State Government cannot fix the “minimum price” of sugarcane once Centre has already fixed it

Supreme Court: The 5-judge bench of Arun Mishra, Indira Banerjee and Vineet Saran, M.R. Shah and Aniruddha Bose, JJ., held that once the Central Government having exercised the power under Entries 33 and 34 List III of seventh Schedule and fixed the “minimum price”, the State Government cannot fix the “minimum price” of sugarcane. 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 Court, however, clarified that

“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.”

The Court, further, held:

  • 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;
  • 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.

Background of the Reference

The Court was hearing a reference seeking resolution of conflict between the rulings in Tika Ramji v. State of Uttar Pradesh, AIR 1956 SC 676 and State of U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association, (2004) 5 SCC 430.

In Tika Ramji Case, the 5-judge bench held that,

  • Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 does not include the power to fix a price;
  • The price of cane fixed by the U.P. Government only mean the price fixed by the appropriate Government which would be the Central Government, under Clause 3 of the Sugarcane (Control) Order, 1955.
  • even the provisions in behalf of the agreement contained in Clauses 3 and 4 of the U.P. Sugarcane (Regulation of Supply and Purchase) Order, 1954 provided that the price was to be the minimum price to be notified by the Government subject to such deduction, if any, as may be notified by the Government from time to time, meaning thereby the Central Government, the State Government not having made any provision in that behalf at any time whatsoever;
  • there is no power to fix a price for sugarcane under the U.P. Sugarcane Act or Rules and the Orders made thereunder.

In UP Cooperative Cane unions Federations Case, the 5-judge bench held that

“the inconsistency or repugnancy will rise if the State Government fixes 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.”

It explained that a higher price fixed by the State Government would automatically comply with the provisions of clause 3(2) 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.

This Court on conflict between Tika Ramji Case and UP Cooperative Cane unions Federations Case:

As per the aforementioned ruling of the Court in the present case, it held that the view taken by the Constitution Bench of this Court in the case of U.P. Cooperative Cane Unions Federations case is the correct law.

In the case of Tika Ramji, the Court held that in the field of sugar and sugarcane, both, the Parliament and the State legislature would have the concurrent Jurisdiction as the same will fall under Entry 33 in the Concurrent List of seventh Schedule. Considering the fact that the State Government did not exercise the power of fixing the price, though the powers were available and the Central Government fixed the price/minimum price which came to be adopted by the State Government, this Court in Tika Ramjis case held that in such a situation there is no conflict and the question of repugnancy does not arise.

It, therefore held,

“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.”

[West UP Sugar Mills Association v. State of Uttar Pradesh, 2020 SCC OnLine SC 380, Decided on 22.04.2020]

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