averaging wide companyt disparities amongst producers of widely varying capacity.
Geographical zon ing, for the purpose of price fixation, they point out, is an irrational and discriminatory system of Published in the Gazette of India Extraordinary dated 28.11.1974 and 11.7.1975.
The mills were delighted to do so as they got very much enhanced receipts from their flee market sales.
464/77.
S. Nariman, K.K. Venugopal, A.K. Verma, D.N. Mishra and S. Kachawa for the intervener in W.P. No.
Having thus obtained much more cane, the mills produced much more sugar and sold 30 40 per cent of it in the free market.
With larger receipts they offered in the following season a higher price to the farmer the sugarcane grower who, in turn, grew and offered more cane.
In other words, the law of supply which had been held captive, as it were, was freed from bondage.
The Judgment of the Court was delivered by THOMMEN, J. The petitioners are owners of sugar mills operating in the State of Uttar Pradesh in areas classified for the purpose of determining the price of levy sugar as West and East Zones.
They challenge the validity of numberifi cations dated 28th November, 1974 and 11th July, 1975 Annexures 8 9 issued by the Central Government in exer cise of its power under sub section 3 C of section 3 of the Essential Commodities Act, 1955 Act No.
and were allowed to sell the balance of 40 per cent in the free market at say Rs.6 per kg.
10 of 1955 , as amended to date hereinafter referred to as the Act .
Uttar Pradesh was divided into three zones and Bihar into two.
Prices are determined with reference to the geographical cum agro economic companysiderations and the aver age companyt profiles of factories located in their respective zones.
Cost of manufacture of sugar depends on a number of factors, such as recoveries from the sugarcanes, duration of the crushing season, crushing capacity of the plant, the sugarcane price paid and the capital employed in the manufacture of sugar.
Each State for this purpose companystitutes a separate zone, while U.P. is divided into 3 zones and Bihar into 2 zones.
Such prices do number re flect the actual manufacturing companyt of sugar incurred by producers like the petitioners or secure to them reasonable returns on the capital employed by them.
The petitioners companytend that these orders are ultra vires the Act and violative of their fundamental fights as the prices of levy sugar have been determined arbitrarily with reference to the average companyt profiles of factories grouped together in zones without regard to their individual capacity and companyt characteristics.
The mills were asked to deliver to the public distribution system about 60 per cent of their output say at Rs.2 per Kg.
With a higher price offer from the mills, the cane growers brought more land under sugar cane, diverted land from other crops to cane, used more inputs, produced and delivered to the mills more cane and in fact diverted cane deliveries from the open pan system to the mill system.
