Judges: Arun Mishra, Indira Banerjee, Vineet Saran, M.R. Shah and Aniruddha Bose, JJ.

Facts:

In view of the conflicting decisions of present court in the case of Ch. Tika Ramji and Ors., Etc. v. The State of Uttar Pradesh and Ors., MANU/SC/0008/1956 and U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association and Ors., MANU/SC/0455/2004 , the matter has been referred to present Five Judge Bench to decide on the necessity to refer the matter to the larger Bench consisting of seven Judges. The issue in these cases is related to state Government's power of fixation of State Advised Price (SAP) which is required to be paid over and above the minimum price fixed by the Central Government.

In Tika Ramji case (supra), present Court did not comment on whether a power which the State Government exercised under Section 16 of the U.P. Act, 1953 would be repugnant to the Central legislation, since this Court found no such power exercised by the State Government. In the case of U.P. Coop. Cane Unions Federations (Supra), this Court held that the State Government has power to fix the price which may be higher than the minimum price fixed by the Central Government.

Issues:

(i) Whether the State Government/Cane Commissioner has any power or authority under the 1953 U.P. Act or the Rules and the Orders made thereunder to fix the sugarcane price?

(ii) If the State of U.P. had such a power, would such legislation be repugnant to the Central legislation i.e. Essential Commodities Act and the 1966 Order?

(iii) Whether there is any conflict between the Constitution Bench judgment of this Court in the case of Tika Ramji (Supra) and in the case of U.P. Coop. Cane Unions Federations (Supra)?

Contentions:

Appellant

(i) The power to regulate the distribution, sale or purchase of cane under Section 16 of the 1953 U.P. Act does not include the power to fix the price. This aspect has been comprehensively dealt with in the case of Tika Ramji wherein this court held that the power reserved to the State Government to fix the minimum price of sugarcane which existed in U.P. Act 1 of 1938 was deleted from the 1953 U.P. Act. Since then, said power was exercised by the Centre under Clause 3 of Sugar and Gur Control Order, 1950.

(ii) The 1953 U.P. Act or the Rules and the Orders made thereunder made no provision for fixation of price of sugarcane whatsoever and therefore, there was no question of repugnancy with the Central law. In the case of U.P. Coop. Cane Unions Federations, this Court did not quote paragraph 34 and relevant paragraphs of the decision in the case of Tika Ramji and erroneously holds that Tika Ramji only held that the State did not in fact exercise the power to fix the price.

(iii) Tika Ramji case has specifically held that there was no power to fix the price for sugarcane under the 1953 U.P. Act or the Rules and the Orders made thereunder. Although the judgment in Tika Ramji does not specifically quote Section 16 of the 1953 U.P. Act, it is clear from the judgment that every Section and every Rule was examined to see whether there was any power to fix cane price or any provision relating to price of cane.

(iv) Even if power to fix SAP exists Under Section 16 of the 1953 U.P. Act, such power would be totally repugnant to the power of Central Government to fix the minimum price under Clause 3 of the 1955 Order and thereafter under 1966 Order. Tika Ramji case (supra) has not commented on whether such a power with the State Government would be repugnant to the Central Legislation, since it found no such power exercised by the State Government. However, the majority in the Constitution Bench judgment in the case of U.P. Coop. Cane Unions Federations (Supra) held that this would not be repugnant to the Central Legislation. Thus, basis for holding that there is no repugnancy is that it is possible for both the orders to operate simultaneously and to comply with both of them.

(v) In the case of U.P. Coop. Cane Unions Federations (Supra), subsequently it is held that any price fixed by the State Government which is higher than that fixed by the Central Government cannot lead to any kind of repugnancy. This conclusion and its use for determining repugnancy is incorrect and contrary to the earlier Constitution Bench judgment including in the case of Tika Ramji (Supra). Therefore this issue also needs to be referred to a larger Bench to resolve the conflict. Reliance is placed on some of the observations in the case of Tika Ramji (Supra); in the case of State of Orissa v. M.A. Tulloch & Co., MANU/SC/0021/1963 and in the case of M. Karunanidhi v. Union of India, MANU/SC/0159/1979.

(vi) There cannot be two minimum prices, one fixed by the Central Government as minimum price and other fixed by the State Government as SAP, which is also a minimum price. As the Centre has fixed a minimum price, any other price whether minimum price or SAP would be repugnant to the Centre's decision and the Centre's power and such power of the State Government would therefore have to yield to the Central legislation Under Article 254 of the Constitution, both legislations being under the Concurrent List.

(vii) There is a direct conflict between the Constitution Bench judgment of this Court in the case of Tika Ramji (Supra) on one hand and the later judgment also of the Constitution Bench in the case of U.P. Coop. Cane Unions Federations (Supra), which needs to be referred to the larger Bench of seven Judges.

Respondents

(i) There is a sea change in the law prevailing and considered by this Court in the case of Tika Ramji (Supra) and thereafter in the case of U.P. Coop. Cane Unions Federations (Supra);

(ii) By the time of the challenge to the 1953 U.P. Act and the 1954 U.P. Order made Under Section 16 of the 1953 U.P. Act in the U.P. Coop. Cane Unions Federations (Supra), there was a fundamental change in the substratum on which Tika Ramji case was decided to the extent that the Central Government had repealed and substituted the 1955 Order by the 1966 Order.

(iii) The 1966 Order issued Under Section 3 of the Essential Commodities Act, 1955 expressly left room for the State to advise a price higher than the minimum price fixed by the Central Government under Clause 3(1) of the 1966 Order at which agreements for cane procurement could be reached between farmers or cooperative societies, especially in the context of the reservation of cane-growing areas for exclusive procurement by sugar factories.

(iv) The ratio of Tika Ramji (Supra) is not premised solely on the complete absence of power under the 1953 U.P. Act to fix prices. If so, there was no need for this Court to hold premise its reasoning on the "fact" that the State of U.P. had not actually fixed the price for sugarcane.

(v) There has been a sea change in the law relating to repugnancy between Central law and State law in the context of laws made under the Concurrent List, List III in the VII Schedule to the Constitution of India, where both, the Union and the States have power to make law.

(vi) Being fully aware of the judgment of this Court in the case of Tika Ramji (Supra), the Central Government retreated from the field of fixing "the price" of sugarcane and only retain the power to fix "the minimum price" while permitting an agreement for fixing higher price for sugarcane. Therefore, the Central Government left it open for the State to fix the price above the minimum price for purposes of the agreement to be reached between the sugarcane growers and sugarcane cooperative society, on the one hand, and the sugarcane factories, on the other.

(vii) It is evident from the amended provisions of the 1966 Order, as amended in 1976 and again in 1978, that the Central Government intentionally vacated space in favour of the State Legislature to regulate the price at which agreements could be reached between sugarcane farmers and cooperative societies of sugarcane farmers for procurement of sugarcane, especially in the context of reservation of areas for procurement by sugar factories.

(viii) As long as the State Advised Price fixed by the State Government of Uttar Pradesh by exercising powers Under Section 16 of the 1953 U.P. Act remains over and above the minimum price fixed by the Central legislature under the 1966 Order, there is no repugnancy to the extent that both laws can be obeyed without infringing the other.

(ix) The decision of this Court in the case of U.P. Coop. Cane Unions Federations (Supra) must be upheld as there is no conflict with the decision in the case of Tika Ramji (Supra).

Analysis

Conflict in Decision

(i) There is a sea change in the law prevailing and considered by this Court in the case of Tika Ramji (Supra) and thereafter in the case of U.P. Coop. Cane Unions Federations (Supra) which can be summarized as under:

1. a. That, the Central Government repealed and substituted the 1955 Order by 1966 Order;
2. b. That, in the 1966 Order issued Under Section 3 of the Essential Commodities Act, 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;
3. c. Clause 3 of the 1955 Order empowered the Central Government to fix "price" or "minimum price" to be paid by the producer of sugar for sugarcane purchased by him. However, 1955 Order came to be repealed by the 1966 Order and Clause 3 of 1966 Order provides that the Central Government may fix the "minimum price" of sugarcane to be paid by the producers of the sugar;
4. d. That, 1966 Order came to be further amended in 1976 and 1978 and Clauses 3(3) and 3-A came to be introduced which now contemplates "agreed price";

(ii) In the case of Tika Ramji (Supra), this Court considered Clause 3 of 1955 Order which specifically empowered the Central Government to fix the "price or minimum price" and also considered that the State Government has not exercised the power by fixing the price. However, in the case of U.P. Coop. Cane Unions Federations (Supra), this Court was considering the subsequent change in law more particularly the 1966 Order and Clause 3 of the 1966 Order and other relevant Clauses of 1966 Order.

(iii) Thus, the factual matrix and the relevant provisions which fell for consideration before this Court in the case of Tika Ramji (supra) and which fell for consideration by this Court in the case of U.P. Coop. Cane Unions Federations (supra) were altogether different.

(iv) Clause 3 of 1955 Order empowered the Central Government to fix "the price or the minimum price". The aforesaid Clause 3 of 1955 Order was under consideration by this Court in the case of Tika Ramji (supra). However, subsequently, 1955 Order has been repealed by 1966 Order and Clause 3 of 1966 Order provides that the Central Government may fix "the minimum price" of the sugarcane, which was under consideration in the case of U.P. Coop. Cane Unions Federations (supra) .

(vi) Therefore, there is no apparent conflict between the decisions in Tika Ramji's case and U.P. Coop. Cane Unions Federations, which require to be referred to a larger Bench of seven Judges.

(vi) The view taken by the Constitution Bench of this Court in the subsequent decision in the case of U.P. Coop. Cane Unions Federations (supra) is the correct law.

Fixation of Price

(i) It is evident from the amended provisions of the 1966 Order, as amended in 1976 and again in 1978, that the Central Government intentionally vacated space in favour of the State Legislature to regulate the price at which agreements could be reached between sugarcane farmers and cooperative societies of sugarcane farmers for procurement of sugarcane, especially in the context of reservation of areas for procurement by sugar factories.

(ii) As long as the State Advised Price fixed by the State Government of Uttar Pradesh by exercising powers Under Section 16 of the 1953 U.P. Act remains over and above the minimum price fixed by the Central legislature under the 1966 Order, there is no repugnancy to the extent that both laws can be obeyed without infringing the other.

(iii) Thus, this court is in complete agreement with the view taken in the case of U.P. Coop. Cane Unions Federations, which lays down that the inconsistency or repugnancy will arise if the State Government fixed a price which is lower than that fixed by the Central Government. But, if the price fixed by the State Government is higher than that fixed by the Central Government, there will be no occasion for any inconsistency or repugnancy as it is possible for both the orders to operate simultaneously and to comply with both of them. A higher price fixed by the State Government would automatically comply with the provisions of Sub-clause (2) of Clause 3 of 1966 Order. Therefore, any price fixed by the State Government which is higher than that fixed by the Central Government cannot lead to any kind of repugnancy.

Power to fix SAP

(i) Clause (1) of Article 254 of the Constitution gives primacy to central legislations in case of conflict with State laws whether enacted before or after. The central law operates only in case of repugnancy and not in a case of mere possibility when such an order might be issued under state law.

(ii) It is apparent that in U.P. Cooperative Cane Unions Federations (supra), a Constitution Bench has rightly opined that Under Section 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 legislation occupies the field, the Essential Commodities Act, 1955, and the Order of 1966 issued thereunder deals with minimum price. The Central Government has the power to fix the minimum price in Clause 3. The State Government is not denuded of the power under the Act of 1953 to fix the "State Advised Price" Under Section 16 as held in U.P. Cooperative Cane Unions Federations (supra). The power to regulate includes the power to fix the price. But State advised price has to be higher than the minimum price fixed by Central Government. The exercise of the power Under Section 16 of the Act of 1953 to fix State Advised Price, cannot be said to be irreconcilable with the minimum price fixation Under Section 3(2) (c) of the Essential Commodities Act, 1955 and Clause 3 of the Sugarcane (Control) Order, 1966 and cannot be said to be arbitrary or illegal in any manner.

Conclusion

(i) 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".

(ii) 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;

(iii) 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 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. 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.

(iv) The view taken by the Constitution Bench of this Court in the case of U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association and Ors. is the correct law.

Important Precedents:

(i) Ch. Tika Ramji and Ors., Etc. v. The State of Uttar Pradesh and Ors., MANU/SC/0008/1956

(ii) U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association and Ors., MANU/SC/0455/2004