{"id":139850,"date":"1997-01-15T00:00:00","date_gmt":"1997-01-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/s-k-g-sugar-ltd-vs-state-of-bihar-ors-on-15-january-1997"},"modified":"2018-01-23T11:45:24","modified_gmt":"2018-01-23T06:15:24","slug":"s-k-g-sugar-ltd-vs-state-of-bihar-ors-on-15-january-1997","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/s-k-g-sugar-ltd-vs-state-of-bihar-ors-on-15-january-1997","title":{"rendered":"S.K.G. Sugar Ltd vs State Of Bihar & Ors on 15 January, 1997"},"content":{"rendered":"
Supreme Court of India<\/div>\n
S.K.G. Sugar Ltd vs State Of Bihar & Ors on 15 January, 1997<\/div>\n
Bench: K. Ramaswamy, S. Saghir Ahmad, G.B. Pattanaik<\/div>\n
           PETITIONER:\nS.K.G. SUGAR LTD.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF BIHAR & ORS.\n\nDATE OF JUDGMENT:\t15\/01\/1997\n\nBENCH:\nK. RAMASWAMY, S. SAGHIR AHMAD, G.B. PATTANAIK\n\n\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
\t\t\t O R D E R
\n     These two\tappeals\t arise\tfrom  the  judgment  of\t the
\nDivision Bench of the Patna High Court, made on November 13,
\n1984 in Order No. 11 and Review Order arising thereunder the
\nCWJC No. 2370\/84.\n<\/p>\n
     The admitted position is that the appellant factory had
\na `reserved  area’ under  Section 31  of the Bihar Sugarcane
\n(Regulation of\tSupply and  Purchase) Act,  1981 (for short,
\nthe `Supply  Act’) and\thad the\t sugarcane supplied  by\t the
\ngrowers. The  Central Government, exercising the power under
\nClause 3  of the Sugarcane (Control) Order, 1966 (for short,
\nthe `Order’)  determined the  minimum price for sugarcane at
\nRs. 13.92  per quintal.\t The State  Government announced  on
\nMarch 31,  1983 the  price of  Sugarcane at  Rs.  20.50\t per
\nquintal. The  cane growers  supplied the  sugarcane  to\t the
\nappellant, but the appellant admittedly had paid the minimum
\nprice determined  under the Order But the difference between
\nthe price  fixed under\tthe Order and the price announced by
\nthe State  Government was  not paid.  As a  consequence, the
\nCollector save\ta certificate  of dues for realisation under
\nthe Revenue  Recovery  Act.  Calling  those  proceedings  in
\nquestion, the writ petition came to be filed. The contention
\nraised in  the High  Court as  well as in this Court is that
\nthe Central  Government having\tdetermined the\tprice of the
\nsugarcane at Rs. 13.92 per quintal, the State Government was
\ndevoid of  power to  fix the  price at Rs. 20.50 per quintal
\nand, therefore,\t the Collector\thas no\tpower to  issue\t the
\ncertificate of arrears; since what is due is the price fixed
\nunder the Order which has already been paid, there is no due
\nin accordance with law.\n<\/p>\n
     She Y.V.  Giri, learned  counsel for the appellant, had
\ncontended that\tSection 42 of the Supply Act prescribes only
\nthe power for fixation of the price in respect of the units,
\nnamely, Khandasari  Unit or  any  unit\tmanufacturing  sugar
\nunder open  pan process. Under the provision, the Government
\nhave no\t power to  fix higher price of sugarcane supplied to
\nsugar factory  than that  is fixed for the Khandasari units.
\nThe fixation  of the  price at\tRs.  20.50  per\t quintal  is
\nwithout\t any   authority  of  law  or  jurisdiction.  For  a
\ncertificate proceeding\twhat is\t required to be proceeded is
\nthe due\t in accordance\twith law  but not in accordance with
\nany order  passed by  the  State  Government.  The  dues  in
\naccordance with\t the price fixed under Clause 3 of the Order
\nhaving been  paid, the appellant is not due of any sugarcane
\nprice payable  to the  cane growers and, therefore, the view
\ntaken by the High Court is not correct in law. Even if there
\nare dues,  the same  could be  recovered in  a suit  by\t the
\ngrowers. We find no force in the contentions.\n<\/p>\n
     Under the\tOrder. The  object of the Order is to ensure
\nthat the  cane growers should not be compelled to sell their
\nsugarcane at  a price minimum to the price prescribed by the
\nCentral Government  under Clause 3 of the Order. In State of
\nMadhya Pradesh\tvs. Jaora  Sugar Mills\tLtd. & Ors.<\/a> etc. [CA
\nNos. 1811-14\/96]  decided on  October 10, 1996 by a Bench of
\ntwo Judges,  to which  two of  us  (K.\tRamaswamy  and\tG.B.
\nPattanaik,  JJ.)   were\t members,   considered\tthe  similar
\nquestion and held thus:\n<\/p>\n
     “Rule 3  [3]  determines  “where  a
\n     producer  of  sugar  purchases  any
\n     sugarcane\t from\t a   grower   of
\n     sugarcane or  from a sugarcane from
\n     a grower  of sugarcane  or\t from  a
\n     sugarcane\t grower’s   co-operative
\n     society, the producer shall, unless
\n     there is an agreement in writing to
\n     the contrary  between the\tparties,
\n     pay within\t fourteen days\tfrom the
\n     date of  delivery of  the sugarcane
\n     to the  seller or tender to him the
\n     price of  the cane sold at the rate
\n     agreed to\tbetween the producer and
\n     the sugarcane  grower of  sugarcane
\n     growers’  co-operative  society  or
\n     that fixed under sub-clause (1), as
\n     the case  may be, either a the gate
\n     of\t the  factory  or  at  the  cane
\n     collection centre\tor  transfer  or
\n     deposit the necessary amount in the
\n     Bank Account  of the  seller or the
\n     co-operative society,  as the  case
\n     may be.”\n<\/p><\/blockquote>\n
     Clause   (3A)   to\t  Rule\t 3   was
\n     introduced by  way of  an amendment
\n     made in  GSR 62(E), dated 2.2.1978.
\n     For payment  of the price within 15
\n     days with\tinterest on  the delayed
\n     payment at\t the  rate  of\t15%  per
\n     annum for\tthe period of such delay
\n     beyond 14 days has been introduced.
\n     Earlier, it was covered by the Act.
\n     Clause (1)\t of  Rule  3  fixes  the
\n     minimum price  of sugar  payable by
\n     the purchase  of the  sugarcane  as
\n     fixed by  the Central Government in
\n     the   manner   indicated\ttherein.
\n     Clause (2)\t of Rule  3 is\trelevant
\n     for the  purpose of this case which
\n     shows that “no person shall sell or
\n     agree  to\t sell  sugarcane   to  a
\n     producer of sugar or his agent, and
\n     no such  producer\tor  agent  shall
\n     purchase  or   agree  to\tpurchase
\n     sugarcane, at  a price  lower  than
\n     that fixed\t under sub-clause  (1)”.<\/p><\/blockquote>\n
     Section  23(3)  of\t the  Act,  also
\n     couched   in    similar   language,
\n     enables to\t novate by  contract the
\n     minimum price  fixed by the Central
\n     Government\t in   respect  of   cess
\n     payable to Government.\n<\/p><\/blockquote>\n
     This would\t clearly  indicate  that
\n     despite  the  fixation  of\t minimum
\n     price under  clause (1)  of Rule 3,
\n     by agreement  between the sugarcane
\n     grower and\t the  purchaser\t of  the
\n     sugarcane, they would be at liberty
\n     to agree  to sell\tor purchase  the
\n     sugarcane at  a higher  price  than
\n     that  was\t fixed\tby  the\t Central
\n     Government under clause (1) of Rule\n<\/p><\/blockquote>\n
     3. Only for postponement of payment
\n     beyond 14\tdays, there should be an
\n     agreement in  writing  between  the
\n     parties\tobviously    with    the
\n     concurrence    of\t  the\t Central
\n     Government or  authorised authority
\n     in that  behalf. Thus,  there is no
\n     statutory\t prohibition   in   that
\n     behalf to\tpay higher  price.  That
\n     would be further clear by Rule 3(2)
\n     which  speaks   of\t  the\tcontract
\n     between the  parties for payment of
\n     higher  price  of\tsugarcane  fixed
\n     under clause (1) of Rule 3 pursuant
\n     to the agreement or pursuant to the
\n     minimum price  fixed by the Central
\n     Government under  Rule 3(1)  of the
\n     Order.\n<\/p><\/blockquote>\n
     Under  Rule   3(1)\t and  additional
\n     price fixed  under Rule  5A, it was
\n     within the\t domain of  the contract
\n     between the  sugarcane growers  and
\n     the factories  who could  agree  to
\n     pay price\thigher than  the minimum
\n     price fixed  under the  Order. What
\n     sub-rule (2) of Rule 3 prohibits is
\n     the purchase  or sale  or agreement
\n     in that  behalf, for bargain to pay
\n     price lesser than the minimum  rice
\n     fixed by the Central Government. In
\n     other words,  the sugarcane growers
\n     should not be compelled to sell the
\n     sugarcane at  a price  lesser  than
\n     what was  prescribed by  the Order.
\n     Thus, we  hold that  there\t was  no
\n     statutory\t prohibition\tat   the
\n     relevant  time   to  agree\t to  pay
\n     higher price  than was  fixed under
\n     the order.”<\/p><\/blockquote>\n
     There is,\tthus, no  prohibition on  payment of  higher
\nprice, it  is seen  and it is not disputed that there was an
\nagreement by  the  Sugar  Factory  Owners  Association\twith
\ngrowers of  sugarcane entered  in January  1983 wherein\t the
\nprice to  the sugarcane\t at Rs. 20.50 per quintal was agreed
\nto be  paid. It\t is stated in the judgment of the High Court
\nthat this  was fixed after the agreement between the Millers
\nAssociation and\t the farmers  at a  meeting convened  by the
\nState Government and the agreement was notified by the State
\nGovernment.  The   High\t Court\thas  also  stated  that\t the
\nappellant had played prominent part in fixation of the price
\nand it acted upon it till March 31, 1983. What was contended
\nin the\tHigh Court  was that though the agreement was there,
\nsince the  Company is  an independent  entity in  the eye of
\nlaw, it\t is not\t bound by  such an agreement and, therefore,
\nthe appellant  is entitled to resile from the agreement with
\nthe  farmers   at  that\t  meeting  convened   by  the  State
\nGovernment. In Jaora’s case this Court had held thus:\n<\/p>\n
     “The question  is: whether\t such  a
\n     higher price  has been agreed to be
\n     paid to the sugarcane growers, when
\n     contract has  come\t into  existence
\n     between  the  respondents\tand  the
\n     cane growers  with the aegis of the
\n     appellants?  As   a  facts,  except
\n     Kaluram,  all   representatives  of
\n     other factories were present at the
\n     time of  the agreement  dated March
\n     21, 1976.\tAs  far\t as  Kaluram  is
\n     concerned, on the first occasion he
\n     was  present,  but\t on  the  second
\n     occasion  when   the  meeting   was
\n     adjourned, he  was not  present, it
\n     has been  averred in  the\tcounter-
\n     affidavit that the Secretary of the
\n     Sugarcane\t   Factories\t Owners’
\n     Association had contracted him when
\n     he\t was   in   the\t  hospital   and
\n     thereafter,   the\t agreement   was
\n     entered into. Though, subsequently,
\n     an\t attempt   was\t made\tby   the
\n     Secretary to  wriggle out\tfrom it,
\n     the Government  has stated that and
\n     the  sugarcane  growers  have  also
\n     agreed for\t the same, we are of the
\n     considered\t view\tthat  he  was  a
\n     consenting\t party\t and  there  was
\n     consensus ad  idem\t to  pay  higher
\n     price of sugarcane than the minimum
\n     price   fixed    by   the\t Central
\n     Government and  they acted upon it.
\n     There was\tno prohibition\tfor oral
\n     agreement\t between   growers   and
\n     owners through  the service  of the
\n     Cane  Commissioners,   a  statutory
\n     authority to effect such agreement.
\n     It would  thus be\tclear  that  the
\n     Cane Commissioner\thaving power  to
\n     compel the\t cane growers  to supply
\n     cane  to\tthe  factory  Khandasari
\n     unit, he  has incidental  power and
\n     duty bound to ensure payment of the
\n     price of  the sugarcane supplied by
\n     the  sugarcane  grower.  The  price
\n     fixed  or\tagreed\tis  a  statutory
\n     price  and\t  bears\t the   stamp  of
\n     statutory first charge on the sugar
\n     and assets\t of the factory over any
\n     other  contracted\t liabilities  to
\n     recover the  price of the sugarcane
\n     supplied\tto    the   factory   of
\n     Khandasari unit.\n<\/p><\/blockquote>\n
     Thus, it would be seen that the Act
\n     regulates the  recovery as\t arrears
\n     of land  revenue. According, demand
\n     has been  for payment of the amount
\n     in a  sum of  Rs. 6,34,166\/-  in CA
\n     No. 1813\/80, Rs. 13,40,700\/- in Can
\n     No. 1814  and Rs.\t2,71,000\/- in Ca
\n     No.  1812\/80.   Thus,  the\t demands
\n     issued against  the respondents are
\n     in accordance  with the  provisions
\n     of the  Act and  they are liable to
\n     pay the same.”<\/p><\/blockquote>\n
     It is  not in  dispute that  under Section\t 31  of\t the
\nSupply Act,  the State\tGovernment  has\t power\tto  fix\t the
\nreserved area,\tin other  words, zone was carved out for the
\nappellant for  the supply  of sugarcane\t to the factory. All
\nthe farmers  who are  cultivating the  sugarcane within that
\nzone are  bound by  the State  action to supply sugarcane to
\nthe factories  within that  reserved area. Consequently, the
\nfactory\t also\tis  bound   by\tthe  actions  of  the  State
\nGovernment. Obviously, pursuant to the obligation had by the
\nState under  the Supply Act, the meeting was convened by the
\nState Government whereat the factory owners’ Association and
\nfarmers participated  and agreed  to fixed  the price at Rs.
\n20.50 per  quintal of  sugarcane. As a consequence, both the
\ncane growers  as well as the owners of the factory are bound
\nby the\tdecision. This\thaving been  agreed upon,  the price
\nfixed by the State Government in excess of the minimum price
\nfixed by  the Central Government under Clause 3 of the Order
\nwould be  the price  fixed for\tsupply of  sugarcane and the
\nGovernment would  be entitled to enforce the liability. As a
\nconsequence, the  Collector was\t empowered and duty bound to
\nissue a\t certificate of\t the dues as arrears of land revenue
\nfor recovery under the Revenue Recovery Act. The certificate
\nobviously relates  to the  difference  between\tthe  minimum
\nprice fixed  by the  Central Government, i.e., Rs. 13.92 per
\nquintal and  the  price\t of  Rs.  20.50\t determined  by\t the
\nagreement between  the\tparties.  Under\t the  circumstances,
\nthere need  not be any separate agreement to be entered into
\nbetween the  cane growers  in  the  reserved  area  and\t the
\nappellant’s factory  to be  enforceable. We  hold  that\t the
\ncertificate issued by the Collector is valid in law. As held
\nearlier, the  State  Government\t acted\tin  their  statutory
\ncapacity to  fix the increased price of the sugarcane. There
\nis no  need for the growers to file separate suit to recover
\nthe difference\tof the\tprice. The  recovery proceedings are
\nthe appropriate\t course of  action rightly  adopted  by\t the
\nState Government.\n<\/p>\n
     Shri Giri\tnext sought  to contend\t that the appellant-
\nfactory was  notified to  be taken  over and  denotified for
\ndivestment and\tin the\tinterregnum sales and purchases have
\ntaken place  and the  consequence  thereof  requires  to  be
\nconsidered. The\t appellant had crushed the sugarcane through
\nvacuum pan  process  in\t producing  sugar  in  the  relevant
\nperiod. So it alone is liable to pay the cane price. We find
\nthat the  question in  this case of sharing the liability by
\nthe State  Government does  not\t arises.  Therefore,  it  is
\nunnecessary for us to go into the question in these appeals.
\nBy order  dated February  29, 1996 passed by this Court, the
\nState Government was directed to work out the amount due and
\npayable to  the cane  growers in  terms of  the\t undertaking
\ngiven to  this Court  at the  time of  passing\tthe  interim
\norder. Pursuant thereto, it appears and it is not in dispute
\nthat  the   Government\thas  worked  out  the  dues  at\t Rs.
\n62,90,398.72 and  made a  demand on  March 22,\t1996 and  in
\nfurtherance thereof,  the appellant has deposited the amount
\non April  3, 1996.  In view  of the  above, if\tthere is any
\nother demand  than what was directed, the respondents are at
\nliberty to proceed in accordance with law and if there is no
\ndemand and the demand has already been satisfied, then it is
\nneedless to  mention that  the respondents  may not take any
\nfurther steps in that behalf.\n<\/p>\n
     The appeals  are accordingly  dismissed with  the above
\nobservations. No costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India S.K.G. Sugar Ltd vs State Of Bihar & Ors on 15 January, 1997 Bench: K. Ramaswamy, S. Saghir Ahmad, G.B. Pattanaik 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: O R D E […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-139850","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nS.K.G. 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