( 1 ) THE petitioners in the above petitions are all manufacturers of sugar having their factories in the State of Karnataka. They have questioned in these petitions the validity of the Sugar (Price Determination for 1974-75 production) Order, 1974 (hereinafter referred to as the 1974 Order) issued on 28-11-1974 and the Sugar (Price Determination for 1974-75 Production) second Amendment Order, 1975 (hereinafter referred to as the 1975 Order) issued on 11-7-1975, by the Central Govt in so far as they relate to the sugsr manufactured by the factories in the State of Karnataka. The supply of sugar-cane to the sugar factories, the quantity of sugar which the sugar factories have to supply to the Central Govt or any of its nominees, the price payable by the Central Govt for such sugar and the distribution of sugar, are controlled by the provisions of the Essential commodities Act, 1955 (hereinafter referred to as the Act) and various orders made by the Central Govt in exercise of its powers under the Act. Under s. 3 of the Act if the Central Govt is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order provide for regulating or prohibiting the production, supply and distribution thereof, and trade and commerce therein. Under that section it is open to the Central Govt to make an order providing for controlling the prices at which any controlled commodity may be bought or sold, for regulating by licence, permit or otherwise, the transport, distribution, acquisition or consumption of any essential commodity, for requiring any person holding in stock any essential commodity to sell the whole or a specified stock to the Central Govt or a State Govt or to an officer or agent of such Govt or to such other person or class of persons and in such circumstances as may be specified in the Order. Sugar-cane and sugar are treated as essential commodities under the Act. In exercise of its power under S. 3, the Central govt promulgated the Sugar-cane (Control) Order, 1966 on 16-7-1966, empowering the Central Govt under C1. Sugar-cane and sugar are treated as essential commodities under the Act. In exercise of its power under S. 3, the Central govt promulgated the Sugar-cane (Control) Order, 1966 on 16-7-1966, empowering the Central Govt under C1. 3 thereof to determine the minimum price payable to sugar-cane growers by the producers of sugar. The relevant, part of that Clause reads as follows :"3. Minimum price of sugarcane payable by producer of sugar : (1) The Central Govt 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 producers of sugar or their agents for the sugarcane purchased by them, having regard. to- (a) the cost of production of sugar-cane; (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. Provided that the Central Govt or with the approval of the Central Govt, the State Govt. may, in such circumstances and subject to such conditions as it may specify, allow a suitable rebate in the price so fixed. Explanation : Different prices may be fixed for different areas or different qualities or varieties of sugarcane. (2) No person shall sell or agree to sell sugarcane to a producer of sugar or his agent, and no such producer or agent shall purchase or agree to purchase sugarcane, at a price lower than that fixed under sub-clause (1 ). " ( 2 ) UNDER C1. 2 of the Levy Sugar Supply (Control) Order, 1972, made on 15-6-1972, the Central Govt may from time to time by order issue direction to any producer or recognised dealer to supply levy sugar of such type or grade and in such quantity, (a) to such person or organisation, in such areas or markets ; or (b) to such. State Govt as may be specified in the order and at price not exceeding the price determined by the Central govt under S. 3 (3c) of the Act. 'levy sugar' means the sugar requisitioned by the Central Govt under Cl. (f) of sub-sec (2) of S. 3 of the Act. State Govt as may be specified in the order and at price not exceeding the price determined by the Central govt under S. 3 (3c) of the Act. 'levy sugar' means the sugar requisitioned by the Central Govt under Cl. (f) of sub-sec (2) of S. 3 of the Act. ( 3 ) IN exercise of the power conferred on it by S. 3 (3c) the Central Govt has issued the notifications which are impugned in these petitions. Sub-sec (3c) of S. 3 of the Act lays down the manner in which the price of levy sugar should be fixed by the Central Govt. It reads :" (3c ). Where any producer is required by an order made with reference to Cl (f) of sub-sec (2) to sell any kind of sugar (whether to the Central Govt or a State Govt or to an officer or agent or such Govt or to any other person or class of persons) and either no notification in respect of such sugar has been issued under sub-sec (3a) or any such notification having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in sub-sec (3), there shall be paid to that producer an amount therefor which shall be calculated with reference to such price of sugar as the Central Govt may. by order, determine having regard to- (a) the minimum price, if any, fixed for sugarcane by the Central government under this section; (b) the manufacturing cost of sugar; (c) the duty or tax, if any, paid or payable thereon; and (d) the securing of a reasonable return on the capital employed in the business of manufacturing sugar, and different prices may be determined, from time to time for different areas or for different factories or for different kinds of sugar. Explanation: For the purposes of this sub-section 'producer' means a person carrying on the business of manufacturing sugar. " ( 4 ) UNDER the order dt. 14-12-1973 determining the price of levy sugar produced during the year 1973-74 the price of D-29 grade of sugar produced by the factories in Karnataka was fixed by the Central Govt at rs. 159-14 per quintal and the prices of other grades of sugar were determined on the above basis. " ( 4 ) UNDER the order dt. 14-12-1973 determining the price of levy sugar produced during the year 1973-74 the price of D-29 grade of sugar produced by the factories in Karnataka was fixed by the Central Govt at rs. 159-14 per quintal and the prices of other grades of sugar were determined on the above basis. The petitioners complained to the Central Govt that the price fixed under that Order for the levy sugar was uneconomical in view of the higher prices they had to pay for the sugar-cane and the increased cost of production and requested the Central Govt to increase the the price of levy sugar produced during the succeeding year. The question of determination of price of levy sugar was- also considered by the tariff Commission in its 1973 report. The question of the quantity of sugar which the sugar factories should supply to the Central Govt or its nominee was engaging the attention of the Central Govt. It would appear that the Central Govt had not sufficient time to finalise the proposals in respect of the quantity of sugar which the factories had to supply to the Central govt and the price payable by the Central Govt during the year 1974-75. But as the 1974-75 season had commenced it became necessary for the central Govt to make an order immediately. It, therefore, issued the 1974 order on 28-11-1974. The circumstances under which the said Order was issued are set out in the counter affidavit filed on behalf of the Central govt in the petitions in which the 1974 Order is questioned. But as the 1974-75 season had commenced it became necessary for the central Govt to make an order immediately. It, therefore, issued the 1974 order on 28-11-1974. The circumstances under which the said Order was issued are set out in the counter affidavit filed on behalf of the Central govt in the petitions in which the 1974 Order is questioned. The relevant part of the said counter-affidavit is set out in para 3 (m) to (r) and it reads as follows :" (m) That while the Govt was formulating proposals in Octr 1974 for fixation of ex-factory prices of sugar for 1974-75 season, having regard to the cost schedule for the zones recommended by the Tariff commission (1973), the minimum notified price of sugarcane, the known escalations in cost of stores materials, wages, bank charges on lending etc, and the estimates of duration and recovery of sugar from sugarcane furnished by the sugar mills, the sugar industry, both in the joint stock and the co-operative sector, represented to the Govt that revised estimates of crushing duration and recovery, which had undergone changes and recent increase in wages, dearness allowance, retaining allowance of labour, rates of purchase tax on sugarcane, etc should be taken into account. As a result, the Govt decided to review the whole position in consultation with the Tariff Commission. Pending decision, the ex-factory prices of sugar for 1974-75 were notified on the 28th Novr, 1974, and these are the same as were applicable for 1973-74 season's production, since sugar stocks of 1973-74 had almost exhausted and it became necessary to release the sugar that was being produced during 1974-75. Meanwhile, the sugar industry suggested that to enable increased production of sugar during the year 1974-75 the proportion of free sale quota be increased. (n) That after receipt of the advice of the Tariff Commission referred to in the foregoing paragraph the Govt. Meanwhile, the sugar industry suggested that to enable increased production of sugar during the year 1974-75 the proportion of free sale quota be increased. (n) That after receipt of the advice of the Tariff Commission referred to in the foregoing paragraph the Govt. keeping in view the need for maintaining the falling trends in prices of essential commodities, reviewed the position taking into account the need to ensure the securing of a reasonable return on the capital employed in the business of manufacturing sugar in the context of the increase in the manufacturing cost of sugar arising mainly from revised wages, higher interest rates etc and the anticipated higher realisations of the factories from disposal of the levy-free sugar and decided that there should be no change in the ex-factory prices of levy sugar, but that the ratio of levy sugar to free-sale sugar should be revised from 70 : 80 to 65 : 35 for 1974-75 season. Consequently, levy sugar will continue to be distributed through fair price shops at the existing rate of Rs. 2-15 per kg throughout the country as was being done during the last two years. (o) That the essence of the scheme of statutory partial control is to safeguard the public interest by meeting a fair portion of the domestic requirement of sugar of the consumer at a fair price and at the same time to see that the cane grower as also the sugar manufacturer does not suffer under the policy. (p) That this object was sought to be achieved by taking over only a portion of the production at a fixed price and leaving the rest to be sold at whatever price the producer might choose in the open market. (q) That because of the wide difference between the notified price and the free market price of sugar, the manufacturer gets sufficient margin which enables him to pay a higher price for sugarcane whereas for the purpose of calculating sugar price, the notified minimum price of sugarcane is taken into consideration as required by sec. 3 (3c) of the Essential Commodities Act, (r) That sugar being in short supply, whatever extra price the producer pays to, the cane grower is more than balanced by a higher return he gets for his free sale sugar. 3 (3c) of the Essential Commodities Act, (r) That sugar being in short supply, whatever extra price the producer pays to, the cane grower is more than balanced by a higher return he gets for his free sale sugar. He is thus encouraged to attract cane to his factory in competition with gur and khandsari manufacturers and is also enabled to prolong his working season and to spread his off season expenses and manufacturing cost over a larger production of sugar, thereby effecting an overall economy in cost of production. " ( 5 ) SINCE the price fixed for levy sugar by the 1974 Order was the same as the price fixed in the year 1973, the petitioners filed writ petitions before this Court questioning its validity. During the pendency of those writ petitions the Central Govt issued the 1975 Order determining the price of levy sugar at Rs. 139-72 per quintal of D-29 grade of sugar and the prices of other grades of sugar were fixed on that basis. The petitioners, therefore, filed another set of writ petitions before this Court questioning the correctness of that Order also in so far as it affected them. Because common questions of law and fact arise for consideration, both the sets of writ petitions filed by the petitioners are disposed of by this common order. The question relating to the fixation of ex-factory price of levy sugar by the Central Govt has been the subject matter of at least three decisions of the Supreme Court, namely, Panipat Co-operative Sugar Mills v. Union of India, AIR 1973 SC 537 ; Anakapalle Co-operative Agricultural and Industrial Society v. Union of India, AIR. 1973 SC 734 and Saraswati Industrial Syndicate v. Union of India, AIR. 1975 SC. 460. ( 6 ) IN the first case the Sugar (Price Determination) Order, 1971, was challenged by certain companies having sugar factories in the State of Haryana,. In the second case certain producers of sugar in Andhra, Pradesh, north Bihar Zone and Punjab Zone questioned the validity of Levy Sugar supply Control Order, 1972, and in the third case the applicability of two notifications issued in 1967 under the Sugar (Control) Order, 1966, fixing ex-factory prices of sugar produced by factories specified in the notifications arose for consideration at the instance of some sugar producers having factories in Haryana State. ( 7 ) A brief history of the legislation governing the controls imposed on' sugar industry in general and the fixation of prices of levy sugar is given in paras 6 to 22 of the decision in Panipat's case (1 ). Hence, it is not necessary to refer to it in detail in this case. After referring to the report of the Tariff Commission of the year 1959, the report of the Sugar Enquiry commission of the year 1965; S. 3 (3c) of the Act and the various orders issued by the Govt of India from time to time, in para 20 of the above decision, Shelat, J: speaking for the Court observed as follows :"20. The history of control over sugar set out above shows that right from 1958 and even earlier, ex-factory prices of sugar were worked out on the basis of cost-schedules prepared by expert bodies appointed for that purpose, that such prices and cost-schdules were prepared in respect of the entire production and not in relation only tq that part of it which was required to be sold to Govt, although partial control in one form or the other was in vogue for some periods before 1967, that such cost-schedules were prepared on the basis of average duration and recovery the minimum price of cane, the average cost of production in the various zones, taxes, and lastly, a return on the capital employed, which as stated above was fixed at the static figure of Rs. 10. 50 per quintal, that being the amount considered a fair return on capital employed in the industry. Both the Central govt and Parliament were aware of the methods followed by these expert bodies in framing cost-schedules on the basis of which, ex-factory prices were fixed, the problems which the Govt was aced with in securing adequate supply of sugar and its equitable distribution at reasonable price to remedy which sub-sec (3c) was enacted. It is in the light of this back-ground that the provisions of that sub-section can be properly understood. " ( 8 ) IN para 24 of the said decision, the Supreme Court considered the true effect of Cls (a), (b), (c) and (d) of S. 3 (3c) of the Act and it observed as follows :" 24. In order to appreciate the meaning of Cls. " ( 8 ) IN para 24 of the said decision, the Supreme Court considered the true effect of Cls (a), (b), (c) and (d) of S. 3 (3c) of the Act and it observed as follows :" 24. In order to appreciate the meaning of Cls. (a), (b), (c) and (d), it must be remembered that ever since control on sugar was imposed, Govt had set up expert committees to work out cost schedules and fair prices. Starting in the beginning with an All-India cost schedule worked out on the basis of the total production of sugar, the factories were later grouped together into zones or regions and different cost schedules for different zones or regions were constructed on the basis of which fair prices were worked out at which sugar was distributed and sold. The Tariff Commission in 1958 and the Sugar enquiry Commission in 1965 had worked out the zonal cost schedules on the basis of average recovery and duration, the minimum and not the actual price of cane, the average conversion costs and recommended a reasonable return on the capital employed by the industry in the business of manufacturing sugar. This experience was before the legislature at the time when sub-sec (3c) was inserted in the Act. The legislature therefore incorporated the same formula in the new sub-section as the basis for working out the price. The purpose behind enacting the new sub-section was three-fold, to provide an incentive to increase production of sugar, encourage expansion of the industry, to devise a means by which the cane producer could get a share in the profits of the industry through prices for his cane higher than the minimum price fixed and secure to the consumer distribution of at least a reasonable quantity of sugar at a fair price. Whether these objectives have, through the working of the new sub-section, been realised or not is a different matter. But there can be no doubt that these were the objectives for which the sub-section was passed. The incentive to secure increased production and expansion of the industry was to leave a certain portion of the stock free for sale in the open market, the assumption being that the industry would get a better price in such market than the price determined under the formula incorporated in sub-sec (3c ). The incentive to secure increased production and expansion of the industry was to leave a certain portion of the stock free for sale in the open market, the assumption being that the industry would get a better price in such market than the price determined under the formula incorporated in sub-sec (3c ). " ( 9 ) IN para 25 the Supreme Court observed that what was envisaged by Cl (d) of sub-sec (3c) of S. 3, namely, a reasonable return on the capital employed in the business of manufacturing sugar was that while determining the price of levy sugar, Govt should take into consideration the business as a whole and not the business of manufacturing levy sugar only. In that connection it observed as follows :" The fair price, therefore, has to be determined on the minimum price of cane fixed by Govt, the manufacturing cost on the basis of zonal cost schedules, the tax or duty applicable in the zones and must be so structured as to leave in the ultimate result to the industry a reasonable return on the capital employed by it in the business of manufacturing sugar. " ( 10 ) IN the other two decisions of the Supreme Court referred to above, the a bove principles have not been departed from. The difficulty however arises in applying the above principles to concrete cases. It was contended on behalf of the petitioners that the fixation of fairprice on zonal basis gives undue advantage to factories in some States and that was not in accordance with S. 3 (3c) of the Act. This contention has to be rejected in view of the decision of the Supreme Court in Panipat's case (1 ). ( 11 ) IT was however argued by the learned Counsel for the petitioners that the determination of fair price of levy sugar made by the Central Govt under the impugned notifications in so far as it related to the State of karnataka was not in conformity with the recommendations made by the Tariff Commission and the Sugar Enquiry Commission which had been statutorily enacted in Section 3 (3c ). ( 12 ) ON behalf of the Central Govt it was urged that the price of levy sugar under the 1974 Order was fixed on the basis of the recommendations made by the Tariff Commission in its 1973 report. ( 12 ) ON behalf of the Central Govt it was urged that the price of levy sugar under the 1974 Order was fixed on the basis of the recommendations made by the Tariff Commission in its 1973 report. Reliance was placed by it on appendix XXXII of the said report in which element-wise break-up of conversion cost of sugar in the State of Karnataka had been given. ( 13 ) IN support of the price determined under the 1975 Order, the central Govt furnished in a tabular form the methods by which it arrived at the figure of rs. 139-72 per quintal which was the ex-factory price of D-29 grade of levy sugar fixed by that order. For purpose of convenience, the said statement is reproduced below : ( 14 ) THE petitioners do not dispute the correctness of the figures mentioned at items 1 to 12 and 14 and 15 of the above statement. They however contend that the escalations allowed under item No. 13 are inadequate and that there was no basis for taking into consideration the figures mentioned at items 17 to 21 in order to determine the price of levy sugar. In regard to the dispute relating to the sums mentioned in item 13, the petitioners submit that since the Central Govt itself has in the course of its counter- affidavit admitted that the cost of production had gone up during the year 1974-75 and that an award had been passed by the Minister for Labour, govt of Karnataka, increasing the wages payable to the workmen in the factories during 1974-75, the Central Govt should have allowed a higher amounts by way of escalations. In regard to items 17 to 21, their contention is that the method of computation adopted by the Central Govt is inconsistent with the recommendations made by the Sugar Industry Enquiry commission, 1974, presided over by Sri V. Bhargava and C1. 5a of the Sugarcane (Control) Order, 1966 which was inserted by the Sugarcane (Control) Amendment Order, 1974, on 25-9-1974, both of which came into existence after the decision of the Supreme Court in Panipet's case (1 ). 5a of the Sugarcane (Control) Order, 1966 which was inserted by the Sugarcane (Control) Amendment Order, 1974, on 25-9-1974, both of which came into existence after the decision of the Supreme Court in Panipet's case (1 ). But on behalf of the Central Govt it is urged that the claim made in respect of escalations and the increased price said to have been paid by the petitioners, was baseless as according to the statement referred to above, the petitioners would still be entitled to a profit of Rs. 13. 40 on every quintal of sugar produced by them. It was also contended that it was open to the Central Govt to take into consideration the realisation made by the petitioners by the sale of free sugar in order to arrive at the price of levy sugar. Reliance was placed on behalf of the Central Govt on the observations of the Supreme Court in Panipat's case (1) in which it had been observed that while determining the reasonable return to which a producer is entitled to under Cl. (d) of Cl. 3 (3c) of the Act, it was open to the Central govt to take into consideration the price realised by the sale of free sugar also. It was further argued that by increasing the quantity of sugar which could be sold by the petitioners in free market from 30 per cent to 35 per cent of the total production, the interest of the petitioners had been well protected. ( 15 ) IT is seen from the statement filed by the Central Govt that when the petitioners are paid Rs. 139-72 for every quintal of levy sugar of D-29 grade, the petitioners would get by way of return only Rs. 13. 40 and nothing more than that. If that is the position, the statement made in paragraph 3 (n) of the counter-affidavit filed in the writ petitions in which the 1974 Order is questioned would become incongruous. 139-72 for every quintal of levy sugar of D-29 grade, the petitioners would get by way of return only Rs. 13. 40 and nothing more than that. If that is the position, the statement made in paragraph 3 (n) of the counter-affidavit filed in the writ petitions in which the 1974 Order is questioned would become incongruous. In that paragraph it is stated on behalf of the Central Govt that after receipt of the advice of the tariff Commission referred to earlier, the Govt keeping in view the need for maintaining the falling prices of essential commodities reviewed the position taking into consideration the need to ensure the securing of a reasonable return on the capital employed in the business of manufacturing sugar in the context of the increase in the manufacturing cost of sugar arising mainly from revised wages, higher interest, etc and the anticipated higher realisation from the disposal of the levy-free sugar and decided that there should be no change in the ex-factory prices of levy sugar, but that the ratio of levy to free-sale sugar should be revised from 70 : 30 to 65 : 35 for 1974-75 season. It follows that when the 1974 Order was issued by the Central Govt determining the price of one quintal of d-29 grade sugar at Rs. 159-14. it was of the opinion that the industry should also have the benefit of the price realised by selling 35 per cent of sugar in the free market, in addition to the price realised by them by the sale of levy sugar. This statement appears to have been made on behalf of the Central Govt in the light of the observations made in the report of the Bhargava Commission and C1. 5a of the Sugarcane (Control) Order which was introduced in Sepr 1974. While recommending that the producer of sugar should share the extra realisation made by him by selling sugar in free market with the cane grower, at para 2-14 in Chap. II of its report at page 185, the Bhargav? Commission observed as follows :" 2-14. The primary objective of the scheme is to provide incentives to canegrowers to enter into agreements with factories for supply of cane and to fulfill their contracts The scheme envisages various incentives including provision of credit facilities and supply of inputs by factories and canegrowers' societies. Commission observed as follows :" 2-14. The primary objective of the scheme is to provide incentives to canegrowers to enter into agreements with factories for supply of cane and to fulfill their contracts The scheme envisages various incentives including provision of credit facilities and supply of inputs by factories and canegrowers' societies. However, the most important incentive is payment of an additional price to those canegrowers who enter into agreement for supply of cane and fulfil them. It is proposed to find money for payment of the additional price out of extra sales realisations of sugar factories. In years of de-control or partial control ordinarily factories obtain prices for their sugar over and above the prices to which they are entitled according to the Tariff Commission schedules. The scheme envisages sharing these extra sales realisations between factory and canegrowers " ( 16 ) IN paragraph 2-15 the details of the scheme were given as follows :" Sugarcane supplies stabilisation scheme. 2-15. The details of the scheme are as follows: (1) A statutory minimum price for sugarcane related to a basic recovery of 8. 6 per cent with a premium for every 0. 1 per cent increase in recovery on proportionality basis will be fixed by the Govt of India. (2) The minimum price payable by individual factories will be fixed on the basis of the recovery of the factory for the normal crushing period of the previous season. (3) The statutory minimum price as fixed above shall be paid to all the canegrowers subject to Cls (18) and (19) of this Scheme. (4) The factories shall share their extra sales realisation from sugar with the canegrowers who execute agreements for supply of cane and fulfill contracts. (5) The extra sales realisations shall be calculated according to the following formula :- s=r-L: Where S stands for the amount shareable; E stands for the sales realisations ex-factory excluding excise duty paid or payable to the factory by the purchase; and L stands for sugar price as calculated on the basis of the statutory minimum cane price and according to the Tariff Commission schedules in force at the time. (In periods of control and partial control, L stands for the final levy price of sugar fixed by Government) (6) The sales realisations will be in respect of the sugar produced during the season. (In periods of control and partial control, L stands for the final levy price of sugar fixed by Government) (6) The sales realisations will be in respect of the sugar produced during the season. (7) The sales realisations will comprise (i) the actual amount realised upto and inclusive of Sepr, 30: and (ii) the estimated value of the unsold stocks held at the end of september 30. In case (ii) the value of the stocks will be calculated at the average rate of the sales made during the last fortnight of September. (8) The excess or shortfall in realisations from the actual sale of the unsold stock of the season after Sepr, 30 shall be carried forward to and adjusted in the extra sales realisations of the following season. (9) The extra realisation shall be divided equally between the factory and the canegrowers. " ( 17 ) ON the basis of the above recommendation Cl. 5a of the Sugarcane (Control) order was promulgated. The relevant part of C1. 5a reads as follows :" 5a. Additional price for sugarcane purchased on or after 1st october, 1974.- (1) Where a producer of sugar or his agent purchases sugarcane, from a sugarcane grower during each sugar year, he shall, in addition to the minimum sugarcane price fixed under C1. 3, pay to the sugarcane grower an additional price, if found due in accordance with the provisions of the Second Schedule annexed to this Order. (2) The Central Govt or the Slate Govt, as the case may be may authorise any person or authority, as it thinks fit, for the purpose of determining the additional price payable by a producer of sugar under sub-clause (1) and the person or authority, as the case may be, who determines the additional price, shall intimate the same in writing to the producer of sugar and the sugar cane grower connected with the supply of sugarcane to such producer of sugar (3) (a) Any producer of sugar Or sugarcane grower, who is aggrieved by any decision of the person or authority, referred to in sub- clause (2) may, within thirty days from the date of communication of such decision under that sub-clause, appeal to the Central Govt or the state Govt, as the case may be. Provided that the Central Govt or the State Govt, as the case may be, may, if it is satisfied that the appellant had sufficient cause for not preferring the appeal within the aforesaid period of thirty days, admit the appeal if presented within a futher peried of fifteen days. (b) The Central Govt or the State Govt as the case may be, may after giving an opportunity to the appellant to represent his case and after making such further enquiry as may be necessary, pass such order as it thinks fit. (c) The decision of the person or authority referred to in sub- clause (2) where no appeal is filed and of the Central Govt or State govt as the case may be, where an appeal is filed, shall be final. (4) The additional price determined under sub-clause (2) shall be paid by the producer of sugar to the sugarcane grower, at such time and in such manner as the Central Govt or the State Govt, as the case may be, may, from time to time, direct. (5) No additional price determined under sub-clause (2) shall become payable by a producer of sugar who pays a price higher than the minimum sugarcane price fixed u C1. 3 to the sugarcane grower: provided that the price so paid shall in no case be less than the total price comprising the minimum sugarcane price fixed under C1. 3 and the additional price determined under sub-clause (2 ). SECOND SCHEDULE the amount to be paid on account of additional price (per quintal of sugarcane) under C1. 5a by a producer of sugar shall be computed in accordance with the following formula, namely : r-L plus 2a plus B x. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c explanation in this formula : 1. 'x' is the additional price in rupees per quintal of sugarcane payable by the producer of sugar to the sugarcane grower. 2. 'r' is the amount in rupees of sugar produced during the sugar year excluding excise duty paid or payable. 3. . . . . . . . . . . . 2c explanation in this formula : 1. 'x' is the additional price in rupees per quintal of sugarcane payable by the producer of sugar to the sugarcane grower. 2. 'r' is the amount in rupees of sugar produced during the sugar year excluding excise duty paid or payable. 3. 'l' is the amount in rupees of sugar required to be sold as levy calculated on the basis of the levy price notified by Govt as in force on 30th day of Septr of each sugar year for sugar produced during that year, excluding excise duty paid or payable. 4. 'a' is the amount found payable for the previous year but not actually paid (vide sub-clause (9) ). 5. 'b' is the excess or shortfall in realisation from actual sales of the unsold stocks of sugar produced during the sugar year, as on 30th day of September (vide item 7 (ii) below) which is carried forward and adjusted in the saler realisations of the following year. 6. 'c' is the quantity in quintals of sugarcane purchased by the producer of sugar during the sugar year. 7. The amounts 'r' and 'l' referred to in items 2 and 3 shall be computed as under:- (i) the actual amount realised during the sugar year; and (ii) the estimate value of the un-sold stocks of sugar held at the end of 30th September calculated in regard to free sugar stocks at the average rate of sales made during the fortnight 16th to 30th September and at the notified levy prices as applicable to levy stocks as on 30th september. Explanation : In this Schedule 'sugar' means any form of sugar containing more than ninety per cent sucrose. " ( 18 ) ALTHOUGH C1. 5a of the Sugarcane (Control) Order, 1966, deals with the additional price payable to the sugarcane grower, from the recommendation made by the Bhargava Commission and the method of computation provided in the Second Schedule of the Sugarcane (Control) Order, it is obvious that the producer of sugar is entiitled to retain an amount equivalent to the amount paid to the cane grower under C1. 5a and that the said amount cannot be taken into consideration for determining the price of levy sugar. That would be clear from paras 2-17, 2-20, 2-21 and 2-39 of chap. 5a and that the said amount cannot be taken into consideration for determining the price of levy sugar. That would be clear from paras 2-17, 2-20, 2-21 and 2-39 of chap. II of the Bhargava Commission Report at pages 186, 187 and 189, which read thus :" 2-17. Statutory minimum prices for individual factories are fixed by the Govt of India in. accordance with the quality formula. We have incorporated the formula in the scheme to ensure that the incentive to canegrowers for producing cane of better quality is retained. In discussing this formula earlier (in Part II), we have made certain recommendations which, in pur opinion, will improve the effectiveness and usefulness of the formula. The Scheme provides for a basic recovery of 8. 5 per cent and the payment of premium on proportionality basis. It also provides for the fixation of the minimum prices payable by individual factories on the basis of the average of the recovery of the previous normal crushing period of the factory. The reasons for using the average recovery of the normal crushing period in preference to the average recovery of the optimum period for this purpose have already been stated. 2-20. The provision of Cl (6) about the sale realisations being in respect of the sugar produced during the season is intended to ensure, as far as possible, that canegrowers who supplied the cane from which the sugar was produced should benefit from the prices obtained for the sugar. The manner in which the sales realisations should be calculated, presented a problem. It is necessary that the additional price which may be payable to canegrowers out of extra realisation should be announced in October so that it may influence sowings of cane and execution of agreements for supply of cane. Keeping this in view, it is necessary to calculate early in October the value of the sugar produced during the season. About 70 per cent of sugar produced in a season is ordinarily sold out by the end of Septr. For such stocks, the figures of actual realisations would be avaiable by the end of September. 2-21. Keeping this in view, it is necessary to calculate early in October the value of the sugar produced during the season. About 70 per cent of sugar produced in a season is ordinarily sold out by the end of Septr. For such stocks, the figures of actual realisations would be avaiable by the end of September. 2-21. As regards the unsold stocks, the value thereof could be estimated in more than one way on the basis of the market prices prevailing at the end of September, on the basis of the average of the sales of sugar upto the end of September, on the basis of the average of the sales made during the last fortnight of September, etc. The scheme provides for an evaluation of the unsold stock on the last basis mentioned. The problem, however, remained of accounting for the difference between the estimated price and the actual subsequent realisations from the stocks which remain unsold on 30th September. This difficulty has been overcome by the provisions for the difference being carried forward to the next year for adjustment in the sugar sales realisations. 2-39. After considering all these facts we have decided that the extra realisations on the sale of sugar be divided between the growers and the industry in the ratio of 50 : 50. A provision to this effect has been made in Cl (9) of the Scheme. It should be mentioned that after deducting the tax obligations to be borne by the industry, the actual accruals will be in the proportion of 70 to the cane growers and 30 to the industry. This share of canegrowers approximates the share of the cost of cane in the cost of sugar. " ( 19 ) WHEN the tabular statement prepared by the Central Govt for arriving at the price of Rs. 139-72 per quintal of D-29 grade sugar in the 1975 Order is considered in the light of C1. 5a, it would become clear that items 17 to 21 in that statement could not have been taken into consideration by it. Any amount paid by the producer to the canegrowers over and above the minimum cane price fixed under C1. 3 of the Sugarcane (Control) Order would be additional price payable under C1. 5a thereof. 5a, it would become clear that items 17 to 21 in that statement could not have been taken into consideration by it. Any amount paid by the producer to the canegrowers over and above the minimum cane price fixed under C1. 3 of the Sugarcane (Control) Order would be additional price payable under C1. 5a thereof. That has to be arrived at the close of the 'sugar year' which is defined as the year commencing on the 1st day of October and ending on the 30th day of Septr in the year next following, the Explanation (2) giver, in Cl. 5a. In order to determine the additional price payable the formula set out in the Second schedule has to be followed. In that formula the price realised by the sale of levy sugar at the price fixed by the Central Govt under C1. 3 (3c) and the price realised by selling free sugar should both be taken into consideration in order to determine the extra realisation as can be seen from clause 7 of the Explanation to the formula in the Second Schedule. I am of the view that any construction to be placed on the provisions of the Act and the several Orders made thereunder should be reasonable and should not lead to any friction or inconvenience. The following observations made by the Judicial Committee of the Privy Council in Shannon realities Ltd v. Ville De St Michel, 1924 AC. 185, 192 have to be borne in mind while construing the several provisions of law :" Where the words of a btatute are clear they must, of course, be followed; but in their Lordships' opinion, where alternative constructions are equally open, that alternative is to be chosen which will be consistent with the smooth working of the system which the statute purports to be regulating snd that alternative is to be rejected which will introduce uncertainty, friction or confusion into the working of the system. " ( 20 ) IT is well known that the availability of sugarcane for manufacturing sugar depends on several factors such as the probable price which the sugar cane can fetch when it is ready for harvest, the price of other food-stuffs which can be grown on the land which has to be utilised for growing sugarcane, the period occupied in raising the sugarcane crop and the uncertain climatic conditions In order to maintain regular supply of sugar it is necessary to have regular supply of sugarcane. The supply of sugarcane depends upon the total average brought under sugarcane cultivation. The agriculturist should have the necessary incentive to grow sugarcane instead of some other crop and that is provided by the Sugarcane (Control) order which authorises the Central Govt to fix the minimum price which the producer of sugar should pay to the canegrower on a future date. This necessarily involves the determination of the minimum price payable under C1. 3 of the Sugarcane (Control) Order at the commencement of the planting season. After the minimum price of sugarcane is so fixed, at the commencement of the sugar year (as defined in C1. 5a of the Sugarcane (Control) Order), it is necessary for the Central Govt to fix the price payable for levy sugar and also determine the quantity of sugar which a producer should supplv to the Central Govt or its nominee, to enable the producer to arrange his programme of production well in advance and also to pay extra price to the sugarcane grower over and above the price fixed under C1. 3 of the Sugarcane (Control) Order to attract supply of sufficient quantity of sugarcane to his factory which of course he would be able to adjust against the additional price pavable under C1. 5a after the close of the sugar year. After the sugar year is over, the authority which is empowered to determine the additional price would determine it in accordance with the formula found in the Second Schedule and payment of additional price would be made to the canegrower accordingly. At this stage the amount which the producer can retain out of the extra realisaton made by him would also be known. It is significant that the Bhaigava Commission recommended that the factory owner should share the extra realisation with the canegrower. ( 21 ) THE expression "to share" means ' to participate in'. At this stage the amount which the producer can retain out of the extra realisaton made by him would also be known. It is significant that the Bhaigava Commission recommended that the factory owner should share the extra realisation with the canegrower. ( 21 ) THE expression "to share" means ' to participate in'. It, therefore, follows that a sum equivalent to the amount paid by way of additional price would go to the benefit of the producer. If that is the true legal position, the method adopted by the Central Govt in determining the price of levy sugar under the 1975 Order would have to be treated as faulty. No part of the extra realisation can. be taken into consideration while determining the price of levy sugar. It is no doubt true that in Panipat's case (1) the Supreme Court having regard to the law as it stood then observed that it would be open to the Central Govt to take into consideration the extra realisation of a producer by the sale of levy-free sugar also while determining the price that has to be determined under C1. 3 (3c ). I am of the view that the above view of the Supreme Court stands superseded by C1. 5a of the Sugarcane (Control) Order which was introduced subsequently. ( 22 ) IT is the duty of the Court to give effect to C1. 5a of the Sugarcane (Control) order without being influenced by any observations made by the supreme Court earlier when a similar clause was not in force. The case put forward on behalf of the Central Govt that even after the promulgation of C1. 5a it would be open to the Central Govt to take into consideration the extra realisation for the purpose of determining the price of levy sugar under C1. 3 (3c) would be impracticable, because the determination of price under CL3 (3c) cannot be postponed to a date subsequent to the close of the sugar year. If that is allowed to be done, the producer of sugar would be compelled to carry on production of sugar without having an idea of the price that is likely to be determined by the central Government under Clause 3 (3c ). ( 23 ) IF something has to be dons in law in a particular way then it has to be done in that way only. ( 23 ) IF something has to be dons in law in a particular way then it has to be done in that way only. Since it is implicit in C1. 5a of the Sugarcane (Control) Order that the extra realisation which has to be shared by the producer of sugar with the canegrower should be determined on the basis of the total realisation from the sale of levy sugar and from the sale of levy- free sugar, after the close of the sugar year, the price of levy sugar must be determined earlier on the basis of a reasonable estimate of the prospects of the sugar trade. Such price cannot be determined after determining what the extra realisation would be. That would amount to a plain reversal of what the law prescribes. There cannot be any difficulty in determining the price of levy sugar before the close of the sugar year and that is established by the statement produced by the Central Govt in which it has arrived at Rs. 171-52 in accordance with Clause 3 (3c ). ( 24 ) THERE is no substance in the submission made on behalf of the Central govt that C1. 5a of the Sugarcane (Control) Order which deals with the amount payable to the canegrower cannot have any relevance while determining the price of levy sugar. It is seen from the history of the legislation bearing on the question, that the determination of the minimum price of sugarcane and determination of the price of levy sugar and the quantity of sugar to be supplied by the producer to the Central Govt have bearing on one another. They must be read as a whole and not in isolation while deciding what should be the fair price of levy sugar payable to the producer by the Central Govt. It becomes evident from Cl (a) of S. 3 (3c) of the Act which provides that only the minimum cane price fixed under C1. 3 of the Sugarcane (Control) Order should be taken into consideration while determining the price of levy sugar. It is also clear that the additional price payable to the canegrower under Cl. 5a. has to be determined after the expiry of the sugar year and that it should come out of the extra realisations made by the producer by selling sugar in free market at a price higher than the levy price. It is also clear that the additional price payable to the canegrower under Cl. 5a. has to be determined after the expiry of the sugar year and that it should come out of the extra realisations made by the producer by selling sugar in free market at a price higher than the levy price. ( 25 ) THE Central Govt was not, therefore, right in taking into consideration the actual extra price paid by the producer of sugar to the canegrower over and above the minimum cane price, which is shown as item 17 in the tabular statement and the incidence of additional cost shown at item 18. They are extraneous to what is provided in Section 3 (3c) of the Act. Relying upon the decision of the Gujarat High Court in Chalthan vibhag Khan Udyog Mandali Ltd, Chalthan, Surat v. Union of India it wss argued on behalf of the Central Govt that the 1975 Order was unassailable. That decision is of no assistance since it relates to the validity of 1974 Order and that C1. 5a of the Sugarcane (Control) Order and the recommendations of the Bhargava Commission which have a material bearing on the case were also not considered. ( 26 ) THE estimate of the cost structure found in the letter of the Tariff commission dt. 10-12-1974 on which reliance was placed by the Central govt would only assist in arriving at the estimated conversion cost during the year 1974-75, but would not support the case of the Central Govt that the extra realisation made by the producer of sugar by sale of levy-free supar should be utilised to bring down the price of levy sugar to Rupees 139-72 per quintal of D-29 grade sugar even though admittedly the minimum price of cane, the cost of conversion provision for escalations and a reasonable return on the capital invested together would come to Rs. 171-52. Since even according to the Govt of India the levy price of one quintal of D-29 grade sugar calculated on the basis of S. 3 (3c) was Rs. 171-52 when the 1975 Order was issued there was no justification to reduce it to rs. 139-72. 171-52. Since even according to the Govt of India the levy price of one quintal of D-29 grade sugar calculated on the basis of S. 3 (3c) was Rs. 171-52 when the 1975 Order was issued there was no justification to reduce it to rs. 139-72. I am, therefore, of the opinion that the 1975 Order in so far as, the Karnataka region is concerned has to be quashed and the Govt of india has to be directed to fix the levy price for Karnataka region afresh without taking into consideration the amount which the petitioners are likely to get from out of the extra realisation referred to in C1. 5a of the sugarcane (Control) Order. ( 27 ) IN view of the foregoing, I do not think that there is any need to consider the submission made on behalf of the petitioners in support of their plea of promissory estoppel. Hence, I express no opinion on that question but the case regarding the 1974 Order stands on a different footing. Tt is not disputed that in 1974-75 the petitioners were allowed to sell 35% of the sugar produced by them in the free market and that it was 5% more than what it was during the year 1973-74 when the price of a quintal of d-29 grade sugar had been fixed at Rs. 159-14. The extra amount realised by the sale of 5 per cent of the production should be taken as sufficient to off-set any slight increase in the cost of production over and above the cost in 1973-74. The petitioners have not made out that the return that thev would get by selling sugar at the rates determined by the 1974 Order was inadequate. I do not, therefore, consider that the 1974 Order calls for any interference. ( 28 ) IN the result Writ Petition Nos. 432 433 972 974 1073 1105 1222 1224 1283 1285 1375 1419 1609 and 1844 of 1975 in which the validity of the 1974 5. Spl Civ Appln. 24-30/75 dt. 14-8-75 (Guj ). Order is challenged are dismissed. Writ Petition Nos. 3491 3492 3547 3629 3636 3648 3649 3655 3662 3667 3669 3674 3632 3683 and 4128 of 1975 in which the validity of the 1975 Order is challenged are allowed. Spl Civ Appln. 24-30/75 dt. 14-8-75 (Guj ). Order is challenged are dismissed. Writ Petition Nos. 3491 3492 3547 3629 3636 3648 3649 3655 3662 3667 3669 3674 3632 3683 and 4128 of 1975 in which the validity of the 1975 Order is challenged are allowed. The determination of price of levy sugar made in the 1975 Order in so far as the Karnataka region is concerned is quashed and the following directions are issued. The Central Govt shall re-determine the price of levy sugar and issue an appropriate notification in respect of quantities of sugar delivered after the 1975 Order came into force, within four weeks. The petitioners shall be paid for the quantity of levy sugar sold by them after 11-7-1975 at the rates to be determined by the Central Govt. Until suph determination is made the Central Govt shall continue to pay for the levy sugar supplied to it at rs. 159-14 per quintal of D-29 grade sugar and at corresponding rates for other grades of sugar subject to adjustment after the notification is issued. The amount of additional price payable by the petitioners to the canegrowers shall be determined in accordance with the levy price to be fixed by the Central Government within a reasonable time after the issue of the notification. No costs. --- *** --- .