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Home > SC > Criminal Law > Essential Commodities Act > H.S.S.K. NIYAMI AND ORS. Vs. UNION OF INDIA AND ANR.



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H.S.S.K. NIYAMI AND ORS. Vs. UNION OF INDIA AND ANR.

Posted on 23 June 2009 by jyoti

Title

H.S.S.K. NIYAMI AND ORS. Vs. UNION OF INDIA AND ANR.



Coram

RAMASWAMY, K.



Act

Essential Commodities Act



Subject

The Sugar Inquiry Committee appointed by the Government
of India recommended five zones for the fixation of ex-
factory prices of sugar, including Zone No. 1 consisting of
factories in Maharashtra, North Mysore etc. Accepting the
recommendation, the Government of India issued notification
in GSR No. 463 dated March 24, 1966 and the factories were
specified in Schedules 2 & 3 annexed thereto. The appel-
lants' factories located in North Mysore, were included in
Zone No. 1.
The appellants filed writ petitions in the High Court
assailing the constitutional validity of Section 3(3C) of
the Essential Commodities Act, 1955 and the Notification
dated March 24, 1966, and praying for a direction to the
respondents to include the appellants' factories in Zone No.
2 consisting of South Mysore, South Andhra Pradesh and
Orissa and to fix the price at Rs. 161 per quintal for the
sugar manufactured by the appellants' factories. The writ
petitions were dismissed by the High Court.
In the appeals before this Court, on behalf of the
appellants it was contended that the appellants' factories
were part of the entire State as was notified preceding the
notification, that factors like price of sugarcane, taxes,
duties, sugar recovery percentage, labour charges, cost of
production or fair return to the produce were same or simi-
lar in the entire State but due to the notification, which
included the appellants in Zone No. 1, they were put to huge
losses, and that the appel-
lants were entitled to a notice and hearing before placing
them in Zone No. 1 and clubbing with other factories in the
State of Maharashtra, etc. was uneconomical and kept the
appellants under loss and therefore, it was violative of
principles of natural justice.
Dismissing the appeals, this Court,
HELD: 1. The Essential Commodities Act, 1955 having
received the protective umbrella of Article 31C of the
Constitution, read with 9th Schedule, Item No. 126, Section
3(3C) of the Act cannot be held to be ultra vires of the
fundamental rights enshrined under Article 19(1)(g) and
right to property under Article 19(1)(f) as was available in
the year 1968. Moreover, it is covered by a recent decision
of this Court in M/s. Shri Sitaram Sugar Company v. Union of
India & Ors., [1990] 3 SCC 223. Therefore, the point is no
longer resintegra. Section 3(3C) is constitutionally valid
and unassailable. [865G-H; 866A]
2.1 The fixation of the price and zoning are integral
scheme of the notification; without placing the factories in
the appropriate zone based on agro-climatic and other eco-
nomic considerations the proper price fixation cannot be
made. So, both the factors are part of the policy decision
by the government in exercise of the statutory powers. This
decision is based on the recommendation made by the Sugar
Commission consisting of experts in the field of agro-eco-
nomics who after exhaustive study and consideration of the
relevant material placed before it made the recommendation.
Thereby it assumes the character of legislative policy. It
does not concern itself with an individual case. Once it is
concluded that the zoning system is an integral part of the
price fixation of the sugar produced by the factories in a
particular zone, it is legislative in character and no
individual sugar factory is entitled to a notice and hearing
before placing the particular. factory or factories in a
particular zone. Moreover, the Sugar Commission heard the
persons desired to be heard and considered the representa-
tion and material produced. At the stage of notification,
the question of further representation or hearing does not
arise nor a feasible exercise. It is for the Government to
accept or reject or modify the recommendation made by the
Commission. [871A-C; 872D-E]
M/s. Shri Sitaram Sugar Company v. Union of India &
Ors., [1990] 3 SCC 223; Saraswati Industrial Syndicate Ltd.
etc. v. Union of India, [1975] 1 SCR 956; Prag Ice & Oil
Mills & Anr. etc. v. Union of India, [1978] 3 SCR 293; Laxmi
Khandsari etc. etc. v. State of U. P. & Ors., [1981] 3 SCR
92 and Union of India & Anr. v. Cynamide India
Ltd. & Anr., [1987] 2 SCC 720 at 734 & 735, relied on.
Anakapalle Coop. Agrl. & Industrial Society Ltd. etc.
etc. v. Union of India & Ors., [1973] 2 SCR 882, referred
to.
Joseph Beauharnais v. People of the State Illinois, 96
L.Ed. 919 at 930, referred to.
Thus, zoning is a legislative act and policy. The appel-
lants are not entitled to individual representation and
notice before placing them in a particular zone. [872E]
2.2 As regards right to hearing for fixation of prices,
fixation of price for Sugar is a legislative policy and
principles of natural justice would not apply. [867E]
M Is. Shri Sitaram Sugar Company v. Union of India &
Ors., [ 1990] 3 SCC 223, relied on.
2.3 Some loss may be caused to individual factory but
the price fixation cannot be made unit-wise and it is not
practicable to make unit as a base to fix the price or to
place in a particular zone. [872H]
Anakapalle Coop. Agrl. & Industrial Society Ltd. etc.
etc. v. Union of India & Ors., [1973] 2 SCR 882, relied on.
2.4 In an individual case of administrative action if no
counter affidavit is filed, an adverse inference can be
drawn and relief moulded as per given situation but this
Court cannot interfere with the legislative policy of zoning
particular factories merely because the State has omitted to
file counter affidavit denying the allegations of cost
structures and the consequential loss that the appellants
are being put to. [872G-F]



Citation

1990 AIR 2128, 1990( 3 )SCR 862, 1990( 4 )SCC 516, 1990( 2 )SCALE286 , 1990( 3 )JT 579



Head Notes

The Sugar Inquiry Committee appointed by the Government
of India recommended five zones for the fixation of ex-
factory prices of sugar, including Zone No. 1 consisting of
factories in Maharashtra, North Mysore etc. Accepting the
recommendation, the Government of India issued notification
in GSR No. 463 dated March 24, 1966 and the factories were
specified in Schedules 2 & 3 annexed thereto. The appel-
lants' factories located in North Mysore, were included in
Zone No. 1.
The appellants filed writ petitions in the High Court
assailing the constitutional validity of Section 3(3C) of
the Essential Commodities Act, 1955 and the Notification
dated March 24, 1966, and praying for a direction to the
respondents to include the appellants' factories in Zone No.
2 consisting of South Mysore, South Andhra Pradesh and
Orissa and to fix the price at Rs. 161 per quintal for the
sugar manufactured by the appellants' factories. The writ
petitions were dismissed by the High Court.
In the appeals before this Court, on behalf of the
appellants it was contended that the appellants' factories
were part of the entire State as was notified preceding the
notification, that factors like price of sugarcane, taxes,
duties, sugar recovery percentage, labour charges, cost of
production or fair return to the produce were same or simi-
lar in the entire State but due to the notification, which
included the appellants in Zone No. 1, they were put to huge
losses, and that the appel-
lants were entitled to a notice and hearing before placing
them in Zone No. 1 and clubbing with other factories in the
State of Maharashtra, etc. was uneconomical and kept the
appellants under loss and therefore, it was violative of
principles of natural justice.
Dismissing the appeals, this Court,
HELD: 1. The Essential Commodities Act, 1955 having
received the protective umbrella of Article 31C of the
Constitution, read with 9th Schedule, Item No. 126, Section
3(3C) of the Act cannot be held to be ultra vires of the
fundamental rights enshrined under Article 19(1)(g) and
right to property under Article 19(1)(f) as was available in
the year 1968. Moreover, it is covered by a recent decision
of this Court in M/s. Shri Sitaram Sugar Company v. Union of
India & Ors., [1990] 3 SCC 223. Therefore, the point is no
longer resintegra. Section 3(3C) is constitutionally valid
and unassailable. [865G-H; 866A]
2.1 The fixation of the price and zoning are integral
scheme of the notification; without placing the factories in
the appropriate zone based on agro-climatic and other eco-
nomic considerations the proper price fixation cannot be
made. So, both the factors are part of the policy decision
by the government in exercise of the statutory powers. This
decision is based on the recommendation made by the Sugar
Commission consisting of experts in the field of agro-eco-
nomics who after exhaustive study and consideration of the
relevant material placed before it made the recommendation.
Thereby it assumes the character of legislative policy. It
does not concern itself with an individual case. Once it is
concluded that the zoning system is an integral part of the
price fixation of the sugar produced by the factories in a
particular zone, it is legislative in character and no
individual sugar factory is entitled to a notice and hearing
before placing the particular. factory or factories in a
particular zone. Moreover, the Sugar Commission heard the
persons desired to be heard and considered the representa-
tion and material produced. At the stage of notification,
the question of further representation or hearing does not
arise nor a feasible exercise. It is for the Government to
accept or reject or modify the recommendation made by the
Commission. [871A-C; 872D-E]
M/s. Shri Sitaram Sugar Company v. Union of India &
Ors., [1990] 3 SCC 223; Saraswati Industrial Syndicate Ltd.
etc. v. Union of India, [1975] 1 SCR 956; Prag Ice & Oil
Mills & Anr. etc. v. Union of India, [1978] 3 SCR 293; Laxmi
Khandsari etc. etc. v. State of U. P. & Ors., [1981] 3 SCR
92 and Union of India & Anr. v. Cynamide India
Ltd. & Anr., [1987] 2 SCC 720 at 734 & 735, relied on.
Anakapalle Coop. Agrl. & Industrial Society Ltd. etc.
etc. v. Union of India & Ors., [1973] 2 SCR 882, referred
to.
Joseph Beauharnais v. People of the State Illinois, 96
L.Ed. 919 at 930, referred to.
Thus, zoning is a legislative act and policy. The appel-
lants are not entitled to individual representation and
notice before placing them in a particular zone. [872E]
2.2 As regards right to hearing for fixation of prices,
fixation of price for Sugar is a legislative policy and
principles of natural justice would not apply. [867E]
M Is. Shri Sitaram Sugar Company v. Union of India &
Ors., [ 1990] 3 SCC 223, relied on.
2.3 Some loss may be caused to individual factory but
the price fixation cannot be made unit-wise and it is not
practicable to make unit as a base to fix the price or to
place in a particular zone. [872H]
Anakapalle Coop. Agrl. & Industrial Society Ltd. etc.
etc. v. Union of India & Ors., [1973] 2 SCR 882, relied on.
2.4 In an individual case of administrative action if no
counter affidavit is filed, an adverse inference can be
drawn and relief moulded as per given situation but this
Court cannot interfere with the legislative policy of zoning
particular factories merely because the State has omitted to
file counter affidavit denying the allegations of cost
structures and the consequential loss that the appellants
are being put to. [872G-F]



Judgment Made On

21/08/1990

JUDGMENT:
CIVIL APPELLATE JURSIDICTION: Civil Appeal Nos. 154 &
155 of 1974.
From the Judgment and Order dated 19.4.1973 of the
Mysore High Court in W.P. Nos. 356 and 1215 of 1968.
S.S. Javeli and B.R. Agarwala for the Appellants.
N.S. Hegde, Anand Haksar and Mrs. Sushma Suri for the
Respondents.
865
The Judgment of the Court was delivered by
K. RAMASWAMY, J. These two appeals, on certificate under
Article 136 of the Constitution, are by two sugar factories
situated in Northern part of Mysore now Karnataka State. The
appellants filed writ petitions under Article 226 of the
Constitution in the High Court of Mysore at Bangalore as-
sailing the constitutional validity of Section 3(3C) of the
Essential Commodities Act, 1955 (In short 'the Act') and the
Notification dated March 24, 1966. It was prayed inter alia
that a writ or order in the nature of Mandamus be issued
directing the respondents to include the petitioners' facto-
ry in Zone No. 2 and to fix the price at Rs.161 per quintal
for the sugar manufactured by the petitioners' factory.
The Writ Petitions were dismissed by the High Court and
the appellants in these circumstances have approached this
Court challenging the Judgment of the High Court. The mate-
rial contentions raised by the appellants in the affidavit
and adumbrated in the grounds of appeal in this Court are
that the appellants' factories are part of the entire State
of Mysore (now Karnataka) as was notified preceding the
impugned notification. The factors like price of sugarcane,
taxes, duties, sugar recovery percentage, labour charges,
cost of production or fair return to the produce are same or
similar in the entire State but due to the impugned notifi-
cation by including in Zone No. 1 the appellants are put to
huge losses.
The country was divided into five zones. Zone No. 1
consists of all the factories in Maharashtra, Gujarat, North
Mysore, North Andhra Pradesh, Zone No. 2 consists of all the
factories in Orissa, rest of Andhra Pradesh, South Mysore
(rest of Mysore), Madras, Pondicherry and Kerala. On account
thereof the appellants are stated to be subjected to heavy
losses. The details have been mentioned in the affidavit and
the grounds of appeal but for the purpose of disposal of the
point involved in the appeals, it is not necessary to adum-
brate all the material particulars in that regard. The
contention that Section 3(3C) of the Act is ultra vires of
their fundamental rights enshrined under Article 19(1)(g)
and right to property under Article 19(1)(f) as was avail-
able in the year 1968 (but since deleted under Constitution
44th Amendment Act) is no longer available. The Act received
the protective umbrella of Article 31C of the Constitution
read with 9th Schedule as it has been included therein as
item No. 126. It is, thereby, immuned from attack on that
score. Moreover it is covered by a recent constitution bench
judgment of this Court in M/s. Shri Sitaram Sugar
866
Company v. Union of India & Ors., [1990] 3 SCC 223 = [1990]
1 Scale 475. Therefore, the point is no longer res integra.
Section 3(3C) is constitutionally valid and unassailable.
The next contention raised in the High Court as well as
reiterated before us is that the appellants are entitled to
a notice and hearing before placing them in Zone No. 1.
Clubbing with other factories in the State of Maharashtra
etc. is uneconomical and kept the appellants under constant
loss. Therefore, it is violative of the principles of natu-
ral justice. To appreciate the contention it is necessary to
look into the notification issued. The Government of India,
in exercise of the power under section 3 of the Commission
of Inquiry Act, 1952 appointed "Sugar Inquiry Commission" by
notification No. S.O. 2670 dated August 3, 1964 which con-
sists of Dr. S.R. Sen, the Advisor and Addl. Secretary to
Government of India, Planning Commission as Chairman and
four other economic experts as members of the Commission to
inquire into (a) the determination of the prices and the
system of distribution of sugar and (b) the policy regarding
licensing of new sugar factories or the expansion of exist-
ing sugar factories. They made a detailed inquiry, after
examining the persons connected with industries including
many an owner of the sugar factories or representatives of
the Associations of the sugar factories and cooperative
Sugar Factories' Associations etc. In paragraph 4 they
discussed the proliferation of zones as against the four
zones recommended by the previous Tariff Commission. The
representatives of the State Government and the sugar indus-
try submitted their detailed memoranda on the various prob-
lems including zoning and cost schedules. The Commission
made indepth enquiry and in paragraph 4.3, it was stated
that as against the four zones recommended by the Tariff
Commission, Government has gradually increased the number to
twenty-two. The Commission has stated each zone should be
large enough to ensure that the principle of price fixation
does not degenerate into a 'cost plus' basis as the latter
discourages efficiency and perpetuates inefficiency. In
paragraph 4.4, it was stated that the Sugarcane Breeding
Institute, Coimbatore has divided the whole country into
five regions on the basis of agro-climatic and other consid-
erations details of which were given in Chapter IV: Region
(1) consists of Gujarat, Maharashtra, North Mysore, North
Andhra Pradesh and South Madhya Pradesh. In paragraph 4.6,
it was stated that apart from considerations relating to
agro-climatic factors and comparative economic advantage, it
is worthwhile to consider the variations in duration of
crushing and sugar recovery also. On this basis some revi-
sion in the zones, as suggested by the Coimbatore Institute
appears to be necessary.
867
In paragraph 4.7, it was stated that "on the basis of
the above considerations, the Commission recommended five
zones for the purpose of fixation of ex-factory price of
sugar." Zone No. 1 as stated earlier, which is relevant for
the purpose of these appeals, consists of Factories in Maha-
rashtra, North Mysore etc. Accepting the recommendation, the
Government of India in exercise of the powers conferred upon
them by sub-rule (2) of rule 125 of the Defence of India
Rules, 1962 and clause 6 of the Sugar (Control) Order, 1963
issued under section 3(3C) of the Act and in supersession of
the notification of the Government of India, Notification
No. GSR 1145 dated August 6, 1965 issued the impugned noti-
fication in GSR No. 463 dated March 24, 1966 and the facto-
ries were specified in Schedules 2 & 3 annexed. The notifi-
cation has been issued and was published in the Gazette of
India for the purpose of fixing prices in column 2 of Sched-
ule I annexed hereto as the maximum ex-factory price. Thus,
that the appellants' factories came to be included in Zone
No. 1 as recommended by the expert, Economic Commission
appointed by the Government of India. The notification as
stated earlier is a statutory notification issued in exer-
cise of the powers referred to herein before.
The question, therefore, is whether the appellants are
entitled to individual notices of representation and hearing
before placing them in Zone No. 1 and fixation of the
prices. As regards right to hearing for fixation of the
prices is concerned as stated earlier, it is concluded in.
M/s. Shri Sitaram Sugar Company's case. As regards the
zoning of the factories is concerned it is also based on the
reports submitted by the Commissions, consisting of the
economic experts and the Sugarcane Breeding Institute,
Coimbatore that too after considering the representations
made by the State Governments and also the sugar industry.
In paragraph 4 of M/s. Sitaram Sugar Company's case our
learned brother Thommen, J. speaking for the court has noted
that Mr Shanti Bhushan, learned counsel appearing on behalf
of some of the sugar factories conceded that the zoning is
valid but assailed price fixation contending that' as a
result of the zoning, the cost structure was arbitrary and
the classification offends Article 14. That was resisted by
Shri K.K. Venugopal, learned counsel appearing for Indian
Sugar Mills' Association and also counsel for cooperative
sugar factories and they supported the principles of zoning.
In the written submissions made by Shri Venugopal it is
noted by the Bench that as was seen during the course of
heating only two or three persons have come forward chal-
lenging zoning. There are 389 Sugar Factories in the country
and the present intervener has 166 members. Their Associa-
tions being National Federation of Cooperative Sugar Facto-
ries Ltd.,
868
has also intervened in these petitions and have adopted the
arguments of I.S.M.A. Hence almost the entire industry has
supported zoning and only a handful of people who also
factually are not high-cost units have opposed zoning.
In Anakapalle Coop. Agrl. & Industrial Society Ltd. etc,
etc. v, Union of India & Ors., [1973] 2 SCR 882, the facts
are that the Tariff Commission recommended the entire coun-
try to be divided into 15 zones and the levy sugar price was
fixed on the basis. The zoning system was attacked in that
case. While repelling the contention, Grover, J. speaking
for the Constitution Bench held that:
"It is somewhat difficult to accept the argument of those
who are opposed to the zonal system that the loss alleged to
have resulted to some of the sugar producers can be at-
tributed to the prices having been fixed zone-wise. For
instance, in the Punjab zone the crushing capacity of all
the factories is practically the same i.e. 1,000 tons per
day. The prices which were fixed by the Government were on
the basis of 67 days duration with a recovery of 8.75%. In
the case of Malwa Sugar Mills the actual duration was 95
days, the recovery being 8.78%. Ordinarily and in the normal
course profits should have been made by the said unit and it
should not have incurred losses. The reasons for incurring
losses can be many including mismanagement, lack of effi-
ciency and following a wrong investment policy which have
nothing to do with the zonal system."
and again at page 894 it is laid thus:
"The extreme position taken up on behalf of some of the
petitioners that the prices should have been fixed unit-wise
and on the basis of actual costs incurred by each unit could
hardly be tenable. Apart from the impracticability of fixing
the prices for each unit in the whole country the entire
object and purpose of controlling prices would be defeated
by the adoption of such a system. It must be remembered that
during the earlier period of price control the price was
fixed on an All India basis. That still is the objective and
if such an objective can be achieved it cannot be doubted
that it will be highly conducive to proper benefit being
concerned on the consumers. According to the Commission the
objective to be achieved should be to have only two
869
regions in the while country, namely, sub-tropical and
tropical. Not a single expert body appointed by the Govern-
ment of India from time to time countenanced the suggestion
that price control should be unit-wise. It appears that even
before the Tariff Commission such a point of view was under-
standably not pressed on behalf of the sugar industry. The
low cost units demanded the formation of the larger zones.
The high cost units asked for the formation of smaller
zones. No material has been placed before us to show that
there was any serious demand for prices being fixed unit-
wise"
It was further held that even in the arguments it was
almost common ground with the exception of one or two dis-
sentient voices that zoning is unavoidable in our country in
the matter of fixing of the price of sugar. Thus, this Court
rejected that zoning is to be done on unit-wise and that
fixation of the price for each unit in the whole country is
impracticable, unworkable and would defeat the very purpose
of fixing sugar price.
In Shri Sitaram Sugar Company's case in paragraph 59,
this Court held that it is a matter of policy and planning
for the Central Government to decide whether it would be on
adoption of a system of partial control, in the best econom-
ic interest of the sugar industry and the general public
that sugar factories are grouped together with reference to
geographical-cum-agro-economic-factors for the purpose of
determining the price of levy sugar. Sufficient power has
been delegated to the Central Government to formulate and
implement its policy decision by means of statutory instru-
ments and executive orders. Whether the policy should be
altered to divide the sugar industry' into groups of units
with similar cost characteristics with particular reference
to recovery, duration, size and age of the units and capital
costs per tonne of output, without regard to their location
is again a matter for the Central Government to decide. What
is best for the sugar industry and in what manner policy
should be formulated and implemented, bearing in mind the
fundamental object of the statute, namely, supply and equi-
table distribution of essential commodities at fair prices
in the best interest of the general public, is a matter for
decision exclusively within the province of the Central
Government. Such matters do not ordinarily attract the power
of judicial review.
In paragraph 61 it was further stated that the division of
industry
870
on zonal basis for the purpose of price determination has
been accepted without question by almost all the producers
with the exception of a few like the petitioners. The indi-
vidual disadvantage for the loss, this supply on account of
present zoning system by its very nature is incapable of
determination by judicial review.
In Saraswati Industrial Syndicate Ltd. etc. v. Union of
India, [1975] 1 SCR 956, this Court held that price fixation
is more in the nature of a legislative measure even though
it may be based upon objective criteria found in a report or
other material. It could not, therefore, give rise to a
complaint that rules of natural justice have not been fol-
lowed in fixing the price. In Prag Ice & Oil Mills & Anr.
etc. v. Union of India, [1978] 3 SCR 293, Chandrachud, J.
(as he then was) speaking for the Court held that price
fixation is really legislative in character in the type of
control order before the court and it satisfies the test of
legislation and legislative measure does not concern itself
with the facts of an individual case. It is meant to lay
down a general rule applicable to all persons or objects or
transactions of a particular kind or class.
(emphasis supplied)
In Laxmi Khandsari etc. etc. v. State of U.P. & Ors.,
[1981] 3 SCR 92. the facts are that in exercise of power
under Clause 8 of Sugarcane (Control) Order, 1966, a notifi-
cation was issued prohibiting crushing during particulars
hours of the day. It was contended to be violative of the
principles of natural justice. It was held that it is legis-
lative in character and the rules of natural justice would
stand completely excluded and no question of hearing arises.
In Union of India & Anr. v. Cynamide India Ltd. & Anr.,
[1987] 2 SCC 720 at 734 & 735, Chinnappa Reddy, J. speaking
for the Court held that legislative action, plenary or
subordinate, is not subject to rules of natural justice. In
the case of Parliamentary legislation, the proposition is
self evident. In the case of subordinate legislation, it
itself provide for a notice and for a hearing, no one can
insist upon it and it will not be permissible to read natu-
ral justice into such legislative activity. In Shri Sitaram
Sugar Company's case it was reiterated that fixation of
price for sugar is a legislative policy and the principles
of natural justice would not apply.
From this perspective of the statutory study and in the
light of the law laid down by this Court, the question
emerges whether the appellants are entitled to an individual
notice and hearing before placing them in Zone No. 1 in the
impugned notification. The fixation of
871
the price and zoning are integral scheme of the notifica-
tion, without placing the factories in the appropriate zone
based on agro-climatic and other economic considerations the
proper price fixation cannot be made. So both the fact or
are part of the policy decision by the Government in exer-
cise of the statutory powers. This decision is based on the
recommendation made by the Sugar Commission consisting of
experts in the field of agro-economics who after exhaustive
study and consideration of the relevant material placed
before it made the recommendation. Thereby it assumes the
character of legislative policy. It does not concern itself
with an individual case. Once it is concluded that the
zoning system being an integral part of the price fixation
of the sugar produced by the factories in a particular zone,
it is legislative in character and no individual sugar
factory is entitled to a notice and hearing before placing
the particular factory or factories in a particular zone. It
was open to place its view like others' before the Commis-
sion. It is undoubted that in the subsequent years when the
writ petition was filed in the High Court on behalf of the
government, a concession was made that the appellants would
be reimbursed of the losses they incurred but that is no
precedent for deciding that the appellants should be placed
in a particular zone or that they should be heard before
placing them in Zone No. 1. It is true as contended by Shri
Aggarwal that in paragraph 52 and 53 in Shri Sitaram Sugar
Company's case, this Court held that any act of the reposi-
tory of power, whether legislative or administrative or
quasi-judicial, is open to challenge if it is in conflict
with the Constitution or the governing Act or the general
principles of law of the land or it is arbitrary or unrea-
sonable that no fair minded authority could ever had made
it. Even then this Court has pointed out that the impugned
orders are undoubtedly based on an exhaustive study by
experts and that the impugned orders though open to criti-
cism would not be subject to judicial review. It is also
true that in Anakapalle Coop. Agrl. and Industrial Society's
case, this Court has pointed out that all the factories in a
State would be placed in one zone and placing them in dif-
ferent regions would be uneconomical. In Shri Sitaram Sugar
Company's case, the Constitution Bench also held that the
above decision requires no reconsideration. But the observa-
tions therein have been made based upon the recommendation
made by the Tariff Commission and accepted by the government
to keep each State in a particular zone but when the subse-
quent Sugar Commission went into the question since by then
there is appreciable increase of large number of sugar
factories in several regions, though not on the Statewise
basis in a particular zone. As stated earlier the recommen-
dations are based on indepth study. The notification as such
was not questioned in the writ petition. Therefore, the
observation of this
872
Court in that paragraph cannot be construed to put a fetter
on the power of the government to reconsider the policy due
to change in circumstances of groupings of the sugar facto-
ries in a State in one zone or other region. It is apposite
here to quote the rule laid in Joseph Beauharnais v. People
of the State Illinois, 96 L.Ed. 919 at 930, applicable to
the facts of the present case, thus:
"This being so, it would be out of bounds for the judiciary
to deny the legislature a choice of policy, provided it is
not unrelated to the problem and not forbidden by some
explicit limitation on the State's power. That the legisla-
tive remedy might not in practice mitigate the evil, or
might itself raise new problems, would only manifest once
more the paradox of reform. It is the price to be paid for
the trial-and-error inherent in legislative efforts to deal
with obstinate social issues."
Moreover the Sugar Commission heard the persons desired to
be heard and considered the representation and material
produced. At the stage of notification the question of
further representation or hearing does not arise not a
feasible exercise. It is for the government whether to
accept or reject or modify the recommendation made by the
Commission. We, accordingly, hold that zoning is a legisla-
tive act and policy. We have no hesitation to conclude that
the contention of the appellants that they are entitled to
individual representation and notice and heating before
placing them in Zone No. 1 is devoid of force and is reject-
ed. It is also equally true that the government did not file
any counter affidavit even till date, refuting the allega-
tions made in the grounds of appeal regarding the alleged
costs structure and the consequential loss that the appel-
lants are being put to. But in view of the finding that it
is a legislative policy but not an executive action, we
cannot draw an adverse inference against the State for not
denying those allegations and to conclude that the appel-
lants' factories are to be placed in a particular zone. In
other words this Court cannot interfere with the legislative
policy of zoning particular factories in a particular re-
gion, namely, in Zone No. 1 of the appellants' factories by
merely the State having omitted to file the counter affida-
vit refuting the allegations of the alleged loss. In an
individual case of administrative action, if no counter
affidavit has been filed an adverse inference may be drawn
and relief may be moulded as per given situation. Likely
that some loss may be caused to individual factory but as
pointed out by this Court in Anakapalle Coop. Agrl. and
Industrial Society's case that the price fixation cannot be
made unit-wise and it is not practic-
873
able to make unit as a base t6 fix the price or to place in
a particular zone. The very relief in the writ petition to
fix the price at Rs. 161 per quintal cannot be ordered as
was already negatived by this Court. Considering from the
above perspective we have no hesitation to reject the con-
tention of the appellants and dismiss the appeals but with-
out costs.
N.P.V. Appeals dismissed.
874





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