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1987 DIGILAW 931 (ALL)

O. P. Ice and Cold Storage, Agra v. State of Uttar Pradesh

1987-10-07

A.N.VARMA, S.D.AGARWAL

body1987
JUDGMENT A.N. Varma, J. - In this group of petitions filed by owners of some cold storages, the petitioners have challenged the validity of a notification date. Aug. 26, 1982 issued by the State Government under S. 29 of the U.P. Regulation of Cold Storages Act, 1976 (the 'Act', for short) and prayed for its quashing. A writ of mandamus has also been prayed for directing the respondents to allow the petitioners to charge Rs. 25.50 per quintal as storage rent from the hirers. The petitions are being disposed of by a common judgment as the issues involved are identical. 2. For the petitioners the main contention urged by Sri S. P. Gupta was that as a subordinate legislating body the State. Government was not authorised to make law having retrospective operation beyond the limits expressly prescribed under S. 29 and in as much as the impugned notification was given a retrospective effect from Feb. 15, 1982 it must be struck down as completely void and ineffectual at least in respect of the period prior to Aug. 26, 1982, the date on which the notification was issued. 3. Before we deal with the above submission we may mention in our judgment in Civil Misc. Writ No. 2939 of 1987. Sheetgrah Sangh, U.P. Kanpur v. State of Uttar Pradesh, delivered on 7-10-1987 : (reported in 1988 All LJ 14), the provisions of the aforesaid Act and the scheme underlying thereunder have been analysed by us in considerable detail The precise nature and scope of power under S. 29 of the Act as well as the parameters within which judicial review of legislative instruments made under that provision is permissible were examined by us in depth. Shortly, our conclusion was that a notification issued under S. 29 is essentially a legislative activity and consequently the same is subject only to such challenge as has been recognised and is available in respect of a legislative activity. It is unnecessary to dilate on these issues in this case in view of the opinion already expressed by us in writ petition No. 2939 of 1987 (supra). 4. Reverting to the submission of the learned counsel we will first examine whether the impugned notification has been given any retrospective operation. S. 29 confers on the State Government power to prescribe maximum hiring charges which a licensee may realise from the hirers. 4. Reverting to the submission of the learned counsel we will first examine whether the impugned notification has been given any retrospective operation. S. 29 confers on the State Government power to prescribe maximum hiring charges which a licensee may realise from the hirers. In the notification under challenge storage rent has been fixed for the period Feb. 15 to Nov. 15,1982. It was not disputed before us that the normal season for storage of potatoes extends from Feb. 15 to sometime in November. Storage rents are, in the case of potatoes, fixed by the State Government under S. 29 normally for the same period, i.e. from middle of February to middle or end of November. So the Government has under the impugned notification done neither more nor less than fixed the storage rent for what might be described as the normal 'potato season' for the year 1982. Now under S. 26 of the Act, the statutory injunction imposed on a licensee is against taking or receiving any amount over and above the charges fixed by the State Government under S. 29. Irrespective therefore of the agreement which the parties might have entered into prior to the fixation of maximum charges, once maximum charges are fixed under S. 29, the hirer cannot take or receive for storage any amount over and above the charges fixed by the State Government under S. 29. 5. The next important aspect to be borne in mind is that there is nothing either in S. 29 or in the scheme of the Act which might justify the conclusion that the State Government is bound to fix the maximum hiring charges under S. 29 prior to the commencement of the storage operations. Upon its plain terms the State Government is authorised to issue a notification at any time during a season and from time to time fixing maximum charges. The hiring charges are payable by the hirer only when he goes to take delivery of the agricultural produce offered by him for storage upon the surrender by him of the receipt issued by the licensee and on his payment of the hiring charges. Further, S. 5 of the Act provides that no person shall carry on business of storing any agricultural produce in a cold storage except under and in accordance with the terms and conditions of a license granted under the Act. Further, S. 5 of the Act provides that no person shall carry on business of storing any agricultural produce in a cold storage except under and in accordance with the terms and conditions of a license granted under the Act. Under R. 3(19) of the Rules framed under the Act called the U.P. Regulation of Cold Storages (Licensing) Rules, 1976, the licensee is prohibited from imposing any other charge except such as are fixed by the State Government under S. 29. In addition, while making an application for the grant of licence the licensee has to give an undertaking in writing that he shall comply with the provisions of the Act, the rules made thereunder as also the directions which may be issued by the licensing officer from time to time. The licensee is hence bound to comply with the provisions of S. 29 which includes the notifications issued thereunder. 6. Consequently when the licensee enters into an agreement with the hirer stipulating a particular storage rent even prior to the fixation of maximum charges under S. 29, he does so in the aforesaid statutory back-ground, i.e. he shall not realise storage charges in excess of the rate either already fixed by the State Government under S. 29 or the one which might be fixed later. The agreement stands superimposed by the rate fixed by the Government under S. 29. 7. The scheme of the Act thus clearly contemplates that maximum charges can be fixed by the Government even after the. commencement of the season covering the entire season, i.e. both prior to the issue of the notification as well as after it up to the end of the potato season. The impugned notification was hence plainly authorised by the Act, even if it be assumed that it has some, retrospective operation, though, in our opinion, under the scheme of the Act, there is no element of retrospectivity involved in the notification under challenge. As mentioned above, the prohibition is against taking or receiving as storage charges any, amount in excess of that fixed under S. 29 and, on the material on record, we are not satisfied that the petitioners had realised storage charges from the hirers in excess of the notified rate prior to the issue of the notification. As mentioned above, the prohibition is against taking or receiving as storage charges any, amount in excess of that fixed under S. 29 and, on the material on record, we are not satisfied that the petitioners had realised storage charges from the hirers in excess of the notified rate prior to the issue of the notification. The allegation contained in para 6 of the petition stating that the petitioners had already realised hiring charges at the rate of Rs. 18.50 in respect of 40% of the goods offered to them for storage even prior to the issue of the notification, has been effectively countered in para 3 of the counter-affidavit filed on behalf of the respondents.I The hiring charges for the previous year, i.e. 1981 were the same as in the year in question, namely, 1982. Further the,Government had issued a telex on June 30, 1982 to all the District Magistrates of Uttar Pradesh directing that the cold storage should be told not to realise hiring charges in excess of the amount fixed for the year 1981. The petitioners have not filed any reliable material in support of their allegation that they had already realised in respect of about 40% of the entire stocks offered to them for storage at a higher rate of Rs. 18.50 per quintal even prior to the issue of the notification under challenge. The higher rent realised by them was under the interim orders passed subsequently. The position, therefore, is that so far as the petitioners are concerned there is no question of the impugned notification operating retrospectively against them. They had still to realise hiring charges and consequently they could be legitimately restrained from realising in excess of the amount fixed under the impugned notification. 8. Sri Gupta, however, placed reliance on the language of S. 26 which provides- "26. No licensee shall take or receive, for storage or any other service tendered to the hirer, any amount over and above the charges fixed by the State Government under S. 29." His submission was that S. 26 clearly postulates that hiring charges shall be fixed by the State Government before the goods are delivered for storage. We are unable to agree. S. 26 has to be read with S. 29 and the entire scheme of the Act. We are unable to agree. S. 26 has to be read with S. 29 and the entire scheme of the Act. S. 26 does not, in our opinion, directly or by implication, suggest that the charges must be fixed before the storage operation starts. 9. In view of what has been stated above we reject the first submission of the learned counsel. As we are of the opinion that the impugned notification is clearly authorised by the Act even if it is deemed to be a piece of legislation having retrospective effect, it is unnecessary to refer to the authorities cited by Sri Gupta in support of his arguments that a legislative instrument having retrospective operation. 10. That takes us to the second submission which was urged by Sri S. P. Gupta in the alternative. The contention was that if it is held that the State Government is authorised to issue the notification having retrospective operation, the exercise of that power after the commencement of the storage operation would be clearly hit by Article 19(1)(8) of the Constitution. Elaborating the submission Sri Gupta argued that it would be highly unfair and unreasonable to declare maximum charges after the hirers and the cold storage owners have entered into an agreement for the payment of an agreed hiring rent applicable for the entire season. If the maximum hiring rent is known to the cold storage owners they might not engage in this business on the ground that the proposition would not be economically viable. To confront the cold storages with maximum charges in the middle of a season would hence be clearly unjust and unreasonable. 11. The submission though attractive on its face does not bear a closer scrutiny. Those desiring to enter into the trade of cold storage are fully aware that it is a regulated industry controlled by the terms and conditions of the licence. They are also aware that if the State Government issues a notification under S. 29 the same shall supersede any agreement which the parties might have entered into and that irrespective of the hiring rent which the parties might have agreed to, the cold storage owners cannot in view of S. 26 take or receive any amount over and above the charges fixed by the Government under S. 29. In Form No. 2 prescribed under the U.P. Regulation of Cold Storages (Licensing) Rules, 1976, the applicant is required to give an undertaking that he will comply with the provisions of the U.P. Regulation of Cold Storages Act and the Rules framed thereunder. The licensee has thus undertaken to abide by the provisions of the Act including S. 29 which authorises fixation of maximum charges. Further under the terms and conditions of the licence prescribed under the rules there is a requirement (vide Rule 3(19)) that the licensee shall not impose any other charges except that fixed by the State Government under S. 29. 12. It will,- therefore, be seen that there is no element of unexpectedness in the exercise of power by the State Government 'under S. 29 of the Act after the commencement of the season. As mentioned above, those entering the trade do so with their eyes and ears open that . S. 29 authorises the State Government to fix maximum charges at any time. As licensees they are bound to comply with the terms and conditions of the licence. They are also bound by their undertaking given in the application for licence. 13. This brings us to the last submission raised by the learned counsel for the petitioner relying on para 40 of Writ Petition No. 10645 of 1982. Learned counsel submitted that the charges fixed by the State Government do not cover even the minimum operational costs of running a cold storage and consequently the impugned notification must' be struck down as being wholly arbitrary and unreasonable. 14. The submission is devoid of any merit. As asserted in the counter-affidavit filed on behalf of the respondents maximum charges were fixed after taking into account the recommendation of the Advisory Board which is an expert body. It has been asserted that before fixation of the maximum charges the Government had considered every aspect of the matter. The report of the Advisory Board, it is stated in the counter-affidavit, was based on the relevant material including the normal expenses required for smooth running of Bold storages. As between the opinion of the expert body and the version of the petitioners, we would prefer to rely on the former rather than the latter. The self-serving charts prepared by the petitioners cannot furnish a safe basis for striking down the impugned notification. As between the opinion of the expert body and the version of the petitioners, we would prefer to rely on the former rather than the latter. The self-serving charts prepared by the petitioners cannot furnish a safe basis for striking down the impugned notification. In the case of Sheetgrah Sangh, 1988 All LJ 14 (supra) we have examined the scope of judicial review in these matters. We have noticed the various Supreme Court decisions in which it has been reiterated that such price fixation notifications should not be interfered with by the Courts under Article 226 of the Constitution except on grounds spelled out therein. For ready reference we may quote a passage from a recent decision of the Supreme Court in the case of Union of India v. Cynamide India Limited, reported in (1987) 2 SCC 720 : AIR 1987 SC 1802 : "We start with the observation, 'price fixation is neither the function nor the forte of the Court'. We concern ourselves neither with the policy nor with the rates. But we do not totally deny ourselves the jurisdiction to enquire into the question, in appropriate proceedings, whether relevant considerations have gone in and irrelevant considerations kept out of the determination of the price. For example, if the legislature has decreed the pricing policy and prescribed the factors which should guide the determination of the price, we will, if necessary, enquire into the question whether the policy and the factors are present to the mind of the authorities specifying the price. But our examination will stop there. We will go no further. We will not deluge ourselves with more facts and figures. The assembling of the raw materials and the mechanics of price fixation are the concern of the executive and we leave it to them. And, we will not re-evaluate the considerations even if the prices are demonstrably injurious to some manufacturers or producers. The Court will, of course, examine if there is any hostile discrimination. That is a different 'cup of tea' altogether .....................The learned counsel argued that there were several patent errors which came to light during the course of the hearing in the High Court. He said that obsolete quantitative usages had been taken into consideration, proximate cost data had been ignored and the data relating to the year ending November, 1976 had been adopted as the basis. He said that obsolete quantitative usages had been taken into consideration, proximate cost data had been ignored and the data relating to the year ending November, 1976 had been adopted as the basis. It was submitted that there were errors in totalling, errors in the calculation of prices of utilities, errors in the calculation of net worth and many other similar errors. As we -pointed out earlier, these are all matters which should legitimately be raised in the review application, if there is any substance in them. These are not matters for investigation in a petition under Article 226 of the Constitution or under Article 32 of the Constitution. Despite the pressing invitation of Shri Divan to go into facts and figures and his elaborate submissions based on facts and figures, we have carefully and studiously refrained from making any reference to such f acts and figures as we have consider it outside province to do so and we do not want to set any precedent as was supposed to have been done in Premier Automobiles though it was not so done and, therefore, needed explanation in later cases." 15. Applying the dicta laid down by their Lordships of the Supreme Court and our own decision in Sheetgrah case (supra) we are clearly of the opinion that the price fixed by the State Government cannot, by any stretch of imagination, be regarded as unconstitutional or legally impermissible or patently unreasonable and arbitrary so as to warrant interference by this Court. 16. The above discussion disposes of all the points urged in support of the petitions. Other learned counsel for the petitioners simply adopted the submissions of Sri S. P. Gupta which have been disposed of by us herein-above. 17. In the result, the petitions fail and are dismissed with costs. The petitioners shall within 6 weeks from today desposit with the Licensing Officer of the district concerned the entire amount charged by them in excess of the maximum charges fixed under the impugned notification together with the list of hirers from which the excess amounts were realised by them. The Licensing Officer shall thereupon arrange to disburse the amounts so deposited amongst the hirers expeditiously, as far as possible within a month from the date of the deposit by the petitioners.