioussubmissions were raised to assail the validity of the Act and thenotification.

14. Firstly, it was urged that the State of Uttar Pradesh had noDpower to enact the Act of 1953 as it relates to the subject of industries,the control of which by the Union is declared by Parliament by law to beexpedient in the public interest within the meaning of Entry 52 of List I.The Act of 1953 was repugnant to Essential Commodities Act, 1955 andthe Industries Development Regulation Act, 1951. The Act of 1953Einfringes the fundamental right carved out under Article 14 as vast powerswere given to the Cane Commissioner, which could be used in adiscriminatory manner. The notification dated 27.9.1954 violated thefundamental right guaranteed under Article 19(1)(c). The cane growerswere compelled to become a member of the society before they couldsell sugarcane to a factory. The Act of 1953 and the notifications infringeFthe fundamental right guaranteed by Article 19(1)(f) and (g) and Article31 of the Constitution.

15. This Court held that the State of Uttar Pradesh had thelegislative competence to enact the Act, and there was no repugnancyof the Act of 1953 with the Act of 1951 or the Essential CommoditiesGAct, 1955. This Court upheld the validity of the Act and notifications andalso held that there was no unreasonable restriction imposed. Therewas no violation of fundamental right under Article 19(1)(f) and (g) andArticle 31 of the Constitution.

16. The question of fixation of price by the State GovernmentHunder the Act of 1953 did not fall for consideration in Ch. Tika Ram (supra). This Court noted that the Uttar Pradesh Government had neverfixed the price of sugarcane to be purchased by the factories by the timethe decision was rendered. While examining the repugnancy, passingreference has been made to the provisions contained in the Act of 1954.

17. During the pendency of petitions, the Sugar Control Order,1955, was issued on 27.8.1955, which was referred to in the judgment.It was not even submission raised or considered that the power ofregulation under Section 16 of the Act would include the power to fix theadvised price of sugarcane. The concept of fixation of minimum priceby Central Government vis a vis to State Advised Price to be fixed byState Government, never fell for consideration of this Court in the saiddecision. The ratio of decision has to be considered in the light of questionsconsidered and answered. In Tika Ramji (supra), it was held that therewas no repugnancy in the Act of 1953 with Act of 1955 or with the Actof 1951, and notifications which were impugned did not infringe thefundamental rights.

18. Thus, from the above, it is clear that the factual matrix and therelevant provisions which fell for consideration before this Court in thecase of Tika Ramji (supra) and which fell for consideration by thisCourt in the case of U.P. Coop. Cane Unions Federations (supra)were altogether different. As observed hereinabove, Clause 3 of 1955Order empowered the Central Government to fix “the price or theminimum price”. The aforesaid Clause 3 of 1955 Order was underconsideration by this Court in the case of Tika Ramji (supra). However,subsequently, 1955 Order has been repealed by 1966 Order and Clause3 of 1966 Order provides that the Central Government may fix “theminimum price” of the sugarcane. Therefore, when the legislatureconsciously deleted the word “the price” and retained the power withthe Central Government to fix “the minimum price”, some meaning hasto be given to such a deletion. The intention of the legislature is alsorequired to be considered when certain words in the provisions of astatute are deleted or added and/or substituted. In the case of TikaRamji(supra), this Court though specifically observed and held that inthe field of sugar and sugarcane, both, the Parliament and the Statelegislature would have the concurrent Jurisdiction as the same will fallunder Entry 33 in the Concurrent List of seventh Schedule. Consideringthe fact that the State Government did not exercise the power of fixingthe price, though the powers were available and the Central Government A

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Afixed the price/minimum price which came to be adopted by the StateGovernment, this Court in Tika Ramji’s case(supra) held that in such asituation there is no conflict and the question of repugnancy does notarise. Therefore, we are of the opinion that as such there is no apparentconflict between the decisions in Tika Ramji’s case and U.P. Coop.Cane Unions Federations, which require to be referred to a largerBBench of seven Judges.

19. Under clause 3 of the 1966 order, the minimum price can befixed. Under clause 3A of the said order, as amended in 1978, the agreedprice is to be mentioned in the agreement, which can be higher than theminimum price and not less than that. Under clause 3(2), no person shallCsell or agree to sell sugarcane to a producer of sugar or his agent, and nosuch producer or agent shall purchase or agree to purchase sugarcaneat a price lower than that fixed under sub-clause (1). Thus, the pricefixed under clause 3(1) has to be treated as a minimum price. Underclause 3(A), as inserted on 2.2.1978, agreement in writing is required,Dand the price has to be paid as agreed to within 14 days.

20. Even otherwise and on merits and for the reasons statedhereinbelow, we are in complete agreement with the view taken by thisCourt in the case of U.P. Coop. Cane Unions Federations, which laysdown that the inconsistency or repugnancy will arise if the StateEGovernment fixed a price which is lower than that fixed by theCentral Government. But, if the price fixed by the StateGovernment is higher than that fixed by the Central Government,there will be no occasion for any inconsistency or repugnancy asit is possible for both the orders to operate simultaneously andto comply with both of them. A higher price fixed by the StateFGovernment would automatically comply with the provisions ofSub-clause (2) of Clause 3 of 1966 Order. Therefore, any pricefixed by the State Government which is higher than that fixed bythe Central Government cannot lead to any kind of repugnancy.

20.1 Question of repugnancy under Article 254 of the Constitution:

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Concerning laws in List III of the Seventh Schedule of theConstitution of India, where both the Union and the States have thepower to enact a law, the question of repugnancy arises only in a casewhere there is an actual irreconcilable conflict between the two laws.Inconsistency between the two laws is irreconcilable, then the questionH

of repugnancy arises. It is necessary to find the dominant intention ofboth the legislatures, partial or incidental coverage of the same area in adifferent context, and to achieve a different purpose, does not attractthe doctrine of repugnancy. In Rajiv Sarin v. State of Uttarakhand, (2011)8 SCC 708, the Court held :

“33. It is trite law that the plea of repugnancy would beattracted only if both the legislations fall under the ConcurrentList of the Seventh Schedule to the Constitution. Under Article254 of the Constitution, a State law passed in respect of a subject-matter comprised in List III i.e., the Concurrent List of the SeventhSchedule to the Constitution would be invalid if its provisions arerepugnant to a law passed on the same subject by Parliament andthat too only in a situation if both the laws i.e., one made by theState Legislature and another made by Parliament cannot existtogether. In other words, the question of repugnancy under Article254 of the Constitution arises when the provisions of both lawsare completely inconsistent with each other or when the provisionsof both laws are absolutely irreconcilable with each other, and it isimpossible without disturbing the other provision, or conflictinginterpretations resulted into when both the statutes covering thesame field are applied to a given set of facts. That is to say, insimple words, repugnancy between the two statutes would ariseif there is a direct conflict between the two provisions and the lawmade by Parliament and the law made by the State Legislatureoccupies the same field. Hence, whenever the issue of repugnancybetween the law passed by Parliament and of State Legislatureare raised, it becomes quite necessary to examine as to whetherthe two legislations cover or relate to the same subject-matter ordifferent.

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45. For repugnancy under Article 254 of the Constitution,there is a twin requirement, which is to be fulfilled: firstly, therehas to be a “repugnancy” between a Central and State Act; andsecondly, the Presidential assent has to be held as being non-existent. The test for determining such repugnancy is indeed tofind out the dominant intention of both the legislations and whethersuch dominant intentions of both the legislations are alike ordifferent. To put it simply, a provision in one legislation in order to A

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give effect to its dominant purpose may incidentally be on thesame subject as covered by the provision of the other legislation,but such partial or incidental coverage of the same area in adifferent context and to achieve a different purpose does notattract the doctrine of repugnancy. In a nutshell, in order to attractthe doctrine of repugnancy, both the legislations must besubstantially on the same subject.”

20.2 In M. Karunanidhi v. Union of India & Anr., (1979) 3 SCC431, the Court opined that where there is a direct collision between thelaw made by the State and the law made by the Parliament, State lawwould be void to the extent of repugnancy. It is only when the provisionsare irreconcilable. The Court held:

“8. It would be seen that so far as clause (1) of Article 254is concerned it clearly lays down that where there is a directcollision between a provision of a law made by the State and thatmade by Parliament with respect to one of the matters enumeratedin the Concurrent List, then, subject to the provisions of clause(2), the State law would be void to the extent of the repugnancy.This naturally means that where both the State and Parliamentoccupy the field contemplated by the Concurrent List then theAct passed by Parliament being prior in point of time will prevail,and consequently, the State Act will have to yield to the CentralAct. In fact, the scheme of the Constitution is a scientific andequitable distribution of legislative powers between Parliamentand the State Legislatures. First, regarding the matters containedin List I, i.e., the Union List to the Seventh Schedule, Parliamentalone is empowered to legislate, and the State Legislatures haveno authority to make any law in respect of the Entries containedin List I. Secondly, so far as the Concurrent List is concerned,both Parliament and the State Legislatures are entitled to legislatein regard to any of the Entries appearing therein, but that is subjectto the condition laid down by Article 254(1) discussed above.Thirdly, so far as the matters in List II, i.e., the State List areconcerned, the State Legislatures alone are competent to legislateon them, and only under certain conditions, Parliament can do so.It is, therefore, obvious that in such matters, repugnancy mayresult from the following circumstances:

1. Where the provisions of a Central Act and a State Act inthe Concurrent List are fully inconsistent and are absolutelyirreconcilable, the Central Act will prevail, and the State Act willbecome void in view of the repugnancy.

2. Where however a law passed by the State comes intocollision with a law passed by Parliament on an Entry in theConcurrent List, the State Act shall prevail to the extent of therepugnancy and the provisions of the Central Act would becomevoid provided the State Act has been passed in accordance withclause (2) of Article 254.

3. Where a law passed by the State Legislature while beingsubstantially within the scope of the entries in the State Listentrenches upon any of the Entries in the Central List theconstitutionality of the law may be upheld by invoking the doctrineof pith and substance if on an analysis of the provisions of the Actit appears that by and large the law falls within the four corners ofthe State List and entrenchment, if any, is purely incidental orinconsequential.

4. Where, however, a law made by the State Legislatureon a subject covered by the Concurrent List is inconsistent withand repugnant to a previous law made by Parliament, then such alaw can be protected by obtaining the assent of the Presidentunder Article 254(2) of the Constitution. The result of obtainingthe assent of the President would be that so far as the State Actis concerned, it will prevail in the State and overrule the provisionsof the Central Act in their applicability to the State only. Such astate of affairs will exist only until Parliament may at any timemake a law adding to, or amending, varying or repealing the lawmade by the State Legislature under the proviso to Article 254.

So far as the present State Act is concerned, we are called uponto consider the various shades of the constitutional validity of thesame under Article 254(2) of the Constitution.

24. It is well settled that the presumption is always in favourof the constitutionality of a statute and the onus lies on the personassailing the Act to prove that it is unconstitutional. Prima facie, A

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there does not appear to us to be any inconsistency between theState Act and the Central Acts. Before any repugnancy can arise,the following conditions must be satisfied:

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2. That such an inconsistency is absolutely irreconcilable.

3. That the inconsistency between the provisions of the twoActs is of such nature as to bring the two Acts into direct collisionwith each other and a situation is reached where it is impossibleto obey the one without disobeying the other.”

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20.3 Clause (1) of Article 254 of the Constitution gives primacy tocentral legislations in case of conflict with State laws whether enactedbefore or after. The central law operates only in case of repugnancyand not in a case of mere possibility when such an order might be issuedunder state law, as opined in Belsund Sugar Co. Ltd. v. State of Bihar &DOrs., (1999) 9 SCC 620; Punjab Dairy Development Board & Anr. v.Cepham Milk Specialities Ltd. & Ors, (2004) 8 SCC 621; SouthernPetrochemicals Industries Ltd. v. Electricity Inspector and ETIO & Ors.,(2007) 5 SCC 447 and Bharat Hydro Power Corporation Ltd. & Ors. v.State of Assam & Anr. (2004) 2 SCC 553.

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E20.4 It is apparent that in U.P. Cooperative Cane UnionsFederations (supra), a Constitution Bench has rightly opined that undersection 16 of the Act of 1953, there is the power to fix a price with State,which is State advised price. It cannot be said that the Central legislationoccupies the field, the Essential Commodities Act, 1955, and the OrderFof 1966 issued thereunder deals with minimum price. The CentralGovernment has the power to fix the minimum price in clause 3. TheState Government is not denuded of the power under the Act of 1953 tofix the “State Advised Price” under section 16 as held in U.P. CooperativeCane Unions Federations (supra). The power to regulate includes thepower to fix the price. But State advised price has to be higher than theGminimum price fixed by Central Government. But the exercise of thepower under section 16 of the Act of 1953 to fix State Advised Price,cannot be said to be irreconcilable with the minimum price fixation undersection 3(2)(c) of the Essential Commodities Act, 1955 and clause 3 ofthe Sugarcane (Control) Order, 1966. The power of fixation of State H

advised price under section 16 of the Act of 1953 cannot be said to bearbitrary or illegal in any manner.

20.4.1 In the case of U.P. Cooperative Cane Unions Federations(supra), this Court had an occasion to consider the ambit, scope andimport of Section 16 of the Act. The question involved was as to whetherthe State Government had the power to fix SAP for sugarcane or it wasonly the Central Government, which could fix the minimum price or soto say, whether the fixation of SAP was covered by the CentralLegislation or was it open to the State to fix the price different than theprice fixed by the Central Government and whether there was repugnancyin view of Article 254 of the Constitution.

20.4.2 From the close scrutiny of the judgment passed by thisCourt in the case of U.P. Cooperative Cane Unions Federations(supra), it did appear that this Court took into consideration the effect,scope and impact of Section 16 under the Act. This Court considered indetail Section 16 of the Act – the provision to regulate purchase andsupply of sugarcane in the reserved and assigned area, under which theState Government is vested with the power to regulate the distribution,sale or purchase of sugarcane in any reserved or assigned area andpurchase of cane in any area other than a reserved or assigned area byissuing an order to that effect. Thereafter, this Court has held that thepower to regulate includes the power to fix the SAP. This Court has alsospecifically observed and held that there was no repugnancy.

20.4.3 From the judgment of the Constitution Bench in the caseof U.P. Cooperative Cane Unions Federations (supra), it furtherappears that this Court took into account the relevance, importance,purpose and object, its impact, implication and reasons for enacting Section16 of the Act and after taking into account all the relevant considerationsthis Court has specifically held that the SAP is a price higher than thatdetermined by the Central Government which is known as StatutoryMinimum Price (SMP). Thus, in the case of U.P. Cooperative CaneUnions Federations (supra), this Court has specifically upheld the powerof the State Government to fix the SAP under Section 16 of the Act.

20.5 Now, so far as the fixation of the SAP by the StateGovernment is concerned, from the counter affidavit before the HighCourt filed in Writ Petition No. 8548 (MB) of 2007 it appears that as perthe State Government, the following factors are the relevant facts fordetermination of SAP.

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A(i)The cost of cultivation of sugarcane.

(ii) The cost of transport of sugarcane by cane growers fromthe field to purchase center or to mill gate as the case maybe.

(iii) A reasonable return on the aforesaid amount of his produceBto cane growers.

(iv) Availability of the cane area, demand of sugarcane byindustries, profitability of the industries by selling sugar, andother bye products etc.

C(v)The price of sugarcane paid by sugar factories in theproceeding year.

(vi) The factors necessary to avoid diversion of sugarcane fromsugar industries to other consumers like Kolhu andKhandsari Units.

DIt also appears that determination and fixation of the SAP is aCabinet decision which has been fixed after considering several factors,including the cost of cultivation/production of the sugarcane etc. andafter taking into consideration the relevant factors as above and includingincreasing of national economic growth, cost of production of sugarcane,increase in the cost of seeds, fertilizers, labour charges, irrigation etc.,Eincluding the profit earned by sugar factories from the produces frombye-products, power projects etc. Thus it appears that that authority isguided by all relevant factors while determining such price – SAP.

20.5.1 In the case of U.P. Cooperative Cane Unions Federations(supra), the Constitution Bench has upheld the power and authority ofFthe State Government to fix the SAP after precisely observing that theAct of 1953 has been enacted to regulate the SAP and purchase ofsugarcane required by the sugar factories and that the word ‘regulate’would also include the right to fix the price. It has also declared that theSAP fixed by the State Government has to be higher than the minimumGprice fixed by the Central Government. In a given case, the SAP pricemay be an agreed price.

20.6 At this stage, is required to be noted that in the case of U.P.Cooperative Cane Unions Federations (supra), this Court specificallynegatived the submission on behalf of the sugar factories that they cannotHbe compelled to enter into agreements with the cane growers and cane-

growers’ cooperative society in forms B and C, wherein the State-advisedprice is mentioned. This Court also negatived the submission on behalfof the sugar factories that as the consent cannot be said to be a voluntaryconsent and as the consent was obtained under compulsion or duressand, therefore, the sugar factories cannot be compelled to pay suchState-advised price even though it may have been mentioned in the formsor in the purchase and therefore it cannot be said to be a sale.Negativating the aforesaid submission and after considering the entirescheme, this Court in paragraph 33 observed and held as under:

“33. As discussed earlier, the reservation or assignment ofarea is made for the benefit of a sugar factory. The agreementsexecuted by the cane-growers or cane-growers’ cooperativesociety in favour of occupier of a factory are also for the benefitof the sugar factory as by such agreements it gets an assuranceof a continuous supply of freshly harvested sugarcane on the daysindicated in the requisition slips issued by it so that there may notbe any problem in getting optimum quantity of raw materialthroughout the crushing season. In absence of the agreementsthe sugar factory will also be a loser as it may face great problemin getting the supply of sugarcane according to its requirement.The occupiers of the factory are themselves keen for executionof the agreements but their only objection is to the mention ofState Advised Price. The agreement is one composite transactionand it is not open to them to contend that the terms thereof whichare to their advantage should be enforced but the term relating toprice notified by the State Government should not be enforced astheir consent in that regard was not a voluntary act. In our opinion,having regard to the advantages derived by the sugar factories,they are fully bound by the agreement wherein the State AdvisedPrice may be mentioned and it is not open to them to assail theclause relating to price of the sugarcane on the ground that theirconsent was not voluntary or was obtained under some kind ofduress.

It further lays down the proposition that having regard to theadvantages derived from the sugar factories, they are fully bound by theagreement, wherein the State-advised price may be mentioned and it isnot open to them to assail the clause relating to price of the sugar caneon the ground that their consent was not voluntary or was obtained undersome kind of duress.

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A20.7 As observed herein above, in the 1966 Order the word “theprice” has been deleted and Clause 3 of 1966 Order provides that theCentral Government may fix “the minimum price” of the sugarcane tobe paid by the producer of sugar. As rightly submitted by the learnedCounsel on behalf of the State, there is a difference between “the price”and “the minimum price”. The aforesaid shall be apparent from theBrelevant Clauses of the 1966 Order.

20.7.1 The provision of State advised price has been made toprotect the interests of the sugarcane growers who are not in a positionto negotiate. In Sukhnandan Saran Dinesh Kumar & Ors. v. Union ofIndia & Ors., (1982) 2 SCC 150, this Court opined:

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“22. The statutory prescription of quantum of rebate for bindingmaterial has been prescribed for the benefit of sugarcane growers.Producers of sugar and khandsari sugar constitute a powerfultrade lobby, the fact of which one can take judicial notice. Sugarbeing an essential commodity occasionally kept in short supplyand being a commodity needed for consumption by almost theentire population, the powerful industry magnates in this field arein a position to dominate both the growers of sugarcane as alsothe consumers of the essential commodity. Number of regulationshave been enacted almost since the dawn of independence toregulate this powerful combination of manufacturers of sugar andkhandsari sugar all over the country for the ultimate benefit ofconsumers on the one hand and on the other hand the farmersand the growers of sugarcane with their small holdings and raisinga perishable food crop. The marginal farmers are unable to standup against the organised industry. It does not require long argumentin this predominantly agricultural society that the farmers havingsmall holdings need protection for selling at fair price their meagreagricultural produce. As far back as 1953, the U.P. Legislatureenacted U.P. Sugarcane (Regulation of Supply and Purchase)Act, 1953, for rational distribution of sugarcane to factories, forits development on the organised scientific line, to protect theinterest of cane growers and of the industry, etc. Constitutionalityof this Act was challenged on various grounds including one underArticle 19(1)(g). In Ch. Tika Ramji v. State of U.P. this Courtrepelled the challenge under Article 19(1)(g) holding that therestriction which is imposed upon the cane growers in regard to D

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sale of their sugarcane to the occupiers of factories in areas wherethe membership of the cane growers’ cooperative society is notless than 75 per cent of the total cane growers within the area, isa reasonable restriction in the public interest designed forsafeguarding the interest of the large majority of growers ofsugarcane in the area and works for the greatest good of thegreatest number. The proposition is now beyond the pale ofcontroversy that the State can impose a restriction in the interestof general public on the right of a party to contract where in theopinion of the Government the contracting parties are unable tonegotiate on the footing of equality. Constitutional validity ofstatutes prescribing minimum wages has been founded on thisproposition. The principle can be effectively extended to thepowerful sugar industry and the cane growers because the canegrowers admittedly are at a comparative disadvantage to theproducers of sugar and khandsari sugar who were described inthe course of arguments as sugar barons. It does not require anelaborate discussion to reach an affirmative conclusion thatsugarcane growers who are farmers cannot negotiate on thefooting of the equality with the producers of sugar and khandsarisugar. The State action for the protection of the weaker sectionsis not only justified but absolutely necessary unless the restrictionimposed is excessive.”

20.7.2 Clause 3(1) empowers the Central Government to fix theminimum price of sugarcane to be paid by the producers of sugar ortheir agents for the sugarcane purchased by them. Clause 3(2) providesthat no person shall sell or agree to sell sugarcane to a producer of sugaror his agent, and no such producer or agent shall purchase or agree topurchase sugarcane, at a price lowerthan that fixed under sub-clause(1). As per Clause 3(3), where a producer of sugar purchases anysugarcane from a grower of sugarcane or from a Sugarcane-grower’sCo-operative Society, the producer shall, unless there is an agreementin writing to the contrary between the parties, pay within fourteendays from the date of delivery of the sugarcane to the seller or tender tohim the price of the cane sold at the rate agreed to between theproducer and the sugarcane- grower or Sugarcane- growers’ Co-operative Society or that fixed under sub-clause (1), as the casemay be. Clause (3-A) provides that a producer of sugar or his agentshall pay, for the sugarcane purchased by him, to the sugarcane grower ABC

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Aor the sugarcane growers’ coopearative society, either the minimumprice of sugarcane fixed under Clause 3, or the price agreed tobetween the producer or his agent and the sugarcane grower orthe sugarcane growers’ cooperative society, as the case may be(agreed price). Agreed Price to be paid under the Agreement may beeven SAP fixed and/or determined by the State Government. ClauseB(5-A) provides that where a producer of sugar purchases sugarcane,from a sugarcane-grower during each sugar year, he shall be liable topay, in addition to the minimum sugarcane price fixed under Clause3, an additional price. Sub-clause (2) of Clause 5-A authorizes theappropriate authority to determine the additional price. Sub-clause (5)Cfurther provides that no additional price determined under sub-clause(2) or sub-clause (3) is required to be paid by a producer of sugar whopays a price higher than the minimum price fixed under Clause 3 to thesugarcane-grower, provided that, “the price so paid is not less thanthe total price comprising the minimum sugarcane price fixed under Clause 3 and the additional price determined under sub-Dclause (2) or sub-clause (3).”

21. As held by this Court in the case of U.P. Cooperative CaneUnions Federations (supra), the State has the competence to determineand fix the State Advised Price fixed under section 16 and thereforefixation of SAP by the State Government cannot be said to be beyondEthe purview of legislative competence. Once the fixation of State AdvisedPrice has been done, the Cane Commissioner can direct the parties tofollow the same as held in U.P. Cooperative Cane Growers Federation(supra). It cannot be said that fixation of price under the regulatorymeasure provided in section 16 suffers from arbitrariness, nor can it beFtermed to be uncanalised power. Thus, we are of the considered opinionthat the decision in Tika Ramji (supra) is not in conflict with the decisionin U.P. Cooperative Cane Unions Federations (supra) and the decisionin the latter case is not required to be revisited by a larger Bench ofseven Judges.G22. Thus, considering the entire scheme of 1966 Order, it providesfor “the minimum price” and “the additional price” or “the advised price”.Considering the aforesaid provisions under 1966 Order, there cannot beany sugarcane price (advised price) below “the minimum price”. As perthe agreement entered into the “advised price” necessarily had to behigher than the “minimum price”. Thus, there is a difference betweenH

“the price” and the “the minimum price”. As per Clause 3 of 1966 Order,it empowers the Central Government to fix the “minimum price” and theState Government is authorized to fix the Advised Price which as observedhereinabove is always higher than the “minimum price” fixed by theCentral Government. Therefore, as rightly observed by this Court in thecase of U.P. Coop. Cane Unions Federations, there is no conflict inexercise of powers by the Central Government in fixing the “minimumprice” and in fixing the “advised price” by the State Government whichis higher than the “minimum price” fixed by the Central Government.Therefore, as rightly observed by this Court in the case of U.P. Coop.Cane Unions Federations, there is no inconsistency or repugnancy infixing the “advised price” or “remunerative price” by the StateGovernment and the “minimum price” fixed by the Central Government.As rightly held, if the price fixed by the State Government is higher thanthat fixed by the Central Government, there will be no occasion for anyinconsistency or repugnancy as it is possible for both the orders to operatesimultaneously and to comply with both of them.

23. Thus, it is held that the view taken by the Constitution Benchof this Court in the subsequent decision in the case of U.P. Coop. CaneUnions Federations (supra) is the correct law. There is no conflictbetween the two decisions of this Court in the case of Tika Ramji andin the case of U.P. Coop. Cane Unions Federations and therefore,there is no necessity to refer the matter to the larger Bench consisting ofseven Judges. Therefore, our final conclusions are as under:

a.By virtue of Entries 33 and 34 List III of seventh Schedule,both the Central Government as well as the StateGovernment have the power to fix the price of sugarcane.The Central Government having exercised the power andfixed the “minimum price”, the State Government cannotfix the “minimum price” of sugarcane. However, at the sametime, it is always open for the State Government to fix the“advised price” which is always higher than the “minimumprice”, in view of the relevant provisions of the Sugarcane(Control) Order, 1966, which has been issued in exerciseof powers under Section 16 of the U.P. Sugarcane(Regulation of Supply and Purchase) Act, 1953; b.The Sugarcane (Control) Order, 1966 which has been issuedunder Section 16 of the U.P. Sugarcane (Regulation of Supply A

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Aand Purchase) Act, 1953 confers power upon the StateGovernment to fix the remunerative/advised price at whichsugarcane can be bought or sold which shall always behigher than the minimum price fixed by the CentralGovernment; Bc.Section 16 of the U.P. Sugarcane (Regulation of Supplyand Purchase) Act, 1953 is not repugnant to Section 3(2)(c)of the Essential Commodities Act, 1955 and Clause 3 ofthe Sugarcane (Control) Order, 1966 as, as observedhereinabove, the price which is fixed by the CentralGovernment is the “minimum price” and the price which isCfixed by the State Government is the “advised price” whichis always higher than the “minimum price” fixed by theCentral Government and therefore, there is no conflict. Itis only in a case where the “advised price” fixed by theState Government is lower than the “minimum price” fixedDby the Central Government, the provisions of the Centralenactments will prevail and the “minimum price” fixed bythe Central Government would prevail. So long as the“advised price” fixed by the State Government is higherthan the “minimum price” fixed by the Central Government,the same cannot be said to be void under Article 254 of theEConstitution of India.

d.The view taken by the Constitution Bench of this Court inthe case of U.P. Cooperative Cane Unions Federations vs.West U.P. Sugar Mills Association and Others is the correctlaw.F

24. The Reference is answered accordingly. Now the Registry tonotify all these matters before the Court taking up such matters forthwith,for disposal.

GDivya Pandey

Reference answered.

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