State & Centre Have Concurrent Power To Fix Sugarcane Prices; No Conflict If State's Price Is Higher Than Centre's 'Minimum Price' : SC [Read Judgment]

A Constitution Bench of the Supreme Court on Wednesday held that both the Centre and the State have concurrent powers to fix the prices of sugarcane. At the same time, the  price' fixed by the State Government for sugarcane cannot be lower than the 'minimum price' fixed by the centre, the Court added.

Also, it is open to the States to fix the price higher than the price fixed by the Centre.

A 5-judge bench comprising Justices Arun Mishra, Indira Banerjee, Vineet Saran, M R Shah and S Ravindra Bhat was deciding whether there was any conflict between Ch. Tika  Ramji & Others, Etc. vs. The State of Uttar Pradesh & Others [AIR 1956 SC 676] and U.P. Cooperative Cane Unions Federations vs. West U.P. Sugar Mills Association and Others [(2004)5 SCC 430].

The bench concluded that there was no conflict between these two decisions, and therefore held that there was no need for reference to a 7-judge bench. The bench had reserved its judgment on the limited issue of reference to a larger bench on February 27.

The issue in the case was whether the State of U.P. has the authority to fix the State Advised Price (SAP) for sugarcane over and above the minimum price fixed by the Central Government.

While considering the issue in 2012, a 3-judge bench felt that there was conflict between Tika Ramji and UP Cooperative Cane Unions Federations and referred the matter to five-judge bench.

Answering the reference, the 5-judge bench noted that the factual matrix of both the decisions were different.

In Tika Ramji, the court held that the appropriate government to fix the price of sugarcane was the Central Government as per Clause 3 of the Sugarcane (Control) Order, 1955 issued under the Essential Commodities Act.

Later, the 1955 order was substituted by the Central Government with another order issued in 1966. In the 1966 Order  from the word "price and the minimum price", word "price" came to be deleted and the power to fix "minimum price" came to be retained.

It was the 1966 Order which came for consideration in the subsequent case UP Cooperative Cane Unions Federations. Taking note of the changes in the Sugarcane Order, the Court in that case held that the power retained by the Central Government was only to fix the 'minimum price', and that the State had the power to fix price over and above such 'minimum price' fixed by the Centre.

In this backdrop, the present 5- judge bench held that there was no conflict between these decisions :

"As held by this Court in the case of U.P. Cooperative Cane Unions Federations (supra), the State has the competence to determine and fix the State Advised Price fixed under  section 16 (of U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953) and therefore fixation of SAP by the State Government cannot be said to be beyond the purview of legislative competence. Once the fixation of State Advised Price has been done, the Cane Commissioner can direct the parties to follow the same as held in U.P. Cooperative Cane Growers Federation (supra). It cannot be said that fixation of price under the regulatory measure provided in section 16 suffers from arbitrariness, nor can it be termed to be uncanalised power. Thus, we are of the considered opinion that the decision in Tika Ramji (supra) is not in conflict with the decision in U.P. Cooperative Cane Unions Federations (supra) and the decision in the latter case is not required to be revisited by a larger Bench of seven Judges".

The 5-judge bench summarized its conclusions as follows :

1. By virtue of Entries 33 and 34 List III of seventh Schedule, both the Central Government as well as the State Government have the power to fix the price of sugarcane. The Central Government having exercised the power and fixed the "minimum price", the State Government cannot fix the "minimum price" of sugarcane. However, at the same time, it is always open for the State Government to fix the "advised price" which is always higher than the "minimum price", in view of the relevant provisions of the Sugarcane (Control) Order, 1966, which has been issued in exercise of powers under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953;
2. The Sugarcane (Control) Order, 1966 which has been issued under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 confers power upon the State Government to fix the remunerative/advised price at which sugarcane can be bought or sold which shall always be higher than the minimum price fixed by the Central Government;
3. Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 is not repugnant to Section 3(2)(c) of the Essential Commodities Act, 1955 and Clause 3 of the Sugarcane (Control) Order, 1966 as, as observed hereinabove, the price which is fixed by the Central Government is the "minimum price" and the price which is fixed by the State Government is the "advised price" which is always higher than the "minimum price" fixed by the Central Government and therefore, there is no conflict. It is only in a case where the "advised price" fixed by the State Government is lower than the "minimum price" fixed by the Central Government, the provisions of the Central enactments will prevail and the "minimum price" fixed by the Central Government would prevail. So long as the "advised price" fixed by the State Government is higher than the "minimum price" fixed by the Central Government, the same cannot be said to be void under Article 254 of the Constitution of India.
4. The view taken by the Constitution Bench of this Court in the case of U.P. Cooperative Cane Unions Federations vs. West U.P. Sugar Mills Association and Others is the correct law

Case Details
Title : West UP Sugar Mills Association and others vs State of Uttar Pradesh and others
Case No : Civil Appeal No. 7508 of 2005
Bench    : Justices Arun Mishra, Indira Banerjee, M R Shah, Vineet Saran and Ravindra Bhat.
Appearances : Senior Advocates Jayanth Bhushan (for appellants), Senior Advocate Krishnan Venugopal (for State of UP)

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