PETITIONER:
S.K.G. SUGAR LTD.
Vs.
RESPONDENT:
STATE OF BIHAR & ORS.
DATE OF JUDGMENT: 15/01/1997
BENCH:
K. RAMASWAMY, S. SAGHIR AHMAD, G.B. PATTANAIK
ACT
HEADNOTE
JUDGMENT
ORDER
These two appeals arise from the judgment of the Division Bench of the Patna High Court, made on November 13, 1984 in Order No. 11 and Review Order arising thereunder the CWJC No. 2370/84.
The admitted position is that the appellant factory had a ‘reserved area’ under Section 31 of the Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981 (for short, the ‘Supply Act’) and had the sugarcane supplied by the growers. The Central Government, exercising the power under Clause 3 of the Sugarcane (Control) Order, 1966 (for short, the ‘Order’) determined the minimum price for sugarcane at Rs. 13.92 per quintal. The State Government announced on March 31, 1983 the price of Sugarcane at Rs. 20.50 per quintal. The cane growers supplied the sugarcane to the appellant, but the appellant admittedly had paid the minimum price determined under the Order But the difference between the price fixed under the Order and the price announced by the State Government was not paid. As a consequence, the Collector save a certificate of dues for realisation under the Revenue Recovery Act. Calling those proceedings in question, the writ petition came to be filed. The contention raised in the High Court as well as in this Court is that the Central Government having determined the price of the sugarcane at Rs. 13.92 per quintal, the State Government was devoid of power to fix the price at Rs. 20.50 per quintal and, therefore, the Collector has no power to issue the certificate of arrears; since what is due is the price fixed under the Order which has already been paid, there is no due in accordance with law.
She Y.V. Giri, learned counsel for the appellant, had contended that Section 42 of the Supply Act prescribes only the power for fixation of the price in respect of the units, namely, Khandasari Unit or any unit manufacturing sugar under open pan process. Under the provision, the Government have no power to fix higher price of sugarcane supplied to sugar factory than that is fixed for the Khandasari units. The fixation of the price at Rs. 20.50 per quintal is without any authority of law or jurisdiction. For a certificate proceeding what is required to be proceeded is the due in accordance with law but not in accordance with any order passed by the State Government. The dues in accordance with the price fixed under Clause 3 of the Order having been paid, the appellant is not due of any sugarcane price payable to the cane growers and, therefore, the view taken by the High Court is not correct in law. Even if there are dues, the same could be recovered in a suit by the growers. We find no force in the contentions.
Under the Order. The object of the Order is to ensure that the cane growers should not be compelled to sell their sugarcane at a price minimum to the price prescribed by the Central Government under Clause 3 of the Order. In State of Madhya Pradesh vs. Jaora Sugar Mills Ltd. & Ors. etc. [CA Nos. 1811-14/96] decided on October 10, 1996 by a Bench of two Judges, to which two of us (K. Ramaswamy and G.B. Pattanaik, JJ.) were members, considered the similar question and held thus:
"Rule 3 [3] determines "where a
producer of sugar purchases any
sugarcane from a grower of
sugarcane or from a sugarcane from
a grower of sugarcane or from a
sugarcane grower’s co-operative
society, the producer shall, unless
there is an agreement in writing to
the contrary between the parties,
pay within fourteen days from the
date of delivery of the sugarcane
to the seller or tender to him the
price of the cane sold at the rate
agreed to between the producer and
the sugarcane grower of sugarcane
growers’ co-operative society or
that fixed under sub-clause (1), as
the case may be, either a the gate
of the factory or at the cane
collection centre or transfer or
deposit the necessary amount in the
Bank Account of the seller or the
co-operative society, as the case
may be."
Clause (3A) to Rule 3 was
introduced by way of an amendment
made in GSR 62(E), dated 2.2.1978.
For payment of the price within 15
days with interest on the delayed
payment at the rate of 15% per
annum for the period of such delay
beyond 14 days has been introduced.
Earlier, it was covered by the Act.
Clause (1) of Rule 3 fixes the
minimum price of sugar payable by
the purchase of the sugarcane as
fixed by the Central Government in
the manner indicated therein.
Clause (2) of Rule 3 is relevant
for the purpose of this case which
shows that "no person shall sell or
agree to sell sugarcane to a
producer of sugar or his agent, and
no such producer or agent shall
purchase or agree to purchase
sugarcane, at a price lower than
that fixed under sub-clause (1)".
Section 23(3) of the Act, also
couched in similar language,
enables to novate by contract the
minimum price fixed by the Central
Government in respect of cess
payable to Government.
This would clearly indicate that
despite the fixation of minimum
price under clause (1) of Rule 3,
by agreement between the sugarcane
grower and the purchaser of the
sugarcane, they would be at liberty
to agree to sell or purchase the
sugarcane at a higher price than
that was fixed by the Central
Government under clause (1) of Rule
3. Only for postponement of payment
beyond 14 days, there should be an
agreement in writing between the
parties obviously with the
concurrence of the Central
Government or authorised authority
in that behalf. Thus, there is no
statutory prohibition in that
behalf to pay higher price. That
would be further clear by Rule 3(2)
which speaks of the contract
between the parties for payment of
higher price of sugarcane fixed
under clause (1) of Rule 3 pursuant
to the agreement or pursuant to the
minimum price fixed by the Central
Government under Rule 3(1) of the
Order.
Under Rule 3(1) and additional
price fixed under Rule 5A, it was
within the domain of the contract
between the sugarcane growers and
the factories who could agree to
pay price higher than the minimum
price fixed under the Order. What
sub-rule (2) of Rule 3 prohibits is
the purchase or sale or agreement
in that behalf, for bargain to pay
price lesser than the minimum rice
fixed by the Central Government. In
other words, the sugarcane growers
should not be compelled to sell the
sugarcane at a price lesser than
what was prescribed by the Order.
Thus, we hold that there was no
statutory prohibition at the
relevant time to agree to pay
higher price than was fixed under
the order."
There is, thus, no prohibition on payment of higher price, it is seen and it is not disputed that there was an agreement by the Sugar Factory Owners Association with growers of sugarcane entered in January 1983 wherein the price to the sugarcane at Rs. 20.50 per quintal was agreed to be paid. It is stated in the judgment of the High Court that this was fixed after the agreement between the Millers Association and the farmers at a meeting convened by the State Government and the agreement was notified by the State Government. The High Court has also stated that the appellant had played prominent part in fixation of the price and it acted upon it till March 31, 1983. What was contended in the High Court was that though the agreement was there, since the Company is an independent entity in the eye of law, it is not bound by such an agreement and, therefore, the appellant is entitled to resile from the agreement with the farmers at that meeting convened by the State Government. In Jaora’s case this Court had held thus:
"The question is: whether such a
higher price has been agreed to be
paid to the sugarcane growers, when
contract has come into existence
between the respondents and the
cane growers with the aegis of the
appellants? As a facts, except
Kaluram, all representatives of
other factories were present at the
time of the agreement dated March
21, 1976. As far as Kaluram is
concerned, on the first occasion he
was present, but on the second
occasion when the meeting was
adjourned, he was not present, it
has been averred in the counter-
affidavit that the Secretary of the
Sugarcane Factories Owners’
Association had contracted him when
he was in the hospital and
thereafter, the agreement was
entered into. Though, subsequently,
an attempt was made by the
Secretary to wriggle out from it,
the Government has stated that and
the sugarcane growers have also
agreed for the same, we are of the
considered view that he was a
consenting party and there was
consensus ad idem to pay higher
price of sugarcane than the minimum
price fixed by the Central
Government and they acted upon it.
There was no prohibition for oral
agreement between growers and
owners through the service of the
Cane Commissioners, a statutory
authority to effect such agreement.
It would thus be clear that the
Cane Commissioner having power to
compel the cane growers to supply
cane to the factory Khandasari
unit, he has incidental power and
duty bound to ensure payment of the
price of the sugarcane supplied by
the sugarcane grower. The price
fixed or agreed is a statutory
price and bears the stamp of
statutory first charge on the sugar
and assets of the factory over any
other contracted liabilities to
recover the price of the sugarcane
supplied to the factory of
Khandasari unit.
Thus, it would be seen that the Act
regulates the recovery as arrears
of land revenue. According, demand
has been for payment of the amount
in a sum of Rs. 6,34,166/- in CA
No. 1813/80, Rs. 13,40,700/- in Can
No. 1814 and Rs. 2,71,000/- in Ca
No. 1812/80. Thus, the demands
issued against the respondents are
in accordance with the provisions
of the Act and they are liable to
pay the same."
It is not in dispute that under Section 31 of the Supply Act, the State Government has power to fix the reserved area, in other words, zone was carved out for the appellant for the supply of sugarcane to the factory. All the farmers who are cultivating the sugarcane within that zone are bound by the State action to supply sugarcane to the factories within that reserved area. Consequently, the factory also is bound by the actions of the State Government. Obviously, pursuant to the obligation had by the State under the Supply Act, the meeting was convened by the State Government whereat the factory owners’ Association and farmers participated and agreed to fixed the price at Rs. 20.50 per quintal of sugarcane. As a consequence, both the cane growers as well as the owners of the factory are bound by the decision. This having been agreed upon, the price fixed by the State Government in excess of the minimum price fixed by the Central Government under Clause 3 of the Order would be the price fixed for supply of sugarcane and the Government would be entitled to enforce the liability. As a consequence, the Collector was empowered and duty bound to issue a certificate of the dues as arrears of land revenue for recovery under the Revenue Recovery Act. The certificate obviously relates to the difference between the minimum price fixed by the Central Government, i.e., Rs. 13.92 per quintal and the price of Rs. 20.50 determined by the agreement between the parties. Under the circumstances, there need not be any separate agreement to be entered into between the cane growers in the reserved area and the appellant’s factory to be enforceable. We hold that the certificate issued by the Collector is valid in law. As held earlier, the State Government acted in their statutory capacity to fix the increased price of the sugarcane. There is no need for the growers to file separate suit to recover the difference of the price. The recovery proceedings are the appropriate course of action rightly adopted by the State Government.
Shri Giri next sought to contend that the appellantfactory was notified to be taken over and denotified for divestment and in the interregnum sales and purchases have taken place and the consequence thereof requires to be considered. The appellant had crushed the sugarcane through vacuum pan process in producing sugar in the relevant period. So it alone is liable to pay the cane price. We find that the question in this case of sharing the liability by the State Government does not arises. Therefore, it is unnecessary for us to go into the question in these appeals. By order dated February 29, 1996 passed by this Court, the State Government was directed to work out the amount due and payable to the cane growers in terms of the undertaking given to this Court at the time of passing the interim order. Pursuant thereto, it appears and it is not in dispute that the Government has worked out the dues at Rs. 62,90,398.72 and made a demand on March 22, 1996 and in furtherance thereof, the appellant has deposited the amount on April 3, 1996. In view of the above, if there is any other demand than what was directed, the respondents are at liberty to proceed in accordance with law and if there is no demand and the demand has already been satisfied, then it is needless to mention that the respondents may not take any further steps in that behalf.
The appeals are accordingly dismissed with the above observations. No costs.