JUDGMENT : - M.Katju, Rakesh Tiwari 1. THE petitioner Nos. 1 to 3 are Associations of sugar factories in U. P., and petitioner Nos. 4 to 36 are companies having sugar factories in U. P. They have challenged clause 3A of the Sugarcane (Control) Order, 1966 fixing the maximum rebate for transportation cost from the purchase centers to the sugar factories. 2. HEARD Shri Sudhir Chandra, learned Senior Advoate and Shri Tarun Agarwal for petitioners, Sri B. N. Singh for the Central Government and Shri P.M. N. Singh and Sri Ganga Singh for respondent No. 2. Respondents may file counter-affidavit within three weeks. List thereafter. This writ petition illustrates what happens in a country when the authorities override basic economic principles for political or other extraneous considerations. It is a sad state of affairs that U. P., which is potentially one of the richest States in India, is economically stagnating, and in fact even going downhill because industries in the State are closing down due to wrong policies and short-sightedness of the people at the helm of affairs in the State. 3. THIS petition relates to the sugar industry in U. P. regarding which a detailed news items in the Economic Times of 22.10.2002, appeared as follows : "The Sugar crisis that has gripped Maharashtra has now engulfed Uttar Pradesh, with mills fearing not only delayed crushing, but downright closure in the face of a huge glut in sugar stocks, abysmally low prices and disproportionately high cane prices for the fourth consecutive year. Sugar prices are expected to fall further after the festival season, once excess stocks are pushed into the market. 'By our rough estimates, if we close, our losses are around 6-7%, but if we operate despite the acutely adverse conditions, we are likely to incur losses totalling around 20-25%, thanks to the fact that politics rather than economics is allowed to run the industry," pointed out S. S. Majithia of Saraya Industries. Crushing is expected to be far lower than last season's quantity of 553 lakh tonnes. Last year, on a total production of 52.50 lakh tonnes in U. P., the loss is expected to be over Rs. 1,400 crores and millers point to excessive cane prices as the key culprit. Crushing is expected to be far lower than last season's quantity of 553 lakh tonnes. Last year, on a total production of 52.50 lakh tonnes in U. P., the loss is expected to be over Rs. 1,400 crores and millers point to excessive cane prices as the key culprit. As many as 18 factories have already been closed down in the State in the last three years and there have been no takers for 11 State run mills thus far. Eight more are on the anvil for closure now. Given the critical situation, sugar millers are now demanding that the Government should discard all plans of winding up the release mechanism, unless it also plans to do away with the support price for sugar." 4. WE are informed that 18 sugar mills in the State have already closed down and 11 are on the verge of closure. It is quite possible that other sugar industries may also follow suit if the present wrong policy is allowed to continue despite the fact that U. P. is one of the biggest sugarcane growing area in the country. As regard the present case, the controversy is regarding transport cost for transporting the sugarcane from the purchase centres to the sugar factories. In this connection, there is already a mandamus of this Court by a Division Bench of this Court in M/s. Shervani Syndicate Ltd. v. Union of India and others, on 10.7.1979 in Writ Petition No. 9383 of 1978 and other connected writ petitions in AIR 1979 All 394 (copy of which is Annexure-5 to the petition). In this judgment dated 10.7.1979, it was specifically observed that the cost of transportation charges has increased considerably during the last couple of years, and hence maintaining the rate of rebate at 32 paise per quintal appears to be arbitrary and unreasonable, and a direction was given to the Central Government to fix the rate of rebate allowable in case of sugarcane delivered at out-station purchasing centres at a rational and reasonable basis keeping in view the cost of transportation both in respect to sugarcane hauled by rail and road transport. The same view was reiterated in another Division Bench decision of this Court in a judgment, copy of which is Annexure-6 to the writ petition. 5. The same view was reiterated in another Division Bench decision of this Court in a judgment, copy of which is Annexure-6 to the writ petition. 5. DESPITE these two Division Bench judgments, it appears that the Central Government has not taken any action in the matter, and these decisions appear to have been totally flouted for reasons best known to the respondents. 6. IN the judgment which is Annexure-6 to the petition, it has been observed that the Central Government has found that Rs. 5.25 paise is the transportation cost for the year 1997-98. For the year 1998-99, it was Rs. 5.75 paise vide Annexure-7 to the petition. IN our opinion, the transport cost for subsequent years would be more considering the rise in the price of fuel, etc. IN para 17 of the petition, it is stated that the transport cost is in fact Rs. 6.90 per quintal. A statement of actual cost of transportation per quintal to the sugar factories is Annexure-4 to the petition. IN para 12 of the petition, it is mentioned that whereas from 1960 the statutory minimum price has increased from Rs. 4.343 to Rs. 64.50 per quintal, the transport charge has remained static at 32 paise per quintal. For the year 2002-2003, it is estimated to be Rs. 6 to Rs. 8 depending upon the distance of cane centers from the factory. IN para 13 to the writ petition, the petitioner has quoted from the report of the Tariff Commission which observed. "The quantum of rebate is said to have remained unchanged for a long time despite the increase in transport charges". In our prima facie opinion, the illusory and unrealistic transport cost fixed by the Central Government is eating away the financial base of the sugar industries, and if the sugar industries close down, everyone will be a loser, including the cane growers, workers in the factories, the Government, as well as the country as a whole. The action of the Central Government, in our prima facie opinion, is against the interest of the Nation and Society and Clause 3A of the Sugarcane Control Order is violative of Articles 14 and 19 (1) (g) of the Constitution, as it is wholly arbitrary. The action of the Central Government, in our prima facie opinion, is against the interest of the Nation and Society and Clause 3A of the Sugarcane Control Order is violative of Articles 14 and 19 (1) (g) of the Constitution, as it is wholly arbitrary. Price fixation by the Government must be reasonable so as to strike a balance between the interests of the sugar mills and that of the cane growers, and it cannot be done by seeing only the interest of the cane growers for political or other extraneous considerations. By killing the goose which lays the golden egg, we will be losing both the goose and the golden egg. 7. IN today newspapers (INdian Express and Pioneer), it has been reported that the Chairman of U. P. Sugar Mills Association, Mr. C. B. Patodia held a press conference on 23.10.2002, in which he said that the sugar mills of U. P. are not in a position even to pay the statutory minimum price to cane growers due to the slump in the sugar market. Against Rs. 1,400 per tonne cost of production of sugar, the present ruling price was Rs. 1,200 per tonne despite the festival season. He said that the sugar mills were incurring a loss of Rs. 200 to Rs. 350 per quintal on the production of sugar after paying the cane farmers their dues. On a total production of 52.50 lakh tonnes of sugar in U. P., the loss is expected to be over Rs. 1,400 crore. This colossal loss is due to the excessively high cane price fixed by the State Government. He further added that already 18 out of the 51 private mills in U. P. have been referred to the B.I.F.R. He stated that whereas cane price had increased by 35% in the last five years, the free sale sugar prices had decreased from Rs. 1,450 per quintal to Rs. 1,200 per quintal. He further added that the mismatch between the cane and sugar prices was the main cause of the financial loss being suffered by the mill owners. He said while the cane prices have remained at the same level in Maharashtra, Tamil Nadu, Karnataka and Punjab, those in U. P. have gone up. 8. 1,200 per quintal. He further added that the mismatch between the cane and sugar prices was the main cause of the financial loss being suffered by the mill owners. He said while the cane prices have remained at the same level in Maharashtra, Tamil Nadu, Karnataka and Punjab, those in U. P. have gone up. 8. ALL these figures clearly demonstrate that there is an acute crisis in the sugar industry in U. P. and if the problem is not tackled from the point of view economic principles but is continued to be tackled on political or other extraneous considerations the entire sugar industry in the State may close down and thus go the same way as the textile industry in the State. On the facts of the case, we pass an interim order that the petitioners shall be allowed to deduct a sum of Rs. 5.75 paise per quintal towards transportation charges from the statutory minimum price for the sugarcane purchased at the out centers till further orders.