G. P. MATHUR, J. ( 1 ) THE association of Sugar Mills of West U. P. and nine sugar mills of the same zone have filed this writ petition assailing the order of Central Government dated April 6, 2000, by which the price of levy sugar for the year 1999-2000 has been fixed at Rs. 1. 015. 67 per quintal. ( 2 ) SUB-SECTION (1) of Section 3 of the Essential Commodities Act (for short E. C. Act) provides that if the Central Government 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, it may by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Under clause (f)of subsection (2) of Section 3, an order may be issued for requiring any person holding any stock or engaged in production, or in the business of buying or selling any essential commodity (a) to sell the whole or specified part of the commodity held in stock or produced or received by him or (b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him to the central Government or a State Government or to an officer or agent of such Government or to a corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order. Exercising power under clause (f) of sub-section (2) of Section 3 the Central Government issued Levy Sugar Supply (Control) Order. 1979, sub-clause (1) of clause 2 of the aforesaid Order reads as under : "2. Exercising power under clause (f) of sub-section (2) of Section 3 the Central Government issued Levy Sugar Supply (Control) Order. 1979, sub-clause (1) of clause 2 of the aforesaid Order reads as under : "2. Powers to Issue Directions to supply Levy Sugar.-- (1) The Central Government may, from time to time by order issue directions to any producer or recognised dealer to supply, levy sugar of such type or grade or in such quantities, and from such place of manufacture or Storage : (a) to such persons or organisation, in such areas or markets ; or (b) to such State Governments, as may be specified in the Order and at a price not exceeding the price determined under sub-section (3c) of Section 3 of the Essential Commodities Act, 1955. Explanation.--"levy Sugar" means the sugar requisitioned by the Central Government under clause (f) of subsection 12) of Section 3 of the Essential Commodities Act. 1955. " ( 3 ) FOR the sugar year 1999-2000, the Central Government issued an order under which 30 per cent of the total production of each sugar factory was procured at controlled ex-factory levy sugar prices for distribution through public distribution system at a uniform retail issue price and the sugar mills were, allowed to sell the balance sugar production in the open market as free sale sugar. The Explanation to sub-clause (9) of clause 5a of Sugarcane (Contrail Order. 1966 lays down that "sugar year" means the year commencing on the 1st day of October and ending with 30th day of September in the year next following. Exercising powers under sub-section (3c) of section 3 of B. C. Act, the Central Government issued an order known as Sugar (Price determination for 1999-2000 Production) Amendment Order. 2000, which came into force with effect from April 6. 2000. Clause 5 of this Order provides that the price for sugar produced in 1999-2000 sugar season by all vacuum pan sugar factories specified in Scheduled III which is required to be supplied to any person, organisation or State Government under sub-clause (1) of clause 2 of the Levy Sugar Supply (Control) Order, 1979, shall be such as specified in Schedule i or II. Clause 2 of the Control Order provides that the price determination shall apply to the sugar delivered on or after the date of the commencement of the sugar season (1. 10. Clause 2 of the Control Order provides that the price determination shall apply to the sugar delivered on or after the date of the commencement of the sugar season (1. 10. 1999), schedule I gives the price of sugar for delivery into railway wagons and Schedule 11 gives price for delivery in buyers" carts, lorries or other means of transport at the factory gate/factory godown. Sub-clause (4) of clause 1 of this Order has a bearing on the controversy in hand and, therefore, it is being reproduced below : " (4) It is a provisional order. A supplementary notification shall be issued subsequently in accordance with the judgment dated 28. 1. 1997 of the Honble Supreme Court in the case of Shri malaprabha Co-operative Sugar Factory Ltd. v. Union of India and others. I. A. Nos. 56 of 1995. " ( 4 ) THE grievance of the petitioners is that the determination of price of levy sugar has not been done in accordance with law and a wrong criteria has been adopted by the Central Government due to which levy sugar price has been fixed at a very low figure and, consequently, the producers are not paid the amount which they are entitled under the provisions of sub-section (3c) of Section 3 of the E. C. Act. ( 5 ) A perusal of Schedule 1 and Schedule 11 of Sugar (Price Determination for 1999-2000 production) Amendment Order, 2000 will show that the price of levy sugar has neither been fixed uniformly for the whole country nor for individual factory-wise. All the sugar mills in the country have been grouped into 20 7-ones and this system of zoning has been done on the basis of geographical area. In the State of U. P. the sugar mills have been grouped into three different zones. According to Schedule II (for delivery of buyers carts and lorries at factory gate/factory godown) the price fixed for west U. P. none is Rs. 1. 051. 67 per quintal, for central U. P. zone, it is Rs. 1. 075. 41 per quintal and for east U. P. zone it is Rs. 1,160. 20 per quintal. Different prices have been fixed for two zones, each in Bihar and Karnataka and three zones in Maharashtra. In anakapalle Co-op. Agrl. and Industrial Society Ltd. , etc. etc. 1. 051. 67 per quintal, for central U. P. zone, it is Rs. 1. 075. 41 per quintal and for east U. P. zone it is Rs. 1,160. 20 per quintal. Different prices have been fixed for two zones, each in Bihar and Karnataka and three zones in Maharashtra. In anakapalle Co-op. Agrl. and Industrial Society Ltd. , etc. etc. v. Union of India and others, (1973) 3 SCC 435 , a Constitution Bench upheld the system of zone-wise fixation of price of levy sugar and it was held that it was not necessary to fix the price unit-wise as it was not practicable. Similar view was taken by another Constitution Bench in Panipat Cooperative Sugar Mills v. Union of India, (1973) 1 SCC 129 . The question was again considered in Shri Sitaram Sugar company Ltd. and another v. Union of India and others, (1990) 3 SCC 223 , and in paragraph 54 of the reports, the view taken in Anakapalle Cooperative (supra) and Panipat Cooperative Sugar mills (supra) was reiterated in the following manner : "54. Factories are classified with due regard to geographical-cum-agro-economic considerations. Fair prices for different grades of sugar are determined for each zone with reference to a reasonably efficient and economic representative cross-section of the manufacturing units. Such classification, as held in Panipat and Anakapalle cannot, in the absence of evidence to the contrary, be characterised as arbitrary or unreasonable or not founded on an intelligible differentia having a rational nexus with the object sought to be achieved by sub-section (3c ). The person assailing such classification "carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences. " "if the petitioners nevertheless incur losses, such losses need not necessarily have arisen by reason of geographical zoning, but for reasons totally unconnected with it, such as the condition of the plant and machinery, quality of management, investment policy, labour relations, etc. These are matters on which the petitioners have not furnished data, and, and in any event judicial review is hardly appropriate for their consideration. These are matters on which the petitioners have not furnished data, and, and in any event judicial review is hardly appropriate for their consideration. " ( 6 ) IN view of these authoritative pronouncements by the Supreme Court, there cannot be even a slightest a doubt that fixation of common levy sugar price for number of factories grouped under one zone is perfectly valid and the Central Government is under no obligation under the relevant statute to fix the price of levy sugar for each individual sugar factory separately. ( 7 ) SRI Shanti Bhushan, learned senior counsel for the petitioners, has submitted that price of levy sugar has not been determined in accordance with sub-section (3c) of Section 3 of the E. C. Act and alt the components which are required to be taken into account for determining the price have not been taken into consideration and some important components have been ignored. He has urged that the "manufacturing cost of sugar" has not been correctly calculated due to which the price of levy sugar has been fixed at a low amount. Learned counsel has further submitted that while determining the price of levy sugar, some negative adjustments have been made for the first time in the year 1999-2000 which was neither done previously nor is legally justified and this has resulted in depressing the price. Learned counsel has further submitted that while determining the price of levy sugar, some negative adjustments have been made for the first time in the year 1999-2000 which was neither done previously nor is legally justified and this has resulted in depressing the price. ( 8 ) THE relevant provision dealing with the determination or fixation of price of levy sugar is sub-section (3c) of Section 3 of the E. C. Act and it reads as under : (3c) Where any producer is required by an order made with reference to clause (f) of subsection (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Government or to any other person or class of persons) and either no notification in respect of such sugar has been issued under sub-section (3a) or any such notification, having been issued, has ceased to remain in force by efflux of time, then notwithstanding anything contained in sub-section (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 government may, by order, determine, having regard to : (a) the minimum price, if any, fixed for sugarcane by 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 purpose of this sub-section, "producer" means a person carrying on the business of manufacturing sugar. " ( 9 ) SUGARCANE is the main raw material for production of sugar and consequently, its price is bound to materially affect the price of sugar. Keeping in view the said fact, the Legislature has laid down that the price of sugar shall be determined having regard to the minimum price, if any, fixed for sugarcane by the Central Government and this is indicated by clause (a) of sub-section (3c) of Section 3. The price of sugarcane is fixed under Sugarcane (Control) Order, 1966, which has been made by the Central Government under Section 3 of E. C. Act. The price of sugarcane is fixed under Sugarcane (Control) Order, 1966, which has been made by the Central Government under Section 3 of E. C. Act. Sub-clause (g) of clause 2 of this Order provides that "price" means the price or the minimum price fixed by the Central government from time to time for sugarcane delivered to a sugar factory at the gate of the factory or at a sugarcane purchasing centre and clause 3 of the Order casts an obligation on the central Government to fix the minimum price of sugar-cane. Clause 5a (inserted by G. S. R. 402 (E) dated 25. 9. 1974) of the same Order provides for additional price for sugarcane and sub-clause (1) thereof 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 clause (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. " ( 10 ) THE second schedule to the Sugarcane (Control) Order, 1966, lays down that the amount to be paid on account of additional price (per quintal of sugarcane) under clause 5a by a producer of sugarcane shall be computed in accordance with the following formula, namely : (R - L + 2a + B)X= ___________________ 2-C the Explanation gives the details of that letters A. B, C, L, R and X stand for, X represents the additional price of sugarcane payable by a producer. There was initially some controversy as to whether the additional price of sugarcane as determined under clause 5a of the Sugarcane (Control) Order, 1966, would also have to the taken into consideration for the purpose of clause (a) of sub-section (3c) of Section 3 of the Act which refers to minimum price of sugarcane fixed by the Central Government, but the same has been set at rest by the decision of the Apex Court in Shri Malprabha Coop. Sugar Factory Ltd. V. Union of India and another. (1994) 1 SCC 648 , and paragraphs 108 and 109 of the reports in which the final conclusions were expressed are being reproduced below for convenience : "108. Sugar Factory Ltd. V. Union of India and another. (1994) 1 SCC 648 , and paragraphs 108 and 109 of the reports in which the final conclusions were expressed are being reproduced below for convenience : "108. We are unable to agree with the submissions advanced on behalf of the Government that clause 5a deals only with the amount payable to the cane grower and that it cannot have any relevance for determination of levy sugar. If the determination of minimum price of sugar and fixation of the price of levy sugar under quantity of sugar to be supplied by the producer are inter connected, then they must be read as a whole and not separately as though each is distinct. While fixing the price of levy sugar regard is had only to the minimum cane price as spoken to under section 3 (3c) (a ). This minimum cane price is referable to clause (3) of Sugarcane (Control)Order. The additional price payable to the cane grower under clause 5a will arise after the expiry of the sugar year. Sugar price will have to be met only from the extra realisation made by the producer by the sale of sugar in free market which will naturally be more than the levy price. 109. In view of the above discussion, the impugned notifications except the one dated November 28, 1974, cannot be upheld. The reason why we leave out the notification dated November 28, 1974 is that the same came to be issued before the pricing policy was introduced. We hereby direct the Union of India to amend the notifications taking into account the liability of the manufacturers under clause 5a of the Sugarcane (Control) Order as regards cane price and re-fix the price of levy sugar having regard to the factors mentioned in Section 3 (3c) of the Act. The government will have lime to issue the amended notification as directed above till December 31. 1993. " ( 11 ) THE Union of India being not satisfied with the aforesaid directions filed review applications but the same were dismissed and the judgment is in Shri Malprabha Coop. Sugar Factory Ltd. v. Union of India and another, (1997) 10 SCC 216 . 1993. " ( 11 ) THE Union of India being not satisfied with the aforesaid directions filed review applications but the same were dismissed and the judgment is in Shri Malprabha Coop. Sugar Factory Ltd. v. Union of India and another, (1997) 10 SCC 216 . Thus, the legal position is fully settled that for the purpose of sub-clause (a) of subsection (3c) of Section 3 of the E. C. Act, minimum price of sugarcane would also include the additional price for sugarcane as determined under clause 5a of Sugarcane (Control) Order. 1966. It appears that the Central Government was conscious of this legal position and, therefore, in sub-clause (4) of clause 1 of the Sugar (Price Determination for 1999-2000 Production) Amendment Order, 2000, it is mentioned that it is, a provisional order and a supplementary notification shall be issued subsequently in accordance with the judgment dated 28. 1. 1997 of the Supreme Court in Shri Malprabha Co-operative Sugar Factory Ltd. v. Union of India. The fact that the Central Government characterised the Sugar (Price determination for 1999-2000 Production) Amendment Order, 2000 as a "provisional order" shows that it is not a final order. The dictionary meaning of the word provisional is tenantive or providing for a temporary need. In the counter-affidavit filed on behalf of the Union of India (sworn by Sri R. K. Paul, Director (Cost) Ministry of Consumer Affairs and Public Distribution), the same stand is taken in paragraph 3 (h) and (i), and they are being reproduced below for convenience : " (h) That the second respect is that Government has fixed the levy sugar prices provisionally. The supple mentary notification shall be issued subsequently in accordance with the judgment dated 28. 1. 1997 of the Honble Supreme Court in the case of Malprabha Co operative Sugar factory Ltd. v. Union of India and others. (i) The additional cane price payable under clause 5a of the Sugarcane (Control) Order, 1966, arises only after the State Government notify the l Factor, which is only done after the sugar season is over. 1. 1997 of the Honble Supreme Court in the case of Malprabha Co operative Sugar factory Ltd. v. Union of India and others. (i) The additional cane price payable under clause 5a of the Sugarcane (Control) Order, 1966, arises only after the State Government notify the l Factor, which is only done after the sugar season is over. " ( 12 ) IN paragraph 4 (a) of the rejoinder-affidavit (sworn by Sri Arun Kumar), It is averred that the provisional orders determining the price of levy sugar issued for the years 1996-97, 1997-98 and 1998-1999 were never followed by any subsequent notifications and no final order determining the price of levy sugar after taking into consideration the additional sugarcane price under clause 5a of the Sugarcane (Control) Order, 1966, were never issued. It is further averred that the central Government has not given effect to its undertaking of issuing a revised notification in terms of the Supreme Court judgment since the year 1995-96 and the directions of the Court were never given effect to. The factual position that since the year 1996-97. no revised notifications have been issued after taking into consideration the additional sugarcane price paid to a sugarcane grower has not been controverted from the side of the respondents. In view of the directions issued by the Supreme Court in Shri Malprabha Coop. Sugar Factory Ltd. (1994) 1 scc 648 and second Shri Malprabha, (1997) 10 SCC 216 , and also the stand taken in paragraphs 3 (h) and 3 (i) of the counter-affidavit, the Central Government is bound to issue a revised notification as the sugar year 1999-2000 is already ever. The respondent Nos. 1 and 2 should, therefore, issue revised notification determining the price of levy sugar, after taking into consideration the additional sugarcane price paid under clause 5a of Sugarcane (Control) Order, 1966. ( 13 ) SHRI Shanti Bhushan, learned senior counsel for the petitioners has next submitted that earlier the price of levy sugar used to be determined by Tariff Commission and from 1974 onwards, this exercise was being done by the Bureau of Cost and Pricing (for short, B. I. C. P.) which was an independent body of experts, but in the year in question. i. e. , 1999-2000 the price of levy sugar has been determined by Cost Account Branch of the Ministry of Finance which is neither a body of experts nor an independent body and, consequently, the determination of price has not been properly done, and it deserves to be set aside. He has further submitted that a direction should be issued to the Central Government to have the exercise done afresh by B. I. C. P. which alone is in a position to fairly and independently determine the price of levy sugar. The stand of the Union of India in paragraphs 3 (b) and (c) of the counter-affidavit is that the computation of levy sugar price is done as per formal recommendation by the expert body whom the cost investigation of sugar industry is entrusted from time to time. The Bureau of Industrial Cost and Price (B. I. C. P.)had submitted the cost schedules which were valid for three years, i. e. , 1996-97, 1997-98 and 1998-99. The matter to undertake an investigation into the cost structure of the sugar industry for recommending the basic cost schedule for the conversion charges to cover the subsequent three sugar seasons, i. e. , 1999-2000 to 2001-2002 was initially referred to Tariff Commission but they showed their inability to take up the said study. Thereafter, the matter was referred to the Cost accounts Branch (C. A. B.) of the Ministry of Finance. The Cost Division of Bureau Commission (previously B. I. C. P.) and Cost Accounts Branch (C. A. B.) are manned by the officers from the same services, viz. , the Indian Cost Accounts Service, and there is no basic difference whether the study of cost structure is done by the Tariff Commission or by the C. A. B. It is further stated that the C. A. B. is an independent pricing agency of the Central Government for conducting cost and pricing studies and is equally competent to take up such studies. In paragraph 4 of the counter-affidavit, it is averred that the Cost Accounts Branch is an independent pricing agency of the Central Government and is a repository of expertise in the cost management and financial accountancy in the Government and has rendered professional assistance to different ministries and Government agencies. In paragraph 4 of the counter-affidavit, it is averred that the Cost Accounts Branch is an independent pricing agency of the Central Government and is a repository of expertise in the cost management and financial accountancy in the Government and has rendered professional assistance to different ministries and Government agencies. In paragraph 8 of the counter-affidavit, it is averred that Cost accounts Branch took a number of mega cost studies like rubber pricing, textile pricing, railway wagons pricing on an industry basis in the past. In the rejoinder-affidavit, these averments in the counter-affidavit have not been challenged and the only fact stated is that the C. A. B. is a department of Ministry of Finance and, therefore, cannot be called an independent body. In view of the facts stated in the counter-affidavit, there cannot be any doubt that the Cost Accounts branch is also manned by experts who have sufficient expertise and experience to undertake major cost studies. The mere fact that it is manned by officers of Indian Cost Accounts service can be no ground to hold that it is not an independent body or the determination done by it is not fair. We would like to point out that the petitioners have not placed before us the report of the b. I. C. P. It is, therefore, not possible to ascertain whether any important factor which was relevant and had bearing on cost structure and which had been taken into consideration by the b. I. C. P. had been ignored by the C. A. B. It is also not possible to ascertain whether there has been any major variation or departure in the data which has been taken into consideration by the c. A. B. from the data which formed the basis for determination of price by the B. I. C. P. Therefore, the contention of the petitioners, upon the alleged incorrectness or unfairness of price determination by the C. A. B. cannot be accepted. ( 14 ) SHRI Shanti Bhushan has strenuously urged that cost of transport of sugarcane from the purchasing centre to the factory has not been taken into consideration by the C. A. B. and, it being an important component of "manufacturing cost of sugar" as provided in clause (b) of sub-section (3c) of Section 3 of the E. C. Act, the price of levy sugar has not been correctly determined. Learned counsel has submitted that as the cost of transport of sugarcane from the purchasing centre has a substantial bearing on the "manufacturing cost of sugar" the price of levy sugar requires a fresh determination after taking into consideration the transport cost. Sub-section (3c) of Section 3 of E. C. Act gives the methodology of determining the price of sugar which a producer has been required to sell to the Central Government or to a State government in pursuance of an order issued under clause (f) of subsection (2) of Section 3 of the act. The true import of sub-section (3c) of Section 3 was explained by the Apex Court in Shri sitaram Sugar Company Ltd. and another v. Union of India and others, (1990) 3 SCC 223 , and paragraph 30 thereof is being reproduced below ; "the words "having regard to" in sub-section are the legislative instruction for the general guidance of the Government in determining the price of sugar. They are not strictly mandatory, but in essence directory. The reasonableness of the order made by the Government in exercise of its power under sub-section (3c) will, of course, be tested by asking the question whether or not the matters mentioned in clauses (a) to (b) have been generally considered by the Government in making its estimate of the price, but the Court will not strictly scrutinise the extent to which those matters or any other matters have been taken into account. There is sufficient compliance with the sub-section if the Government has addressed its mind to the factors mentioned in clauses (a) to (d) amongst other factors which the Government may reasonably consider to be relevant, and has come to a conclusion, which any reasonable person, placed in the position of the Government, would have come to. On such determination of the price of sugar, which, as stated in Panipat, (1973) 1 SCC 129 , is the fair price, the sub-section postulates the calculation of an amount, with reference to such price, for payment to each producer who has complied with an order made with reference to sub-section (2) (f ). The "price of sugar", unlike the "amount", is arrived at by a process of costing in respect of a representative cross-section of manufacturing units, bearing, of course, in mind the legislative instruction contained in clauses (a) to (d ). The "price of sugar", unlike the "amount", is arrived at by a process of costing in respect of a representative cross-section of manufacturing units, bearing, of course, in mind the legislative instruction contained in clauses (a) to (d ). " ( 15 ) THIS statement of law clearly shows that it is necessary to consider the matters enumerated in clauses (a) to (d) or sub-section (3c) of Section 3 of the E. C. Act. The petitioners contend that transport cost of sugarcane which is the main raw material or the only raw material required for production of sugar having been ignored, the determination of price of levy sugar done by the central Government suffers from a defect of fundamental character. It is, therefore, necessary to examine whether the cost of transport of sugarcane has been taken into consideration and if not, then what is the import of such an omission. In paragraphs 14 (d), 16 (ii) and 20 of the writ petition. It is averred that the sugar factories have to transport sugarcane from different purchasing centres to the factory gate and have to incur substantial cost which ranges from Rs. 6 to 7 per quintal of sugarcane. As per the last B. I. C. P. report for the year 1998-99, transport cost of Rs. 12 per quintal of sugar was allowed. There was a hike in diesel prices in 1999 as a result of which the actual transport cost during the season 1999-2000 had gone up substantially over the last year. It is claimed that according to the calculation made by the petitioners, the incidence of sugarcane transportation cost for the west of U. P. zone comes to Rs. 16 per quintal of sugar. The stand of Union of India regarding the impact of transport cost of sugarcane on manufacturing cost of sugar has been given in paragraph 8 (ii) of the counter-affidavit and it is being reproduced below : "that in respect of cost of transportation. Cost Accounts Branch in their report followed the same practice as adopted by B. I. C. P. in their earlier reports. Cost Accounts Branch in their report followed the same practice as adopted by B. I. C. P. in their earlier reports. Normally, the cane is transported by the farmers and delivered at the factory gate, that is why the transportation cost is included in s. M. P. by the Commission for Agricultural Costs and Prices (C. A. C. P.), C. A. C. P. informed c. A. B. that the weighted average sum of Rs. 5. 25 per quintal of cane on account of transportation expenses has been included in S. M. P. If any factory incurred any cost on cane transportation for their convenience and to get better results over and above included in S. M. P. , the Government is not bound to include the same in levy price fixation. However, in this regard cost Accounts Branch also observed that in few zones, the impact of updated actual cane transportation cost directly incurred by sugar factories in various zones is less than the cost of transportation, already included in S. M. P. They have also observed that there is no uniformity in the treatment of transportation cost in the books of accounts of the sugar factories which fall under different zones. The Government finally felt that the transportation cost included in S. M. P. is fully compensated with regard to the actual cost incurred by the sugar factories on cane transportation, that is why the same has not been included separately again in the levy sugar prices. " ( 16 ) THE reply to the averments made in paragraph 20 of the writ petition has been given in paragraph 16 of the counter-affidavit which is virtually a repetation of paragraph 8 (ii) quoted above and nothing new has been stated. ( 17 ) THE averments made in paragraphs 8 (ii) and 16 of the counter-affidavit show that the statutory minimum price fixed for the sugarcane also includes Rs. 5. 25 per quintal of cane as transportation cost which has been taken as weighted average on account of transport expenses. Therefore, according to the data available with C. A. B. , a farmer has to incur an expense of Rs. 5. 25 in transporting sugarcane from his field to factory gate. 5. 25 per quintal of cane as transportation cost which has been taken as weighted average on account of transport expenses. Therefore, according to the data available with C. A. B. , a farmer has to incur an expense of Rs. 5. 25 in transporting sugarcane from his field to factory gate. If the sugarcane is delivered at the factory gate by the grower himself, naturally the mill owners do not incur any expenses in transporting the same and it is the sugarcane grower who is entitled to an extra amount towards the transportation cost in addition to the price of sugarcane at his field. The averment made in paragraphs 8 (ii) and 16 of the counter-affidavit shows that the Government has proceeded on the premise that normally the cane is transported by the farmers and delivered at the factory gate, that is why the transportation cost is included in S. M. P. A supplementary affidavit (sworn by Sri arun Kapoor on 10. 8. 2000) has been filed by the petitioners wherein it is averred that the sugar factories send their working results to the Sugar Directorate which is a department of Ministry of food, Government of India. From the said report, a chart has been prepared which shows that some sugar factories of west U. P. and central U. P. zones purchase a substantial portion of sugarcane at the cane purchasing centres and the details of percentage of such purchase is given in paragraphs 3 and 4 of the supplementary affidavit. It shows that out of the total quantity of sugarcane utilised by the sugar mills specified in para 3, the purchases at the purchasing centres ranged between 51. 95 percent to 68. 88 per cent in west U. P. and between 52. 57 per cent to 76. 60 per cent in central U. P. in the 2nd supplementary affidavit (sworn by Sri Shyam Lal gupta on 28. 9. 2000), it is averred that the average percentage of cane delivered by the growers at the purchasing centres of all the sugar factories of west U. P. during the period 1997-98 to 1999-2000 was 47 per cent of the entire quantity of sugarcane crushed. A supplementary counter-affidavit in reply to the 2nd supplementary affidavit has been filed which has been sworn by Sri R. P. Singhal, Chief Director (Sugar) on 21. 11. A supplementary counter-affidavit in reply to the 2nd supplementary affidavit has been filed which has been sworn by Sri R. P. Singhal, Chief Director (Sugar) on 21. 11. 2000 and relevant part of paragraph 4 of this affidavit is being reproduced below : "4. . . . . . . The C. A. C. P. informed that in the S. M. P. for 1997-98 sugar season on all India basis, a weighted average price of Rs. 5. 25 per quintal of cane on account of transportation expenses had been included. The C. A. B. therefore, mentioned that a view could be taken that since the cost of cane transportation has already been included in the S. M. P. for each sugar year, no further amount on this account becomes payable to the sugar units in the levy price and that if the units incur some extra cost on these activities, it is with a view to enhance their cane availability and sugar production and it results in enriching higher benefits through better free market sale of sugar. . . . . The Government, therefore, decided that as the system of cane transport varied between zones, the transport costs are not shown in the books of accounts separately, the impact of the cane cost was negative in certain zones and that the S. M. P. included cane transport, there was no need to take into account the additional cane transport cost, if any, in some of the zones in the fixation of the levy sugar prices. " ( 18 ) IN paragraphs 6 and 7 of the same affidavit, it is stated that C. A. C. P. had reiterated that the s. M. P. for sugarcane for 1997-98 sugar season took into account the cost of transportation incurred by the farmers located within a radius of 16 kms. from mill gate. It is also stated that the government has considered the transportation cost as element of cane transportation to the extent of Rs. 5. 25 per quintal. ( 19 ) BASICALLY two reasons are given for not taking into consideration the transport cost of sugarcane in the item relating to "manufacturing cost of sugar" as provided in clause (b) of sub-section (3c) of Section 3. One is that normally the cane growers deliver the sugarcane at the factory gate and the second is that a weighted average sum of Rs. 5. One is that normally the cane growers deliver the sugarcane at the factory gate and the second is that a weighted average sum of Rs. 5. 25 per quintal of sugarcane on account of transportation expenses has been included in the statutory minimum price. If the cane growers themselves supply the sugarcane at the factory gate, the sugar mills naturally do not incur any expense in transport of sugarcane and they cannot claim that transport cost be included in the manufacturing cost. The transport cost having been included in the price of sugarcane which is a separate parameter covered by clause (a), the same cannot again be included in the "manufacturing cost" as required by clause (b ). ( 20 ) HOWEVER, the specific case of the petitioners is that a substantial quantity of sugarcane is transported by them from the purchasing centres to the factory gate. The exact figures of the percentage of such sugarcane which has been collected by the sugar mills from the purchasing centres at their own expenses has been given in the supplementary affidavit sworn by Sri Arun kumar and in the 2nd supplementary affidavit sworn by Sri Shyam Lal Gupta. It is averred that the average percentage of sugarcane purchased by sugar mills at the purchasing centres during the years 1997-98 to 1999-2000 was 47 per cent of the total quantity of sugarcane crushed. The factual position stated in the supplementary affidavit and 2nd supplementary affidavit has not been controverted on behalf of the respondents. Therefore, so far as the State of U. P. is concerned, there appears to be a departure from the normal practice being adopted in the rest of the country and almost half of the total quantity of sugarcane crushed is collected by the sugar mills from the purchasing centres. ( 21 ) AT this stage, it is necessary to examine two other issues which have a bearing on the claim made by the petitioners. It has to be seen whether the sugar mills get any rebate or concession in the price of sugarcane if they themselves collect the same from the purchasing centres. ( 21 ) AT this stage, it is necessary to examine two other issues which have a bearing on the claim made by the petitioners. It has to be seen whether the sugar mills get any rebate or concession in the price of sugarcane if they themselves collect the same from the purchasing centres. The provision for rebate in prices is provided in clause 3a of Sugarcane (Control) Order, 1966 and the relevant part thereof reads as follows : "3-A. Rebate that can be deducted from the price paid for sugarcane.--A producer of sugar or his agent shall pay, for the sugarcane purchased by him, to the sugarcane grower or the sugarcane growers co-operative society, either the minimum price of sugarcane fixed under clause 3, or the price agreed to between the producer or his agent and the sugarcane grower or the sugarcane growers cooperative society, as the case may be (hereinafter referred to as the agreed price) : provided that (i) in the case of sugarcane delivered at any purchase centre. (a) if the sugarcane is transported to the factory by the owner by rail, a rebate of thirty-two paise per quintal shall be made from the minimum price or the agreed price, as the case may be ; or (b) if the sugarcane is transported to the factory by road by the owner on his own transport, a rebate, not exceeding 2. 5 paise (two and half paise) per quintal, per kilometre subject to a maximum of thirty-two paise per quintal, shall be made from the minimum price or the agreed price, as the case may be subject to the condition that a certificate regarding the actual distance from the purchasing centre concerned to the factory and the rate per kilometre applicable in that case on the basis of which the rebate is charged, is obtained from the Central Government, or the state Government, or the Director of Agriculture, or the Cane Commissioner, or the District magistrate, within their respective jurisdiction. (ii) Explanation.--For the purpose of clause (b), the distance of less than half a kilometre shall be ignored while a distance of half or more than half a kilometre, shall be counted as one kilometre. (ii) Explanation.--For the purpose of clause (b), the distance of less than half a kilometre shall be ignored while a distance of half or more than half a kilometre, shall be counted as one kilometre. " ( 22 ) SUB-CLAUSE (b) of proviso (i) shows that the maximum permissible rebate is 32 paise per quintal of sugarcane if the same is transported to the factory by road by the owner on his own transport. Clause (3a) was inserted by an amendment of the Control Order on 24. 9. 1976. In the last about 25 years, the transport charges have increased manifold but it appears that no corresponding amendment has been made in sub-clause (b ). In view of the facts stated in the counter-affidavit it is clear that Government has taken Rs. 5. 25 on an average as transport charges for one quintal of sugarcane from the field to the factory. The purchasing centres are established at a short distance from the fields for the convenience of the growers where they supply the sugarcane by bullock carts. A copy of the reservation order for 1999-2000 has been filed as Annexure-4 to the 2nd supplementary affidavit and this will show that a very large number of cane purchasing centres having been assigned to each sugar factory. The Mawana sugar Mills (petitioner No. 2) has been assigned 114 purchasing centres, Durala Sugar Mills (petitioner No. 1) 91 purchasing centres and Simbhaoli Sugar Mills (petitioner No. 6) 94 purchasing centres. The existence of such large number of purchasing centres adds to the convenience of the grower and he has to cover a very small distance from his field to the purchasing centre for the purpose of transporting sugarcane and this distance is bound to be a small fraction of the total distance from the field to the factory gate. If the Central Government has found as a fact that Rs. 5. 25 per quintal of sugarcane is the transport cost from the field of the grower to the gate of the sugar factory, then the transport cost from the purchasing centres to the sugar factory should be a major and substantial portion of the same. The rebate of 32 paise allowed to the sugar mills towards transport cost from the purchasing centres to the factory gate, which is roughtly 16 per cent of the total cost (Rs. 5. The rebate of 32 paise allowed to the sugar mills towards transport cost from the purchasing centres to the factory gate, which is roughtly 16 per cent of the total cost (Rs. 5. 25), does not at all represent the correct transport cost which is incurred by a sugar mill in transporting sugarcane from the purchasing centre to factory gate. ( 23 ) IT is stated in paragraph 4 of the 2nd supplementary counter-affidavit that the sugar mills open sugar purchasing centres with a view to enhance their cane availability and sugar production and it results in enriching higher benefits through better free market sale of sugar. The statement in paragraph 8 of the same affidavit is that it is not mandatory and the factories are not obliged to open cane purchasing centres compulsorily. If there is no compulsion or legal obligation on the sugar mills to open cane purchasing centre, certainly they cannot claim that any amount incurred by them by way of transport cost of sugarcane from the purchasing centres be included in the manufacturing cost of sugar. Learned counsel for the petitioners has contended that the stand taken in the 2nd supplementary counter-affidavit is not correct and under the system prevailing in the State of U. P. , it is obligatory on the part of the sugar mill to open cane purchasing centre. ( 24 ) SECTION 15 of the U. P. Sugarcane (Regulation of Supply and Purchase) Act. 1953. empowers the Cane Commissioner to reserve or assign any area for the purpose of supply of sugarcane to a factory. Subsection (2) of the same Section lays down that where any area has been declared as reserved area for the factory, the occupier of such factory shall, if so directed by the Cane commissioner, purchase all the cane grown in that area which is offered for sale to the factory. A similar provision has been made under subsection (3) where an area has been declared as assigned area for a factory. Rule 22 of the U. P. Sugarcane (Regulation of Supply and Purchase)Rules, 1954. enumerates the factors which a Cane Commissioner may take into consideration while reserving or assigning an area to a factory and clause (b) thereof is--"facilities for transport of cane from the area". Rule 22 of the U. P. Sugarcane (Regulation of Supply and Purchase)Rules, 1954. enumerates the factors which a Cane Commissioner may take into consideration while reserving or assigning an area to a factory and clause (b) thereof is--"facilities for transport of cane from the area". This shows that the transport facilities provided by a factory is an important consideration for reserving or assigning an area in favour of a sugar factory. The U. P. Sugarcane Supply and Purchase Order, 1954 (for short, 1954 Order) has been made in exercise of powers conferred by Section 16 of the U. P. Sugarcane (Regulation of Supply and Purchase)Act. 1953. Sub-clauses (10) and (11) of clause 5 of this Order read as follows : " (10) The occupier of a factory shall alter the location of or establish or close a purchasing centre at a particular place for the supply of cane to the factory, if so directed by the Cane commissioner. (11) Save with the previous approval of the Cane Commissioner no occupier of a factory shall purchase cane consigned by a cane-grower by rail from a railway station where a purchasing centre has been established or has been ordered to be established under sub-clause (10 ).-" ( 25 ) THESE provisions show that the Cane Commissioner can direct to establish or close or alter the location of a purchasing centre at a particular place. Rule 38a of the Rules gives in detail the steps which have to be taken by a factory at every purchasing centre. Exercising powers under section 15 of the U. P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, and clause 6 (1) (b) of Sugarcane Control Order. 1966, the Cane Commissioner issues an order reserving areas for supply of Sugarcane to the sugar mills. A copy of the reservation order dated 25. 10. 1999 for Meerut range has been filed as Annexure-4 to the 2nd supplementary affidavit. The order mentions the number and names of purchasing centres allotted or assigned to different sugar mills. A perusal of the order would show that the area has been reserved in favour of a sugar mill by mentioning the names of the purchasing centres and not by giving any territorial boundary or geographical area. The order mentions the number and names of purchasing centres allotted or assigned to different sugar mills. A perusal of the order would show that the area has been reserved in favour of a sugar mill by mentioning the names of the purchasing centres and not by giving any territorial boundary or geographical area. The order specifically mentions that all the sugar mills must start operating the purchasing centres reserved or assigned in their favour within one week of the opening of the mill, failing which not only the purchasing centres will be considered for allotment to other sugar mills but penal action will also be taken. Section 22 of the Act lays down that if any person contravenes any of the provisions of the Act or any rule or any order made thereunder, he shall be liable to imprisonment upto 6 months or to a fine not exceeding of rs. 5,000 or both, and in the case of continuing contravention to a further fine not exceeding Rs. 1,000, for each day during which the contravention continues. The statutory provisions and also the reservation order passed by the Cane Commissioner show in unmistakable terms that a sugar mill is legally bound to open and operate a purchasing centre as directed by the authorities and it has no choice in the matter. ( 26 ) THE Central Government has not fixed one price of the levy sugar for the whole country. The price determination order would show that the sugar mills have been grouped in 20 different zones, there being 3 zones in the State of U. P. itself and different zones have different prices, ranging from Rs. 1. 052. 35 to Rs. 1,190. 91 per quintal of sugar. This wide variation in prices must be on account of the fact that the various components involved in structure of cost must be different in different zones. The Government having accepted and determined the price on the principle that the factors involved in cost determinatton differ from zone to zone committed an error in proceeding on the basis that generally the growers in the country themselves transport the Sugarcane to the factory when the facts and material on record show that in west U. P. alone, nearly half of the total quantity of sugarcane crushed is transported by the sugar mills themselves. Therefore, the determination of price of levy sugar by the Central Government suffers from an error as an essential component of "manufacturing cost" was omitted from consideration on a wrong premise. ( 27 ) SRI Shanti Bhushan has next submitted that as per the last B. I. C. P. report, negative adjustment on account of realisation of molasses was made on the basis of an all-India average by applying a uniform factor of 44 per cent of molasses realisation. However, the C. A. B. has recommended different factors for different factories for different zones ranging from 41 per cent in the case of Maharashtra Central to 78 per cent in rest of Karnataka and 50 per cent for west of u. P. zone. The Central Government accordingly made negative adjustment of Rs. 74 per quintal from the price of levy sugar on the basis of realisation from molasses which had been valued at rs. 132 per quintal. Learned counsel submitted that as was being done in the past, a uniform all-India average of 44 per cent of molasses realisation should have been accepted and on the basis of the said figure the negative adjustment in the price of levy sugar should have been only rs. 26. 65 per quintal. The contention raised has no substance. If in the process of making sugar, some bye-products are also produced which have a market value, proper allowance for the same has also to be made in order to determine the price of levy sugar. It is averred in paragraph 14 of the counter-affidavit that the B. I. C. P. in its report of 1994 had recommended negative adjustment of molasses on zonal basis. However, in its report of 1997 recommended the negative adjustment on all-India basis instead of zonal basis. In this connection, many representations were received from the ap bodies and the matter was referred back to the B. I. C. P, with a request to suggest/recommend zonal negative adjustment factors for molasses sales realisation but it turned down the request. The C. A. B. in the report of February, 2000, has recommended zonal negative adjustment factors for molasses sales realisation. ( 28 ) THE determination of levy price on the basis of zones has been found to be more practicable and has been upheld by the Supreme Court in Anakapalle, Panipat and Sri Sitaram Sugar company (supra ). The C. A. B. in the report of February, 2000, has recommended zonal negative adjustment factors for molasses sales realisation. ( 28 ) THE determination of levy price on the basis of zones has been found to be more practicable and has been upheld by the Supreme Court in Anakapalle, Panipat and Sri Sitaram Sugar company (supra ). The fixation of price separately for each sugar mill was not found to be workable. The petitioners cannot blow hot and cold together and now contend that insofar as material relevant to negative adjustment of molasses is concerned it should be done uniformly on all-India basis. The production of molasses varies from season to season, area to area and period to period. Molasses have been completely decontrolled in U. P. from 7. 2. 1998 and its price also varies due to variety of reasons. Therefore, it is not possible to have uniform All-India figure for negative adjustment of molasses. The claim made by the petitioners that the negative adjustment of molasses should be made on the basis of All-India average has no substance and must be rejected. ( 29 ) AT this stage it is necessary to notice another submission of Sri Sudhir Chandra, learned senior counsel who has also appeared in the connected writ petitions that the C. A. B. has committed a clerical error in taking a factor of 56 percent meaning thereby that 56 tonnes of molasses were produced for every 100 tonnes of sugar produced. It is averred in paragraph 18 of the writ petition that sugar production in base year 1997-98 was 14. 41 lakh tonnes and the production of molasses was 6. 62 lakh tonnes and, consequently, the factor for negative adjustment should have been 46 per cent and not 56 per cent as taken by the C. A. B. No specific reply of this averment in the writ petition has been given in the counter-affidavit. It is not clear whether the production figures of 1997-98 were taken into consideration for determining the price of levy sugar for season 1999-2000. We do not want to express any opinion regarding the correctness of the figures mentioned in paragraph 18 of the writ petition. It is not clear whether the production figures of 1997-98 were taken into consideration for determining the price of levy sugar for season 1999-2000. We do not want to express any opinion regarding the correctness of the figures mentioned in paragraph 18 of the writ petition. Since we are directing the respondents to issue a revised notification, the concerned authorities may also look into the aforesaid grievance of the petitioners that an arithmetical mistake has been committed in arriving at the factor for negative adjustment due to molasses production. ( 30 ) LEARNED counsel for the petitioners has also contended that previously B. I. C. P. had never made by any negative adjustment on account of bagasse and pressmud as the former is used as fuel in the sugar factories and the latter is given free to the sugarcane growers. It is urged that c. A. B. for the first time has made negative adjustment on account of these articles and has thereby depressed the cost of levy sugar by Rs. 10. 38 per quintal, which is not proper. The Stand of the Central Government is that as per the accepted accounting principles any income realised from the sale of bye-product scrap generated in the process of manufacturing the main product, a negative adjustment to that extent is made to arrive at the "net cost" of production of the main product. Accordingly, the C. A. B. recommended the negative adjustment in the conversion cost relating to realisable supplies of bagasse and pressmud based on the actual cost data submitted by the sugar unit. The petitioners do not dispute that bagasse and pressmud are produced in the process of manufacturing sugar. They also do not dispute that some quantity of surplus bagasse is sold by few factories. Pressmud is used as manure and has a marketable value. If the petitioners give pressmud free of cost to the cane growers, they cannot, as a matter of right, claim that no negative adjustment for its value can be made. If the petitioners want to earn goodwill of the cane grower by doing an act of charity, they certainly cannot ask the government to compensate them for their said Act. If the petitioners give pressmud free of cost to the cane growers, they cannot, as a matter of right, claim that no negative adjustment for its value can be made. If the petitioners want to earn goodwill of the cane grower by doing an act of charity, they certainly cannot ask the government to compensate them for their said Act. In paragraph 19 of the rejoinder-affidavit, certain portion of the report of the B. I. C. P. has been extracted wherein it is mentioned that bagasse is used for co-generation of power and for paper industry and that some factories had managed to sell pressmud. No convincing reason has been given by the B. I. C. P. for not making any negative adjustment on account of these bye-products. We, therefore, do not find any substance in the contention of the petitioners that C. A. B. committed any error in departing from the report of the B. I. C. P. for the earlier years and in making a negative adjustment in the cost of levy sugar on account of these factors. ( 31 ) Sri Shanti Bhushan lastly urged that in the inquiry conducted by B. I. C. P. , it had allowed post-tax return of 15 per cent which was accepted by the Government but the C. A. B. has reduced the return to 12 per cent on the capital employed and, therefore, the factor enumerated in clause (d) of sub-section (3c) has not been properly taken into consideration. It is averred in paragraph 17 of the counter-affidavit that in all previous cost studies till 1994 a post-tax return of 12 per cent was allowed. This was enhanced to 15 per cent in the last study of B. I. C. P. in January, 1997, in view of the then prevailing high rate of interest. The interest rates have considerably gone down in the subsequent period and are on declining trend. In view of decline in the rate of interest, the C. A. B. considered a post-tax return of 12 per cent as reasonable. The C. A. B. assessed working capital requirement and on its basis recommended post-tax return of 12 per cent. The interest rates have considerably gone down in the subsequent period and are on declining trend. In view of decline in the rate of interest, the C. A. B. considered a post-tax return of 12 per cent as reasonable. The C. A. B. assessed working capital requirement and on its basis recommended post-tax return of 12 per cent. Learned counsel has not been able to show that there is any fundamental error in the approach of C. A. B. It is important to note that in all previous cost studies till 1994 a post-tax return of 12 per cent was considered proper which had been accepted by the Government. It is only in the interim period when the interest rates had gone very high that the B. I. C. P. had recommended a post-tax return of 15 per cent in 1997 having regard to the prevailing market rate of interest. The petitioners do not dispute that since then the rate of interest has fallen and credit having become cheaper the average working capital requirement would also go down. Therefore, the C. A. B. rightly recommended the post-tax return of 12 per cent which has been accepted by the Government. What should be the precise post-tax return in an industry is a matter for the experts to determine. No such ground has been made out on which this Court may interfere under Article 226 of the Constitution on a matter pertaining to "reasonable return on the capital employed. " ( 32 ) NO other point was urged. ( 33 ) FOR the reasons mentioned above, the writ petition is partly allowed. A writ of mandamus is issued commanding respondent Nos. 1 and 2 to issue a revised notification after taking into consideration additional cane price which has been paid to the cane growers in accordance with clause 5a of the Sugarcane (Control) Order, 1966, and the cost incurred by the sugar mills in transporting sugarcane from the purchasing centres to the factory gate. If any arithmetical mistake has crept in while making a negative adjustment for the production of molasses, the same be re-determined after taking into account the correct figures regarding production of molasses and sugar. The revised notification shall be issued expeditiously, preferably within two months of presentation of a certified copy of the order before the appropriate authority of respondent No. 1. .