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2021 DIGILAW 272 (AP)

Oil Palm Developers and Processors Association v. State of Andhra Pradesh

2021-04-23

D.V.S.S.SOMAYAJULU

body2021
ORDER : 1. This writ petition is filed for the following reliefs : “to issue a writ or order or direction more particularly one in the nature of Writ of Mandamus or any other appropriate Writ declaring the G.O.RT.No.22 dated 19.01.2021 issued by the 1st Respondent fixing the formula for the pricing of Oil Palm Fresh Fruit Bunches (FFBs) as arbitrary, illegal, void and contrary to the Judgment passed in W.P.No.9376 of 2015 by the Hon’ble High Court dated 15.12.2015 and the provisions of Andhra Pradesh Oil Palm Regulation of Production and Processing Act, 1993 (hereinafter referred to ‘the Act’) and rules there under besides violating the petitioners rights guaranteed under Articles 14 and 19(1)(g) of the Constitution of India and consequently direct the 1st Respondent to re-fix the FFBs pricing formula for the period November, 2020 to October 2021 (oil year) by taking OER of 16.08% (Pedavegi) in terms of CACP Report and pass….” 2. This Court has heard Sri B.Adinarayana Rao, learned senior counsel for Sri Challa Guna Ranjan, the Government Pleader for Agriculture appearing for respondent Nos.1 and 2, Additional Solicitor General for respondent No.4 and Sri M.S.Prasad, senior counsel for the unofficial respondents. 3. The issue in this case relates to the fixation of price by the State for the Oil Palm Fresh Fruit Bunches (FFB) from which palm oil is extracted. The following facts are not in dispute: (1) The relevant statue applicable to the facts of the case is the Andhra Pradesh Oil Palm (Regulation of Production and Processing) Act, 1993 (for short ‘the Act’). In this Act, section 13 is the important for this case. The two clauses of section 13 of the Act are reproduced hereunder: Section 13. Power to fix prices (1) The Government may on their own fix the minimum price of Oil Palm FFBs or may authorize the Oil Palm Commissioner to do so, subject to such guidelines as they may give in that regard from time to time. (2) Where the Oil Palm Commissioner is authorized to fix the prices of Oil Palm FFBs to be purchased by the factory, he shall declare at such intervals as may be directed by the Government the minimum price at which the Oil Palm FFBs be purchased by the factories. 4. (2) Where the Oil Palm Commissioner is authorized to fix the prices of Oil Palm FFBs to be purchased by the factory, he shall declare at such intervals as may be directed by the Government the minimum price at which the Oil Palm FFBs be purchased by the factories. 4. In addition, section 11 of the Act states that the State Government shall have the power to declare a particular area as the factory zone for the purpose of supply of fresh oil palm fruit bunches to the factories. Under section 11(2) of the Act, once a factory zone is established, all the farmers (oil palm growers) of that area shall supply their fruit bunches from their plantations to the factory. The factory is also under an obligation to buy the oil palm fresh fruit bunches. There is no dispute about this position vis a vis the Act. (2) It is also important to note that there are two State owned units: one in Pedavegi in the State of Andhra Pradesh and the other at Aswaraopet in Telangana. (3) The Government of India has also clarified by letter dated 07.12.2014 that the State Government is free to determine the price and take its own independent decisions basing on their own formula also. Even after the present writ petition is filed, the Government of India clarified that its formula is purely recommendatory in nature and that the State/Government of Andhra Pradesh must take its own decision whether to follow the recommendations or to evolve their own formula. 5. Apart from this, the law on the subject with regard to price fixation is also very clear. The Hon’ble Supreme Court of India in the case of Shri Sitaram Sugar Co. Ltd., v. Union of India, 1990 (3) SCC 223 held as follows in para 45: 45. Price fixation is in the nature of a legislative action even when it is based on objective criteria founded on relevant material. No rule of natural justice is applicable to any such order. It is nevertheless imperative that the action of the authority should 'be inspired by reason. Saraswati Industrial Syndicate Ltd., MANU/SC/0075/1974: [1975]1SCR956. The Government cannot fix any arbitrary price. It cannot fix prices on extraneous considerations: Renusagar, (supra).” 6. No rule of natural justice is applicable to any such order. It is nevertheless imperative that the action of the authority should 'be inspired by reason. Saraswati Industrial Syndicate Ltd., MANU/SC/0075/1974: [1975]1SCR956. The Government cannot fix any arbitrary price. It cannot fix prices on extraneous considerations: Renusagar, (supra).” 6. Paras 45 to 51 of this judgment deal with the entire issue and it is clearly laid down by the Hon’ble Supreme Court that price fixation is in the nature of a legislative action. However, on the issue of judicial review of this action, the Hon’ble Supreme Court held as follows: “45. Judicial review is not concerned with matters of economic policy. The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The Court does not supplant the "feel of the expert" by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land. As stated by Jagannatha Shetty, J. in M/s. Gupta Sugar Works, (supra): The Court does not act like a chartered accountant nor acts like an income tax officer. The court is not concerned with any individual case or any particular problem. The court only examines whether the price determined was with due regard to considerations provided by the statute. And whether extraneous matters have been excluded from determination.” 7. To a similar effect is the judgment of the Hon’ble Supreme Court of India in Pallavi Refractories v. Singareni Collieries Company Limited, 2005 (2) SCC 227 . They cited with approval the earlier judgments and held as follows in para 14: “14. A Constitution Bench of this Court in Shri Sita Ram Sugar Co. Ltd. v. Union of India MANU/SC/0249/1990 : : [1990]1 SCR 909 has held that in judicial review the Court is not concerned with the matters of economic policy. The Court does not substitute its judgment for that of the Legislature or its agent as to the matters within the province of either. Ltd. v. Union of India MANU/SC/0249/1990 : : [1990]1 SCR 909 has held that in judicial review the Court is not concerned with the matters of economic policy. The Court does not substitute its judgment for that of the Legislature or its agent as to the matters within the province of either. The Legislature while delegating the powers to its agent may empower the agent to make findings of fact which are conclusive provided, such findings satisfy the test of reasonableness. In all such cases, the judicial enquiry is confined to the question whether the findings of facts are reasonably based on evidence and whether such findings are consistent with the laws of the land. The Court only examines whether the prices determined was with due regard to the provisions of the Statute and whether extraneous matters have been excluded while making such determination. It was further observed that price fixation is not within the province of the Courts. Judicial function in respect of such matters stands exhausted once it is found that the authority empowered to fix the price has reached the conclusion on rational basis.” 8. These facts and the law are set out at the very out set to highlight the fact that price fixation is essentially a legislative function of the Government and that this Court has a very limited role in the matter, due to its inherent lack of technical, economic and other expertise. Further as per the settled law on the subject, this Court can look into the decision making process and can only see if the decision was arrived at on the basis of some material or is based on extraneous considerations or on the basis of material which is not relevant. 9. The impugned order in this case was issued on 19.01.2021 vide G.O.Ms.No.22 dated 19.01.2021. 9. The impugned order in this case was issued on 19.01.2021 vide G.O.Ms.No.22 dated 19.01.2021. Paras 2 to 4 of this order are reproduced here under : “In the references 1st and 3rd read above, the Commissioner of Horticulture, A.P., Guntur, has informed the pricing formula for the Fresh Fruit Bunches for the Oil Year 2020-21 i.e., from November 2020 to October 2021, based on the OER% and Nuts% for the Oil year 2019-20, furnished by the AP Oilfed, as under:- “12.10 percent of net Crude Palm Oil (CPO) weighted average price realized by the APOILFED, Pedavegi Unit (Based on the actual OER of 16.08% recovered for the Oil Year 2019-20 by the APOILFED Pedavegi Unit) Plus 75.25 percent on 10.26% recovery of Palm Nuts weighted average price realized by APOILFED”. 3. The Commissioner of Horticulture, A.P., Guntur has requested to take necessary action for finalization of Price formula for the Oil year 2020-21 i.e., from November 2020 to October 2021. 4. Government after careful examination of the matter, hereby fix the Oil Extraction Ratio percentage (OER%) as 18.682% for the oil year 2020-21 i.e., from November 2020 to October 2021, so as to avoid loss to the farmer as well as to stop cross purchase of FFB by oil processing units in the state. 10. Against this back drop of the law and the facts, the submission of the learned counsel are being summarized hereunder: 11. For the petitioner, Sri B.Adinarayana Rao, learned senior counsel appeared and argued the matter at length. It is his contention that the fixation of the price is contrary to the order of the combined high Court in WP.No.9376 of 2015 and also contrary to the procedure which was decided in a meeting held in December, 2015. He argues that the first respondent had arbitrarily fixed the Oil Extraction Ratio (OER) at 18.682%. He contends that in the earlier years, this OER was based upon the Pedavegi unit of Andhra Pradesh Oilfed. It is argued that the fixation of price should be in accordance with the CACEO and the OER 16.08% of Pedavegi. He also relies upon the Government of India memo dated 13.08.2013 to argue that the OER should be determined as per the actual oil content extracted in the past by the processing industry. It is argued that the fixation of price should be in accordance with the CACEO and the OER 16.08% of Pedavegi. He also relies upon the Government of India memo dated 13.08.2013 to argue that the OER should be determined as per the actual oil content extracted in the past by the processing industry. Relying upon the expert committee report called the CACP report of January, 2012, the learned senior counsel argues that it is clearly laid down in this report that till the testing centers or other scientific mechanism to determine the OER is in place, the experts are inclined to continue with OER 18%. He also draws the attention of this Court to the minutes of the meeting dated 21.12.2015 and points out that the oil palm price fixation committee met on 21.03.2018 under the Chairmanship of the Minister and recorded their deliberations in the minutes which are filed by the learned Government Pleader. Learned senior counsel points out that in para 2 of the recorded minutes, it was decided to get the fresh fruit bunches from Andhra Pradesh processed at the Telangana State Oil Food Unit at Aswaraopeta and vice versa to determine the correct OER. Learned senior counsel points out that in order to eliminate any differences between the conclusions of oil extraction from fresh fruit bunches, it was decided to test the same at the Pedavegi unit which is in Andhra Pradesh and the same crop/bunch was also to be processed at Telangana State Unit at Aswaraopeta. Learned senior counsel submitted that this was decided upon in order to arrive at a scientific basis for the price fixation. However, by relying upon the subsequent letters which are filed by the learned Government Pleader and in particular the letter dated 17.06.2018 addressed by the Collector of West Godavari, the learned senior counsel submits that although fresh fruit bunches were collected from Andhra area and were sent for processing into Telangana (Aswaraopeta) the vice versa was not done. Therefore, he submits that the respondents cannot rely upon the data said to have been obtained from this processing at Aswaraopeta to fix the price. 12. He also draws the attention of this Court to the minutes dated 21.12.2015 of the meeting chaired by the Hon’ble Minister for Agriculture in which it was decided that with effect from 2016-17, the OER obtained at Pedavegi alone will be considered. 12. He also draws the attention of this Court to the minutes dated 21.12.2015 of the meeting chaired by the Hon’ble Minister for Agriculture in which it was decided that with effect from 2016-17, the OER obtained at Pedavegi alone will be considered. Relying on this minutes, learned counsel submits that it was decided with effect from 2016-17, the OER percentage of the Pedavegi alone is to be considered. He points out that is the reason why the prayer is made in these lines. He also disagrees with the States’ reliance on the testing conducted in Aswaraopeta and submits unless the minutes are followed in their entirety, it cannot be said that the percentages are correct. Relying upon the judgment of the learned single Judge reported in Oil Palm Developers and Processors Association v. State of Andhra Pradesh, MANU/AP/0752/2015 , the learned senior counsel argues that the learned single Judge noticed that the OER ratio/percentage varies from one garden to another, the efficiency of the processing mill, climatic parameters, care of the machinery, control of spillage etc. (para 48). He also relies upon para 49 of this judgment to argue that the OER prevalent in one State alone should be taken into consideration while fixing the oil palm FFB and not the OER of a unit in a different State. Learned senior counsel submits that these factors which have a very heavy bearing on the OER were ignored by this State. 13. In reply to this, learned Government Pleader for Agriculture argues that the present decision is a correct decision taken after considering all the facts. According to him, in the year 2012 itself basing on the CACP report etc., the Government of India issued directions dated 13.08.2013 fixing OER at 18%. He also relies upon the CACP report to argue that the OER is established at 18% as per this report. He draws the attention of this Court to the minutes of the meeting dated 21.03.2018. He points out that even after the 2015 meeting, subsequent committee meetings were held to determine the price. In particular he relies upon the deliberations of a meeting held on 21.03.2018. It is his contention that this was a wide ranging meeting including the farmers, Government and also the representatives of the oil palm extraction industry. He points out that even after the 2015 meeting, subsequent committee meetings were held to determine the price. In particular he relies upon the deliberations of a meeting held on 21.03.2018. It is his contention that this was a wide ranging meeting including the farmers, Government and also the representatives of the oil palm extraction industry. In order to arrive at a conclusion about the OER, which is varying between the A.P. Unit (Pedavegi and the Aswaraopeta unit in Telangana a via media is sought to be achieved. Basing on his counter and the other documents, he argues that the unit at Pedavegi is an old unit and is not giving proper results. Therefore, it was decided to collect fresh fruit bunches from the Andhra area and get them processed both at Pedavegi and also in Aswaraopeta in Telangana. However, as the State of Telangana refused to agree with the vice versa proposal, he submits that the State had no option to go ahead with the processing of the fruit bunches from Andhra in Telangana. He points out that even in the minutes dated 05.07.2018 that the farmers were demanding for 18.5% OER and that it was also agreed that the unit at Pedavegi had to be modernized. 14. Learned Government Pleader therefore contends that in view of the circumstances prevalent, namely, the refusal of the Telangana Government etc., the only rational way was to get the fruits from Andhra Pradesh processed at the Aswaraopeta unit and adopt the results for fixing the price. He points out that this meeting was held in 2018 and hence, falling back on the Pedavegi unit is not really called for. 15. Relying upon the case law that is filed by him, he argues that price fixation is a purely legislative function and that the Court with its limited technical expertise should leave the decision to the experts. He points out that there is a rational basis for the price fixation and it is neither arbitrary nor incorrect. As far as the judgment of the learned single Judge is concerned, the learned Government Pleader points out that it was for a particular year and the main issue involved in the case decided in 2015 was about the using the price within the geographical boundaries of a State alone. As far as the judgment of the learned single Judge is concerned, the learned Government Pleader points out that it was for a particular year and the main issue involved in the case decided in 2015 was about the using the price within the geographical boundaries of a State alone. Hence, he states that it cannot be taken as a binding precedent and also argues that the order of the learned single Judge is under challenge. 16. Sri M.S.Prasad, learned senior counsel argues on behalf of the newly added respondents. He also supports the arguments of the learned Government Pleader in all aspects and brings to the notice of this Court that the CACP report itself suggested a OER of 18.55% till a scientific method is involved. This was highlighted even in the application filed by them to implead (IA.No.4 ). Learned senior counsel submits that despite the report of CACP, neither the Government nor the industry has established a NFFB testing center. 17. In these circumstances, the learned senior counsel submits that the method adopted in this case is correct. He also argues that the petitioners are getting a very high OER that; they are purchasing their fruits out side the allotted area and are avoiding to pay the proper price to the farmers. He points out that geographically there is not much difference between the Pedavegi factory and the Aswaraopeta area which are just across the geographical border. Relying upon the copies of Government Orders issued by the Telangana Government, the learned senior counsel submits that the proforma of the agreement between the petitioners and the Telangana Government clearly mentions in clause 18 that the OER is 18.5% in that oil year or the actual OER generated whichever is higher. Hence, learned senior counsel argues that this is not a case in which the Court should interfere and that the interest of the farmers also should be protected. CONSIDERATION BY THE COURT: 18. This Court after considering all the submissions has to agree that the issue involved in this case is essentially about the fixation of price. As per the settled law on the subject, it is a legislative function. This is not a quasi judicial or other function which may require a personal hearing etc., before a price is fixed. This Court after considering all the submissions has to agree that the issue involved in this case is essentially about the fixation of price. As per the settled law on the subject, it is a legislative function. This is not a quasi judicial or other function which may require a personal hearing etc., before a price is fixed. In view of the settled law on the subject, the rules of natural justice are not really applicable in the facts and circumstances of this case. The decision making process alone can be examined by this Court and that too within certain narrow parameters. 19. The counter filed by the Government Pleader time and again asserts that the Pedavegi unit is not really efficient because of its age and other factors. This is reiterated more than once in the counter. Along with their rejoinder, the petitioners have filed the minutes of the meeting dated 05.07.2018 held at Pedavegi, West Godavari District. One of the issues in this meeting was about the variation in the OER. It is noted that the FFB processed at Aswaraopeta is 18.55.%. It is also noted in the minutes that the modernization of the Pedavegi Unit is necessary to meet the OER. Serious concern was also expressed on the continuous realization of low OER at the Pedavegi unit. Lastly, the meeting concluded by recording the need for improving the OER percentage at the Pedavegi unit. 20. As far as the need for a scientific formula is concerned, as rightly pointed out by the learned senior counsel for the respondents, despite the passage of time, steps are not been taken to establish FFB testing centers in each oil palm cultivation area. It is also noted till the testing center or any other scientific mechanism is evolved to determine OER, the CACP recommended that the current OER should be at 18%. 21. In this case also, there was a meeting between the parties on 21.03.2018. In this meeting which was for fixation of the price, it was decided to take up a study by processing the FFB collected from Andhra area in the Telangana unit and also vice versa. Therefore, the fruit bunches from one area were agreed to be tested in both the Andhra and Telangana units. However, this was not completely feasible/possible as the Telangana Government/unit refused to agree for the same. Therefore, the fruit bunches from one area were agreed to be tested in both the Andhra and Telangana units. However, this was not completely feasible/possible as the Telangana Government/unit refused to agree for the same. The Telangana State Cooperative Oil Seeds Growers Federation agreed to process the fresh fruit bunches from Andhra area at their unit but refused for the “vice versa”. The fresh fruit bunches were in fact processed in Telangana. The letter of the District Collector Eluru dated 17.06.2008 states as follows: “after processing 1014.88 metric tones of FFB at Aswaraopeta, the OER of 18.5% was realized. 22. The FFB was collected from companies in Andhra Pradesh. Three out of the present set of petitioners had sent their FFBs.After processing all these 1014 metric tones, 18.55% OER was realized. After this, another meeting was held in Pedavegi on 05.07.2018 wherein, it was noted once again that the FFBs processed at Telangana yielded an OER 18.55%. 23. As per the settled law on the subject, this Court has a very limited area in which it can interfere. It can only interfere if it comes to a conclusion that the impugned order is passed without any rational basis or by taking into consideration irrelevant material etc. It is also settled law that in areas that require technical knowledge, this Court should be very circumspect in its interference. These are best left to the experts. The two meetings referred to above dated 21.03.2018 and 05.07.2018 were meetings involving all the stakeholders. In the circumstances that were available, the parties decided to get the produce from the same area processed at two units. But processing was only possible at Aswaraopeta and it was not possible in Pedavegi. This was the best available method in the circumstances. This procedure cannot be called irrational also. The contention that the earlier practice cannot be given a go by is not acceptable by this Court. The parties decided to adopt a particular method. In this meeting of July, 2018, the farmers requested 18.55% to be fixed as the OER and in the impugned order the OER is fixed at 18.682% in order to avoid loss to the farmers. Admittedly, Pedavegi unit is not giving the correct OER. The machinery in this unit is out dated and the need for modernization of this machinery has been reiterated on more than one occasion . Admittedly, Pedavegi unit is not giving the correct OER. The machinery in this unit is out dated and the need for modernization of this machinery has been reiterated on more than one occasion . The CACP report indicates that 18% should be adopted. Therefore, this Court is of the opinion that if the OER achieved at Pedavegi is adopted, the farmers would sustain a loss since a lower OER percentage leads to greater losses for the farmers. 24. Hence, this Court is of the opinion that in the peculiar facts and circumstances of the case and as the available evidence shows that the respondents have adopted a reasonable method based upon certain tangible reasons, the action of the State is to be upheld. This Court is also of the opinion that after the meetings of 2018 falling back upon the OER of Pedavegi is not called for, as it is everyone's case that the Pedavegi unit is not giving proper results. 25. Lastly, the issue that survives for consideration is about the order of the learned single Judge reported in Oil Palm Developers and Processors Association (supra). The learned single Judge was considering certain factors which were before him and the question that was framed in the judgment is whether the OER should be fixed based upon OER achieved by the unit at Aswaraopeta in the State of Telangana and whether it could be used to fix the prices in the residuary State of Andhra Pradesh. Para 14 of this judgment makes this clear. In para 51, the learned single Judge held that it is impermissible to ignore the OER of the oil palm unit at Pedavegi and adopt the OER of the neighbouring State. This was the conclusion reached by the learned single Judge. It is also important to note that the issue before the learned single Judge was about the price fixation for the years 2014-2015. The present case is on a different footing altogether. After this judgment was pronounced in 2015, there were meetings wherein a solution was sought to be arrived at by getting the same bunches processed at both the units in Andhra and Telangana. This was the consensus evolved. The processing was only possible at Telangana and the vice versa was not possible. These facts make a fundamental difference to the applicability of the learned Single Judge’s decision to the present case. This was the consensus evolved. The processing was only possible at Telangana and the vice versa was not possible. These facts make a fundamental difference to the applicability of the learned Single Judge’s decision to the present case. A difference in one fact can also make a difference in the applicability of a decision to subsequent cases. Apart from this, it is also clear that this judgment of the learned single Judge is under challenge. Therefore, since the judgment pertains to a particular oil year and since the facts are peculiar to that case, this Court is of the opinion that the judgment passed in WP.No.9376 of 2015 cannot be the sole basis for determination of the price for the present year. 26. For all these reasons, the writ petition is dismissed. No order as to costs. 27. As a sequel, the miscellaneous applications, pending if any, shall stand dismissed.