JUDGMENT Anjani Kumar and Rakesh Sharma, JJ.
1. The petitioner No. 1 is a public limited company filed this writ petition along with petitioner No. 2 who is a share holder of the aforesaid company, challenging the Government Order dated 4.1.2007 copy whereof is annexed as Annexure 9 to the writ petition. It was further prayed that the respondents be directed to determine the transportation cost of the sugar cane transported from purchase center to factory taking into account the price of diesel and other relevant factors involved and allow the rebate in accordance with the figures thus arrived at. A prayer has been made by the petitioner that a writ of certiorari be issued quashing the Clause 3-A of the Sugar Cane (Control) Order, 1966 being redundant. It is prayed that a writ of certiorari or other appropriate writ, oder or direction be issued quashing Clause 3-A of the Sugarcane (Control) Order, 1966 in so far as it limits permissible rebate of the transportation of one quintal of sugarcane for a distance of one kilometer at 2.5 paise and limited to a maximum of 32 paise per quintal irrespective of distance involved and fixing maximum amount payable to the petitioner on account of transportation of sugarcane.
2. The brief facts leading to filing of the present writ petition are that the petitioner is involved in manufacture of sugar from the sugarcane purchased within the area reserved for the petitioner. Petitioners' statement is that sugar industry is an industry which is controlled by both Union and State Governments. The controversy in this writ petition is regarding price of the sugarcane fixed and recoverable by the manufactures under Clause 3-A of Sugarcane (Control) Order, 1966.
3. That in fact, the minimum price for sugarcane that shall be payable to the cane grower, the method of its computation, method of its payment, method of collection of sugarcane, profit sharing etc are all facets that are subject of strict statutory control both by the Union and the State Governments enforced on pain of penalty for any manner of default in adherence.
4. That Section 3(1) of the Essential Commodities Act, 1955 empowers the Central Government to make Orders regulating or prohibiting the production, supply and distribution of Essential Commodities and trade and commerce therein. Said Section contemplates issuance of Orders thereunder inter alia for the purpose of maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices.
5. That the said Act defines "Essential Commodity" 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.
6. That in exercise of powers under Section 3 of the EC Act, the Central Government promulgated the Sugarcane Control Order, 1955. The same was later replaced by the Sugarcane Control Order, 1966. The said Order inter alia provides for fixation of the minimum price for Sugar Cane; which is known as Statutory Minimum Price (SMP). Clause 3 (1) of the said Order mandates that SMP be fixed, having regard to the component factors adnumbered (a) (e) therein. The relevant portion of the said clause is reproduced herein below for ready reference.
Clause 3 : Minimum price of sugarcane payable by producer of sugar:
(1) The Central Government may, after consultation with such authorities, bodies or associations as it may deem fit, by Notification in the Official Gazette, from time to time, fix the minimum price of sugarcane to be paid by them, having regard to-
(a) the cost of production of sugarcane;
(b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities;
(c) the availability of sugar to the consumer at a fair price;
(d) the price at which sugar produced from sugarcane is sold by producers of sugar; and
(e) the recovery of sugar from sugarcane.
That in addition to the SMP fixed under Clause 3, the producers are to pay an additional price for sugarcane which is governed by Clause 3-A of the Control Order which is a profit sharing mechanism.
7. That the Sugarcane Control Order provides for provisions for cost recovery of the transportation of the sugar.
8. That in fact, the SMP fixed for the sugarcane also includes transportation cost. Such computation of cost of transportation to be included in the SMP is undertaken by the Commission for Agricultural costs and Prices of the Ministry of Agriculture. This is under the presumption that mostly, transportation of cane is effected by the farmers all the way to the factory gate. For the current cane year, the said commission be included Rs. 13.33 in the SMP as transportation cost.
9. That if actually the sugarcane is delivered at the factory gate by the grower himself, naturally the mill owners do not incur any expenses in transporting the same and the sugarcane grower would be entitled to an extra amount towards the transportation cost in addition to the price of sugarcane at his field. However, in the State of U.P. more than 50% of the cane is purchased by the factories at various purchase centers spread over the entire reserved or assigned area and is transported to the mills by the factories themselves.
10. That on account of the fact that the transportation cost is included into the SMP paid to the farmers for cane and secondly, on account of the fact that the mills have to actually transport the cane, the factories incur a double expense on account of transportation.
11. That it is relevant to note that in determination of transportation cost for the purpose of inclusion in the SMP, the weighted average on account of transport expenses is taken into account. Further, all relevant factors such as cost of fuel etc. are considered such that the real cost involved in transportation is ascertained and included in the SMP so that the farmers would get the actual price involved in the transportation (no matter who actually effected the transportation).
12. That it is noteworthy for the purpose of this writ petition is that the comprehensive legislative provisions of the State of U.P. governing sugarcane supply and purchase since this aspect determines who actually transports the cane to the mills, the cane grower or the factories themselves. As already submitted, most of the cane supply and purchase does not occur at the factory gate. It is supplied by the cane farmers to cane purchase centers pursuant to the mandatory statutory requirement by the mills all over the area reserved for assigned to it. Thus, in so far as a cane grower is concerned, he need only supply the cane to a cane purchase centre in the vicinity of his farm. At such centers, the mills purchase the same and transport it to the mill at its own cost. Some of the significant provisions relating to the supply and purchase of cane that would illustrate that a sugar mill is legally bound to open and operate a purchasing centre as directed by the authorities on pain of penalty for default is referred to hereunder. It is respectfully submitted that the same would amply demonstrate the fact that the mills have hardly any choice but to undertake transportation of cane to the mills themselves.
13. Section 15 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 empowers the Cane Commissioner to reserve or assign any area for the purpose of supply of sugarcane to a factory. Sub-section (2) of the said Section lays down that where any area has been declared as reserved area for the factory, the occupier of such factory shall, if so directed by the Cane Commissioner, purchase all the cane grown in that area which is offered for sale to the factory. A similar provision has been made under Sub-section (3) where an area has been declared as assigned area for a factory.
14. The U. P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 is abound with provisions relating to transportation that leaves no manner of doubt that the mills are under mandate of undertaking transportation of cane to its mills from the purchase centers. Rule 22 spells out the factors which a Cane Commissioner may take into consideration while reserving or assigning an area to a factory. Clause (b) t hereof is "facilities for transport of cane from the area". As such it is clear that the transport facilities provided by a factory is an important consideration for reserving or assigning an area in favour of a sugar factory. Likewise, Rule 38A of the Rules gives in detail the steps which have to be taken by a factory at every purchasing centre, Rule 39 (i) provides at every purchasing centre adequate facilities for transportation etc. shall be provided by the occupier of a factory to the satisfaction of the Cane Commissioner, Rule 40 deals with the obligation of an occupier to provide necessary amenities at outstation purchasing centers to the satisfaction of the Cane Commissioner, Chapter XVII of the Rules deals with Registers and records to be maintained by the mills at each of the purchase centers.
15. That the U.P. Sugarcane Supply and Purchase Order, 1954 has been made in exercise of powers conferred by the Section 16 of U.P. Sugarcane (Regulation of supply and Purchase) Act, 1953. Sub-clauses (10) and (11) of Clause 5 of this order read as follows:
(10) The occupier of a factory shall alter the location of or establish or close a purchasing centre at a particular place for the supply of cane to the factory, if so directed by the Cane Commissioner.
(11) Save with the previous approval of the Cane Commissioner no occupier of a factory shall purchase cane consigned by a cane-grower by rail from a railway station where a purchasing centre has been established or has been ordered to be established under Sub-clause (10).
16. That the above provisions show that the cane commissioner can direct establishment or closure or alteration of the location of purchasing centre at a particular place. Exercising powers under Section 15 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 and Clause 6 (1) (b) of Sugarcane control order, 1966, the Cane Commissioner issues order reserving areas for supply of sugarcane to the sugar mills. The said order would mention the number and names of purchasing centers allotted or assigned to the sugar mill. A perusal of such order would make it clear that reservation is made not merely with reference to a broad based territory but by clear specification by name of the purchasing centre which would leave the mill with no discretion as to where in a territory it might or might not open a purchasing center. In other words, purchasing centre shall be opened and run in exact location where the authority specifies and that too on pain of penalty for default which even includes the extreme measure of imprisonment in addition to imposition of fine. Still further, the Order carries a strict mandate that the mill shall start operating the purchasing center within one week of the opening of the mill, failing which not only the purchasing centre will be considered for allotment to other sugar mills but penal action will also be taken. Section 22 of the Act lays down that if any person contravenes any of the provisions of the Act or any rule or any order made thereunder, he shall be liable to imprisonment upto six months or to a fine not exceeding of Rs. 5000/- or both, and in the case of continuing contravention to a further fine not exceeding Rs. 1000/- for each day during which the contravention continues. It is respectfully submitted that in view of the above compulsive statutory mandates, a sugar mill is legally bound to open and operate a purchasing centre as directed by the authorities and it has no choice whatever in the matter. That for well over half a century, a "Rebate" for transportation of cane undertaken by the Factory owner used to be permitted in cases where Factory owner himself undertook the transportation of cane, from the amount payable as sugarcane price. This was accorded in exercise of power to grant rebate contained in the Sugarcane (Control) Order,1955 which was later superseded by the current Sugarcane Control Order, 1966. In fact, as early as in 1958-59, 32 paise per quntial used to be permitted thereunder as Rebate for transportation undertaken by the owner.
17. That while substituting the previous 1955 Sugarcane Control Order with the present Sugarcane (Control) Order, 1966 the concept of rebate was retained. The said power was retained in the proviso to Sub-clause (1) of Clause 3 of the Order (which was later modified). Till the proviso was modified in the year 1981, the same read as hereunder:
...the Central Government or, with the approval of the Central Government the State Government may, in such circumstances and subject to such conditions as it may specify allow a suitable rebate in the price so fixed.
18. Petitioner has further given the history of the litigation and legislation with regard to the price fixation and rebate allowable to the manufacturer. This writ petition confines to the rebate as contemplated under Clause 3A of the Sugarcane (Control) Order, 1966.
19. That the first change was effected vide Notification No. GSR 185 (E) dated 24.9.1976. Clause 3A was inserted in the Sugar Cane (Control) Order, 1966 making an exclusive provision for rebate for transportation. It place a mandatory statutory limit to permissible rebate in so far it related to transportation undertaken by the owner of a sugar mill. Relevant portions of the said clause is extracted hereunder for ready reference:
3-A. Rebate that can be deducted from the price paid for sugarcane.___ A producer of sugar or his agent shall pay, for sugarcane purchased by him, to the sugarcane grower or the sugarcane growers co-operative society, either the minimum price of sugarcane fixed under Clause 3, or the price agreed to between the producer or his agent and the sugarcane grower or sugarcane growers' co-operative society, as the case may be (hereinafter referred to as the agreed price):
Provided that -
(i) in the case of sugarcane delivered at any purchasing centre:
(a) if the sugarcane is transported to the factory by the owner by rail, a rebate of thirty two paise per quintal shall be made from the minimum price or the agreed price, as the case may be; or
(b) if the sugarcane is transported to the factory by road by the owner on is own transport, a rebate, not exceeding 2.5 paise (two and half paise) per quintal, per kilometer subject to a maximum of thirty-two paise per quntial, shall be made from the minimum price or the agreed price, as the case may be, subject to the condition that a certificate regarding the actual distance from the purchasing centre concerned to the factory and the rate per kilometer applicable in that case on the basis of which the rebate is charged, is obtained from the Central Government, or the State government, or the Director of Agriculture, or the Cane Commissioner, or the District Magistrate, within their respective jurisdictions.
20. That five years thereafter, vide notification No. GSR. 427 (E) Ess.Com/Sugarcane, dated 3.7.1981, amendment was effected on the proviso to Clause 3 (1) which dealt with Rebate in general so as to whittle that power down to the limiting figures of Rebate introduced vide Clause 3A. While previously the proviso authorized the concerned government to allow rebate in such circumstances and subject to such conditions as " it may specify", the new amendment substituted those words with such conditions as "specified in Clause 3-A". This also had the effect of limiting power to permit rebate only for transportation as it was made subject to Clause 3A.
21. That in the result, while prior to the 1981 amendment the proviso read:
Provided that the Central government or, with the approval of the Central Government, the State government may, in such circumstances and subject to such conditions as it may specify allow a suitable rebate in the price so fixed.
Subsequent to the amendment it reads thus:
Provided that the Central government or, with the approval of the Central government, the State government, may, in such circumstances and subject to such conditions as specified in Clause 3-A, allow a suitable rebate in the price so fixed.
22. That as already stated, the newly introduced ceiling of 32 paise per quintal was in fact a relic from as far back as in the 1950s, which ironically is still in the statutory Order despite lapse of well over half a century and declarations of this Hon'ble Court that the same is arbitrary and unreasonable owing to efflux of time. It is submitted that as against the said scenario, taking the previous 5 years alone, it becomes clear that there has been a steep climb in fuel prices which in fact doubled in just 5 years.
23. That aggrieved by the insertion of Clause 3A in the Control Order placing an inflexible upper limit on rebate, no matter the variation in relevant factors, the Rai Bahadur Narain Singh Sugar Mills Ltd. Saharanpur, U.P. challenged the same vide writ petition No. 10649 of 1978 before this Hon'ble Court.
24. That however, during the course of hearing it was stated on behalf of the respondents that the Union Government was considering revision of the rebate and as such, the said writ petition was disposed of by this Hon'ble Court directing the Government to consider the matter accordingly. However, no such revision was effected and the Government continued the same rebate of 32 paise.
25. That likewise, writ petition No. 9383 of 1978 was filed by M/s Sherwani Sugar Syndicate Ltd. Wherein one of foremost facets of challenge was the legality and reasonableness of Clause 3-A of the Control Order. Similar writs were preferred by other parties as well.
26. That this Court vide judgment dated 10.7.1979 allowed those writ petitions with costs and taking direct cognizance of effect of even couple of years transportation charge escalation held that:
In view of the fact that the cost of transportation charges have increased considerably during the last couple of years, maintaining the rate of rebate at 32 paise per quintal appears to be arbitrary and unreasonable. These out station purchase centers are sometimes situate at a distance of 10 to 15 miles away from the factory premises. A rebate of 32 paise per quintal for purchases made at these centers cannot possibly meet the actual expenses incurred by the producers of sugar. The matter deserves to be considered afresh by the Central Government.
27. We further direct the Central Government to fix the rate of rebate allowable in case of sugarcane delivered at out station purchasing centers at a rational and reasonable basis keeping in view the cost of transportation both in respect of sugarcane hauled by rail and road transport."
28. That it is submitted by the petitioner that to the best of the knowledge of the petitioners, no appeal was preferred from the above judgment and the declarations and directions therein has long since attained finality.
29. That however, the respondents have conveniently ignored the judgment, notwithstanding its finality and force of law. Despite the declaration of this Hon'ble Court that the amount of rebate found in Clause 3A of the Order is "arbitrary and unreasonable" and the consequential clear direction to revise the same and fix the same "at a rational and reasonable basis keeping in view the cost transportation", the Central Government, to this day has done no such thing and has maintained the impugned rate of rebate completely ignoring the direction of this Hon'ble Court.
30. That in the year 2000, the West U.P. Sugar Mills Association filed writ petition No. 21851 of 2000 challenging the continued unrevised ceiling on transport rebate including other issues. The Hon'ble High Court inter alia took note of the fact that even according to the respondents own case, transportation cost of cane stood at Rs. 5.75 per quintal although they incorrectly assumed that the same was payable to the farmers.
31. That eventually, this Hon'ble Court issued a mandamus to be Central Government inter alia directing them to issue revised Notification taking into consideration "the cost incurred by the sugar mills in transporting sugarcane from the purchasing centers to the factory gate.
32. That being aggrieved by the aforesaid direction of this Hon'ble Court, the Union of India filed an appeal before the Hon'ble Apex Court being Civil Appeal No. 4379 of 2002 and the same is pending disposal.
33. That at this point of time, the transportation cost was increased manifold inter alia on account of increase in the cost of diesel and considering its impact over the sugar industry, the West U.P. Sugar Mills Association approached this Hon'ble Court yet again vide writ petition No. 45187 of 2002 praying inter alia as under:
(a) quash Clause 3-A of the Sugarcane (Control) Order which fixed the maximum limit of transport rebate of 32 paise for the out-centre cane; and
(b) direct the Central Government to revise the transport rebate commensurate with the increase in cost of transportation in a reasonable manner.;
34. That after hearing the parties and considering the adverse impact on survival of sugar industry, on 24.10.2002, this Hon'ble Court passed an interim order and allowed the petitioners sugar mills to deduct a sum of Rs. 5.75 per quintal towards transportation charges from the Statutory Minimum Prices for sugarcane purchased at the out centers till further order. The said writ petition is pending before this Hon'ble Court and interim order is continued.
35. That on 7.12.2002, the Government of U.P. in compliance with the said direction, issued an order/notification granting a transport rebate of Rs. 5.75 to the mill owner.
36. That however, inspite of interim order being operative, the State Government withdrew the said rebate and stayed its operation with immediate effect till further orders in utter violation of the order of this Hon'ble Court vide G. O. dated 4th January, 2007. It is further submitted that such action of withdrawal of transport rebate is illegal and also contemptuous in nature.
37. That at this juncture, it is significant to note that it is not as if the Union law is not unaware or unconcerned of the aforesaid state laws which requires the mills to open and maintain "purchase centers". It is clear that the Union Government is cognizant of this fact considering that it has made provisions that are in synch with such state laws. Sub-clauses (3) and (5) of the Sugarcane Control Order, 1966 of the Central Government takes reference to cane purchase at what is termed "collection centers" which is nothing but "purchase centers" under the U.P. State laws. Besides this, Sub-clause (7) thereof as well as certain sub-clauses of Clause 5A deals with crediting of certain undisbursed amounts by the Collector to the Consolidated Fund of the State. The said references to collection/purchase centers and State funds are significant testimony to the fact that the Centre is cognizant of and acknowledges the State government role in matters relating to sugarcane purchase.
38. That it is significant to note that Clause 3-A does not provide for computation of transportation cost in favour of the growers which implies that when the order was promulgated, the executive was well aware of the fact that transportation was undertaken by the mills and not the grower. However, to the understanding of the petitioners in actual fixation transportation cost is factored into factor (a)
39. That it is further submitted that while the price to be paid for sugarcane is reviewed and fixed each year taking into account various relevant factors, the rebate for cost of transportation undertaken by the sugar factories are kept static in the statute at a rate that was determined half a century ago. Since there is no review of the transportation cost at all, there is no occasion to even consider the various dynamic factors such as price of diesel involved in transportation cost.
40. That it is submitted that the escalation of fuel price is relevant for consideration. If the escalation of diesel price in the last five years is considered, it can be seen that the same was climbing steadily and has in fact doubled. However, the permissible rebate for transportation has remained static ever since 1950s.
41. That it is submitted that the cost account branch of the Department of Expenditure in the Ministry of Finance in its report on "Fair Cost Structure of Indian Sugar Industry, 2004-2007" has stated at para 17.12 that the present rate of Rs. 5.75/- qtl has been found much lower than the actual cost incurred by the mills. Further the said report in para 17.21 suggest that sugar mills bear additional transportation cost for the cane received in the situation prevalent in U.P. and that such cost cannot be recovered from the farmers as of present. Giving detailed data on the substantial transportation cost being born by the mills themselves, it recommended at para 17.22 that Government may consider all relevant facts and decide the issue of additional incidences on account of un-recovered cane transport expenses incurred by the sugar mills. Again in para 22.8 it has been reiterated that the actual cost of cane transportation minus recovery of transportation cost is an important cost to be decided by the Government even while computing levy price. The same has been supported by a data given in form of table at 27.1 with the recommendation that the admissibility of such amount may be decided by the Ministry.
42. That it is further submitted that the High Power Committee for sugar industry constituted by the Government of India, Ministry of Food and Consumer Affairs in its report to the ministry has also recommended amendment of Clause 3A of the Sugarcane Control Order, 1966 since the same is outdated. However, the same still remains ignored. The relevant extract is made hereunder:
Para 14.13.1 Under proviso (i) (b) to Clause 3A of the Sugarcane Control Order, 1966, if the sugarcane delivered at any purchasing centre is transported to the factory by road by the owner on his own transport, rebaste not exceeding 2.5 paise per quintal per kilometer, shall be made from the minimum price or the agreed price subject to certain verification. This provision which was made in 1976 has obviously become outdated as the road freights have considerably increased. Instead of fixing a monetary ceiling which may again become outdated, this proviso may be amended to allow the cost of transportation as may be fixed by the state government having regard to actual cost of transportation in the area.
43. That pursuant to the direction of this Court, as stated earlier, respondents have issued impugned Government Order dated 4th January, 2007 directing the rebate of Rs. 5.75 per quintal as was allowed by the G. O. dated 7th December, 2002. The contention of the petitioner in brief are as under:
That in the State of U. P. most of the cane supply and purchase does not occur at the factory gate. It is supplied by the cane farmers to cane "purchase centers" spread over the entire area reserved or assigned to them.
44. That the locations and number of such purchase centers will be specified by the statutory authorities and mills are obligated to open and maintain such centers on pain of penalty for default. From that spot, the mills shall transport it to the factory at its own cost.
45. That the statutory provision providing for compensating mills for the cost of transportation is contained in Clause 3A of the Sugarcane (Control) Order, 1966. there under, if the transportation is by road, a rebate, not exceeding 2.5 paise (two and half paise) per quintal, per kilometer subject to a maximum of thirty two paise per quintal, shall be made from the minimum price or the agreed price.
46. That as a matter of fact, this amount of 32 paise per quintal was fixed as rebate for transportation more than half a century back under the then Sugarcane (Control) Order, 1955. This amount was never revised in over half of a century.
47. That it is submitted that vide the order Dated 24.10.2002, this Hon'ble Court had directed the State to pay Rs. 5.75 per quintal as transportation rebate, when the price of diesel was Rs. 21.47/- per liter. However, the said price of diesel has now increased to almost 90% i. e. Rs. 35.90/-. It may also be relevant to mention that the statutory committee of Central Government (CACP) for 2006-07 has also, after considering each and every aspect recommended Rs. 13.33/-per quintal. Further, the price of diesel has increased exorbitantly. Additionally there are other costs involved too such as maintenance of vehicle and its running costs.
48. That apart from the above, since the actual transportation is in the region is of Rs. 12 to 22 which is almost three times higher than the cost as prevailing in 2002. Therefore, keeping an overall view of the facts and circumstances, to meet the end of justice, the transport rebate may be directed to be fixed as per the actual cost of transportation between Rs. 12 to 22/- or at least Rs. 13.33/- as suggested by the CACP.
49. That the rate of transportation rebate as provided under Clause 3-A of the Sugarcane Control Order 1966 is 2.5 paise per quintal per kilometer to 32 paise per quintal. This rate was fixed about two decades back. It is submitted that the rate were fixed in the year, 1978. Thus, the rates fixed under the said provisions do not reflect the actual prices of the transportation costs incurred by the sugar factories since the price of diesel has shoot up ever since.
50. It is submitted that Clause 3A is unreasonable and discriminatory as discretion is given to determine SMP taking into account various dynamic cost factors including transportation cost incurred by the cane growers. The same can be revised and enhanced depending on actual cost. There is no limitation placed on such revision of transportation cost incurred by the farmers. However, a mandatory limitation is placed on rebate for transportation undertaken by the sugar producer. Because while the Order provides for determination of real cost involved in transportation undertaken by the farmers, it fails to provide for determination of actual transportation cost undertaken by the mill owners.
51. That it is submitted that Clause 3A is inequitable and therefore bad in the eye of law. It is submitted that if transportation is undertaken by the farmers, no matter the distance involved, they get the entire actual cost involved whereas when transportation is undertaken by the mill, it is limited to a maximum of 32 per quintal on the whole, no matter the distance traveled. Clause 3A is clear in it terms in so far as this aspect is concerned. It says that the maximum permissible rebate that can be given on one quintal of cane for a distance of one kilometer is 2.5 paise. However, it specifically states that on the whole, no more than 32 paise is permissible on a quintal of cane.
52. That it is submitted that Clause 3A is unreasonable in so much as it deprives the petitioners the recovery of legitimate cost of manufacture since cost of transportation of raw material is an actual cost of manufacture. Whereas the scheme of the enactment where under the Order is made and the Order itself deals with the cost of Sugarcane and is intended to arrive at a fair price for the sale of commodity. Clause 3A has introduced an element of deprivation in so far as it places a fetter on permissible rebate which is well below real cost. As such, it renders the transaction lose the nature of a fair sale and is thus ultra vires the enabling act.
53. That thus the transportation rebate should also be fixed annually so as to reflect the cost of the transportation. In this regard it is further submitted that the government order in the year 2004 by which the limit of transportation has been enhanced to 5.83 paise is also irrelevant today. That in view of the above facts and circumstances, submissions and further the grounds raised in writ petition, it is prayed that the writ petition filed by the petitioner may be allowed in terms of the prayer (a) to (e) and further transport rebate may be fixed in between Rs. 12 to Rs. 22/- in order to meet the actual cost of transportation.
54. That it is humbly submitted that this Hon'ble Court may graciously be pleased to issue a writ of certiorari or other appropriate writ, order or direction quashing Clause 3A of the Sugarcane (Control) Order, 1966 in so far as it limits the permissible rebate for transportation to for one quintal of cane for a distance of one kilometer as 2.5 paise and limited to the maximum of 32 paise per quintal regardless of dig of distance involved.
55. Respondents have contested the aforesaid writ petition inter alia on the ground:
That the petitioner has sought the relief for a writ, order or direction in the nature of certiorari quashing the Clause 3-A of the Sugarcane (Control) Order, 1966 whereas writ of certiorari does not lie to challenge the constitutional validity of legislative measure. Thus, the writ petition itself is not maintainable so far as the challenge to the validity of Clause 3-A of the Sugarcane (Control) Order, 1966 is concerned. In this respect counsel for the respondent has relied upon the decision : Pramod Verma and Ors. v. State of U.P. and Ors.
56. Respondents further submit that the reliefs sought for by the petitioners are self contradictory and the writ petition itself is not maintainable in as much as on one hand the petitioner has sought the relief to quash the provisions of Clause 3-A of the Sugarcane Control Order, 1966 which provides for rebate in connection with cost of transportation and on the other hand the petitioner has sought the relief to allow higher amount of rebate in respect of transportation cost.
57. Respondents further submit that the petitioner has sought the relief to quash the alleged Government Order dated 4.1.2007 which pertains to the year 2006-07 and the same is not the Government Order but a circular of Cane Commissioner, U.P. There is no allegation in the writ petition with appropriate factual details that transportation rebate was not taken by the petitioner during the year 2006-07 rather on the contrary the chart annexed as Annexure 5 to the writ petition shows that the petitioner has availed the rebate. The cane Year 2006-07 has already expired and therefore, the matter pertaining to 2006-07 cannot be reopened which has already concluded and closed. Further respondents submit that the constitutional validity can be challenged only on the ground of lack of the legislative competence and / or violation of fundamental rights guaranteed under Part III of the Constitution of India. No third ground is available to anybody to challenge the constitutional validity. A bare perusal of the contents of the writ petition would reveal that the petitioner has completely failed to demonstrate the availability of the grounds as aforementioned to challenge the validity of Clause 3-A of the Sugarcane (Control) Order, 1966. In support of this contention counsel for respondents has relied upon the decision ; Greater Bombay Cooperative Bank Ltd. v. United Yarn Textile (Private) Ltd.
58. Respondents further submit that the principles with regard to constitutional validity of a statute are well settled namely that there is always presumption in favour of constitutional validity, the legislature understands correctly the need of its people, legislation is the will the people the Court should make every effort to uphold the constitutional validity of a statute, legislature does not intend the exceed its jurisdiction. Thus validity of Clause 3-A is liable to be upheld.
59. Respondents further submit that Clause 3-A of the Sugarcane (Control) Order, 1966 provides for minimum and maximum statutory rebate. Hence no relief in the nature of writ or mandamus may be availed/sought by the petitioner for breach of statutory provision of Clause 3-A.
60. Respondents further submit that vide interim order dated 21.1.2008 passed by the Division Bench of Lucknow High Court in Civil Misc. Writ Petition No. 8548 (M/B) of 2007 it has been directed as an interim measure that the sugar mill shall pay to Cane societies /cane growers, the cane price @ Rs. 110/- per quintal without any deduction. Thus, the aforesaid interim order is operating. Thus, the writ petition is in the nature of an Appeal against the interim order dated 21.1.2008 passed by the Division Bench and therefore, the writ petition is not maintainable / entertainable.
61. Respondents further submit that Clause 3-A of the Control Order, 1966 provides for minimum and maximum limit of transportation rebate and not the reimbursement of transportation cost. The entire writ petition as well as the submission part of the written submission proceeds on the assumption as if Clause 3-A provides for reimbursement of transportation cost. The word "rebate" used in Clause 3-A of the Control Order, 1966 is quite unambiguous and it does not suffer from any ambiguity and as such the plain meaning of the order "rebate" should be given effect to as per well settled principle of interpretation and also settled in large number of Judgments of Hon'ble Supreme Court including the case of Nathi Devi v. Radha Devi Gupta JT 2005 (1) SCI. The word "rebate" has not been defined in the Control Order, 1966. In the book "Words and Phrase Permanent Edition" the word "rebate" has been defined to mean a deduction, abatement, remission or payment back, to remove a portion of charge and allowance by way of discount or draw back. In the case of freight rate the aforesaid book defines "rebate" as any device by which careers freight is reduced below rate given in public scheduled. On the other hand, the meaning of the word "reimbursement" is to return or restore of an equivalent for something paid, expended or lost to indemnify or to make whole.
62. Respondents further submit that the petitioner may be entitled to transportation rebate only on the strength of Clause 3-A. The sole ground of challenge by the petitioner to quash Clause 3-A is reflected in paras 11 to 22 of the written submission under the heading "submission" and a bare perusal thereof would reveal that the allegations of the petitioner is that actual cost of transportation should be reimbursed to him in view of the increased cost of diesel and since the alleged actual cost of transportation is more than the maximum limit of transportation rebate provided under Clause 3-A and as such the provision of Clause 3-A are unreasonable, discriminatory, inequitable and bad in eyes of law. The aforesaid submission of the petitioner is wholly misconceived in as much as the challenge has been made by the petitioner with regard to the Cane Commissioner circular for the year 2006-07 and for that year the petitioner has already availed the transportation rebate and the matter is closed. Further, when the maximum statutory rebate itself has been provided in the Statute i. e. Clause 3-A which is to the nature of legislative mandate and there is nothing to how that the petitioner has been treated differently amongst the equally situated person and as such the allegation of discriminatory nature of Clause 3-A is wholly misconceived. The allegation of Clause 3-A to be inequitable is wholly without any factual foundation in as much as there is nothing on record to show that any matter pertaining to the cane year 2006-07 still survives with regard to transportation cost and for the year 2007-08 the net price of Rs. 110/- per quintal of cane (without any further deduction)is payable as per interim order passed by the Division Bench of this Hon'ble Court dated 21.1.2008 and there is nothing on record to show that the petitioner has paid any amount in excess of the aforesaid amount.
63. A Division Bench of this Court in Writ Petition No. 45187 of 2002 passed an order dated 24.10.2002. This Court has dealt with in detail the challenge to the provisions of Clause 3 A of the Sugarcane Control Order, 1966 as well as the mechanism of the fixation of transportation charges. This Court has held as under:
As regard the present case the controversy is regarding transport cost for transporting the sugarcane from the purchase centers to the sugar factories. In this connection there is already a mandamus of this Court by a Division Bench of this Court in Shervani Syndicate Ltd. v. Union of India and Ors. on 10.7.79 in writ petition No. 9383 of 1978 and Ors. connected writ petitions reported in AIR 1979 Alld. 394 ( copy of which is Annexure 5 to the petition). In this judgement dated 10.7.79 it was specifically observed that the cost of transportation charges has increased considerably during the last couple of years, and hence maintaining the rate of rebate at 32 paise per quintal per kilometer appears tobe arbitrary and unreasonable, and a direction was given to the Central Government to fix the rate of rebate allowable in case of sugarcane delivered at out station purchasing centers at a rational and reasonable basis keeping in view the cost of transportation both in respect to sugarcane hauled by rail and road transport. The same view was reiterated in another Division Bench decision of this Court in a judgement, copy of which is Annexure 6 to the writ petition.
That In the judgement which is Annexure 6 to the petition it has been observed that the Central Government has found that Rs. 5.75 paise is the transportation cost for the year 1997-98. For the year 1998-99 it was Rs. 5.75 paise vide Annexure 7 to the petition. In our opinion, the transport cost for subsequent years would be more considering the rise in the price of fuel etc. In para 17 of the petition it is stated that the transport cost is in fact Rs. 6.90 per quintal. A statement of actual cost of transportation per quintal to the sugar factories is Annexure 4 to the petition. In para 12 of the petition it is mentioned that whereas from 1960 the statutory minimum price has increased from Rs. 4.343 to Rs. 64.50 per quintal, the transport charge has remained static at 32 paise per quintal. For the year 2002-03 it is estimated to be Rs. 6 to Rs. 8 per quintal per kilo meter depending upon the distance of cane centers from the factory. In para 13 to the writ petition the petitioner has quoted from the report of the Tariff Commission which observed "The quantum of rebate is said to have remained unchanged for a long time despite the increase in transport charges.
64. That the petitioners have given a work-out due to the variable factors for fixation as transportation charges which according to the petitioner for the current crushing year i. e. 2007-08 should not be less Rs. 0.32 per quintal per km. and the fixation of transportation charges by the impugned Government Order / Circular dated 4th January, 2007 (Annexure 9) is wholly arbitrary illusory and deserves to be quashed. The petitioner have also challenged the validity of the Clause 3 A of the Control Order with which we are at the moment not concerned and proceed on the assumption even assuming the Clause 3 A of the Control Order is valid. The price fixed for the transportation by the respondents by the Government Order is wholly arbitrary as has been found by this Court in the writ petition 45187 of 2002 decided on and consequentially the respondents issued the Government Order / Circular therefor, in our opinion, the fixation of the transportation charges should not be one time exercise and should be performed periodically preferably considering the economic growth and variable price of inputs for the transportation in our opinion, therefore the impugned Government Order / Circular issued by the Cane Commissioner dated 4.7.2007 is arbitrary even this has been withdrawn by the Cane Commissioner. Thus, the withdrawal of the circular has left the petitioners to bear the transportation charges themselves which is contrary to the provisions of Clause 3-A of the 1966 Control Order even assuming that the said Clause is valid.
65. Petitioners have worked out the variable of inputs for the purpose of fixation of the transportation charges which according to them comes to more than Rs. 15.00 per quintal per km. Relying upon the document Annexure 10 to the writ petition which has not been controverted by the respondents except that this cannot be the basis.
66. In view of the facts and circumstances of the case, we are of the opinion that the Government Order / Circular dated 4.1.2007 issued by the Cane Commissioner whereby the payment of transportation charges even at the rate of Rs. 5.75 per quintal has been withdrawn, deserves to be quashed and is hereby quashed.
67. Now in our opinion, If the sugarcane is transported to the factory by road by the owner on his own transport, a rebate shall be made from the minimum price or the agreed price, as the case may be, subject to the distance from the purchasing center concerned to the factory and the rate per kilometer applicable in that case on the basis of which the rebate is charged, is obtained from the Central Government, or the State Government, or the Director of Agriculture, or the Cane Commissioner, or the District Magistrate, within their respective jurisdictions.
68. From the fact that the Government Order / Circular dated 4.1.2007 withdraws the earlier direction for payment of transportation charges Rs. 5.75 left the petitioner to the state where no transportation charges shall be paid to the petitioners despite Clause 3 A permits and authorizes the petitioner to deduct the petitioner from minimum price payable by the petitioner to farmers / societies.
69. Further we have held that the petitioners are entitled for the transport rebate in view of the Clause 3-A of the Sugar Control Order, 1966.
70. We have to now consider as to what should be the quantum of the rebate without going into details of the different prices mentioned by the petitioner in the writ petition. If we proceed with that Rs. 5.75 was rebate allowed by the respondents themselves in the year 2002, if we take the diesel prices alone as it was in the year 2002 namely Rs. 21.47 and compare the present price which is Rs. 35.90 multiplied by other factors mentioned in the written submission, the prices worked out comes to Rs. 10.58 per quintal per km.
71. In the facts and circumstances of the case, as stated we are of the opinion that the rate of 10.58 per quintal per km. is fairly reasonable as against the demand of the petitioner of Rs. 13.33 per quintal which should be paid to the petitioner or petitioner should be made entitled to deduct the same from the minimum price payable by the petitioner for the sugarcane purchased by petitioner and this is based on the basis of cost supplied by petitioner till the rate of transportation rebate is worked out on the basis of material as mentioned in Clause 3-A of the Control Order periodically preferably yearly.
72. We therefore, direct that it is fairly reasonable that the petitioner should be made entitled to deduct the amount Rs. 10.58 per quintal per km. towards the minimum price payable by the petitioner for the sugarcane delivered at the purchase centre till the rebate of transport is worked out on the basis of the guidelines issued by the Central Government in accordance with the provisions of Clause 3-A of 1966 Control Order.
73. In the result, writ petition is allowed. The circular dated 4th January, 2007 withdrawing the rebate at the rate of Rs. 5.75 per quintal is quashed. The rate of rebate fixed earlier at the rate of Rs. 5.75 per quintal per kilometer is not applicable to the current crushing season. The petitioner is entitled to be paid or the petitioner is entitled to deduct the same at the rate of Rs. 10.58 per quintal per kilometer for transportation of sugarcane till the rate of transportation rebate is worked out on the basis of materials mentioned under Clause 3-A of the 1966 Control Order, and in view of law laid down in this judgment periodically, preferably every year on the commencement of crushing season.