Holding

The levy order applies to all existing khandsari stocks irrespective of manufacture date, and the price fixation for consumer benefit is constitutionally permissible.

Summary

The petitioners, New India Sugar Works, challenged a Uttar Pradesh government order imposing a levy on khandsari sugar, arguing that the levy should not apply to sugar produced before the order and that the fixed levy price did not cover manufacturing costs, violating their constitutional rights. The Supreme Court held that the order’s operation is not retrospective in the statutory sense; once notified, it naturally applies to all existing stocks regardless of when they were produced. The Court further held that price fixation under the levy is aimed at equitable distribution to consumers and is not unreasonable even if it causes some loss to producers, citing the dominant policy of consumer interest over individual producer interest. The Court dismissed the petitions, but stayed the order pending withdrawal of certain sub‑clauses that required certificates for the remaining sugar. The judgment emphasized that the levy does not infringe Articles 14 or 19(1)(g) of the Constitution.

Issues considered

Whether the levy order on khandsari can have retrospective effect and apply to sugar manufactured before the order.
Whether the price fixed for the levy must cover the manufacturers' cost and whether the levy violates Articles 14 and 19(1)(g) of the Constitution.
Whether the sub‑clauses requiring certificates for the remaining sugar are arbitrary.

Legislation cited

Constitution of Indias. Article 14, s. Article 19(1)(g)

Subjects

retrospective operationlevyprice controlkhandsarisugar levyconstitutional lawArticle 14Article 19(1)(g)consumer interestequitable distributionadministrative law

Judgment

29

NEW INDIA SUGAR WORKS ETC. ETC. A
v.
STATE OF UTTAR PRADESH AND ORS.
February 27, 1981

' [S. MU.RTAZA FAZAL Au AND 0. CHINNAPPA REDDY, JJ.] B
Retrospective operation of law-Order levying· duty on Khandsari issued-
Order, whet.her applies to existing stocks or only to future stockSc--Price fixed
less than manufacturing cost-Order, if liable to be quashed.

On the questions (I) whether an order imposing a levy on Khandsari could
have retrospective operation so as to apply to sugar 1manufactured prior to the
date of the order and (2) whether in fixing the price of levy sugar the Government C
should consider that the price fixed should be sufficient to •cover ihe manufactur-
ing cost.

HELD : L It is not the question of retrospectivity of a statute but its
actual working that is relevant.. It is settled law that where a statute operates
in future it cannot be said to be retrospective merely because within the sweep of
its operation all existing rights are included. Once the notifieation for imposing D
the levy was made it will naturally apply to the existing stocks of khandsari with
the petitioners irrepsective of whether it was manufactured before or after . the
order. [31B; 30G]

2; The policy of price control has for its dominant object equitable ·disJ
tribution and availability of: the commodity at fair price to benefifthe consumers;
Individual interest, however. precious, must yield to the larger interest of the
community namely the consumers. Even if the petitioners have to b~ar some loss
there could be no question of the restrictions imposed on· ·'them being
unreasonabfo. [32 Bl .
' ~-' .

The fixation of price would be in the interest of consumers rather than that
of the producers.. Moreover since the petitioners were allowed to ·sell freely at
any rate they: liked, the.remaining 50% of sugar after, e~cluding the 50% w)lich
they had \o give to levey as also the produce by the second anf} third processes, F
the loss; if any, caused to the petitioners, would be mini~nal. (32 G] . ·
'\, ..
ORIGIJ"AL JURISDICTION: Writ .Petition•Nos. 896/81,,, 8Q~~890 1
577~591, 592-606,. 6Q7-621,. 622:628,. 629-633, ; 634-37,·; 964~88, 544.
545-575, 766-774; 775-776, 902-63, 897-901, 535-37, 532-J<J,, 529-$31,;
639and540-43/8L
. .,
.
., .. 1 ,,.,, ..
· (Under Article 32 of the Constlt~tio.n)
. . .
' . ' . ' ' . ''1

R.K. Puri for the Petitioners 'hiWP 8'96/81; '• ;
''
Vimal D~ve for the Petitioners in WPs 865:890/81.
A.K. Sen; R.M. Dube and Sal'va Mitter for' the 'Petitio~ers in
WPs 540-43/81.
30 SUPREME COURT REPORTS [1981] 3 S.C.R.

A Soli J. Sorabjee, S.S. Ray, A.K. Sen and R.K. Jain for the
Petitioners in WPs 529·37, 544-575, 577-638, 766-776 and 897-988/81.
S.S. Ray, Soli J. Sorabjee and R.K. Jain for the Petitioners in
WPs 634-37/81.
Lal Narain Sinha, Attorney General, O.P. Rana, and Mrs. S.
B Dikshit for the Respondent (State of U.P.) in WPs 540-43, 529-37,
540-43, 544-77 and 5.77-638/81.
MK. Banerjee Addi. Sol. Genl. and S.K. Gambhir for the State
of Madhya Pradesh.
Miss A. Subhashini for Union of India.

The Order of the Court was delivered by

FAZAL ALI, J. Having heard counsel for the parties at great
length we are satisfied that there is no violation of the fundamental
right of the petitioners enshrined in Art. l 9(1)(g) of the Constitution
of India nor is Art. 14 attracted to the facts of the present case.
D There is, therefore, no good ground to entertain the petitions. We
would, however, like to add that on the materials placed before
us the Government may consider the desirability of adopting such
measures as may soften the rigours of the impugned orders which,
though not arbitrary or excessive so as to violate Art. 14 or 19, do
merit some consideration by the Government in order to effectuate
E the policy under which the impugned notification was made.

There are, however, two arguments urged before us which need
special mention. In the first place it was submitted that in th~ U.P.
cases the order impugned imposing a levy on the khandsai·i pro-
duced by the petitioners cannot have any retrospective operation so
F as io apply to the stock of sugar manufactured prior to the date
of the order and would apply only to the sugar produced after the
coming into force of the impugned notification. So far as this
argunment is concerned we find no substance in the same because it
is not a question of retrospectivity of the statute but its actual
working. Once the notification imposing the levy was made it will
G obviously apply to stock of khandsari produced by the petitioners
either before or after the order. This principle has been clearly
laid down by the Constitution Bench of this Court in the case of
Trimbak Damodar Raipurkar v. Assaram Hiraman Patil and Ors.(1)
where Gajendragadkar, J. speaking for the Court regarding the
H
(1) [1962] Supp. 1 S.C.R. 700.
NEW INDIA SUGAR WORKS v. U.P. STATE (Faza! Ali, J.) 31

scope of a Rent Act and Amendment in Rent Act observed as A
follows:
"In this connection it is relevant to distinguish between an
existing right and a vested right. Where a statute operates in
future it cannot be said to be retrospective merely because
within the sweep of its operation all existing rights are 8
included."

This Court.followed the dictum of Buckley, L.J. in the case of
West v. Gwynne.(1) In the aforesaid case Buckley, L.J. while con-
struing an amendment in the Act by which the contract was
governed observed as follows : - ·
c
"The Act of 1881 thus expressed that in the case of leases
made either before or after the commencement of the Act a
covenant not to assign without licence should be enforceable
just as before...... This section is to be read as if' it were
contained in the Act of 1881, and is dealing with a subject-
matter mentioned in the Act of 1881, and as to which there D
is in that Act a provision that the enactment shall apply to
leases made either before or after commencement of the Act."

Hardy, M.R. in a concurring judgment while construing second
amendment in section 14 of the Conveyancing Act pointed out
thus:- E
"In the first place, the language of the section is perfectly
general, "in all leases," and there is nothing in the section
itself to confine it to leases subsequent to the Act.

__ ,
I
Almost every statute affects rights which would have been
in existence but for the statute."
F

In these circumstances, therefore, once the notification for imposing
the levy was made it will naturally apply to the stock of sugar which

,
was with the petitioners irrespective of the fact that it was manu-
• factured before or after the Order.
G
It was next strongly contended that in fixation of the price of
levy sugar the Government has not taken into consideration the fact
that the petitioners would undergo a serious loss because the price
would not be sufficient even to cover their manufacturing cost. We
H
(I) [1911) 2 Ch.D. I.
32 SUPREME COURT REPORTS (1981] 3 S.C.R.

are, however, unable to agree with this argument. The policy of
price control has for its dominant object equitable distribution and
availability of the commodity at fair price so as to benefit the
consumers. It is manifest that individual interests; however, precious
they may be must yield to the larger interest of the community
namely, in the instant case, the large body of the consumers of
B sugar. In fact, even if the petitioners have to bear some loss there
can be no question of the restrictions imposed on the petitioners
being unreasonable. In Shree Meenakshi Mills Ltd. v. U.0.1.(1) this
Court observed as follows ;·
"If fair price is to be fixed. leaving a reasonable margin
c of profit, there is never any question of infringement of f~nda·
mental right to carry on business by imposing' reasonable
restrictions.
In ~d~termh.;ing the reasonableness of 'a 'resti:ictlon imposed
· by law i_n the. field of industry, trade or commerce, it has to
be remembered that the mere fact that some of those who are
D engaged fn these are alleging loss after the. ·imp~siti~n of law
will not render the law unreasonable." (Emphasis Supplied)
Similar view was· taken by this Court in the case of Prag Ice and
Oil Mills and Anr. etc. v. Union of lndia(2 ) where the Court speaking
through Beg, CJ., observed as follows.:
E
"It has also to be remembered that tl1e object is to secure
equitable distribution and availability at fair prices so that it
y
is the interest of the consumer and not of the producer which
is the determining factor in applying any objective tests at
any particular time."
F In this view of the matter the primary consideration in the
fixation of price would be the interest of the consumers rather than /--
that of the producers. Moreover, we think .that since the petitioners
are allowed to sell freely at any rate they like the remaining ·fifty

,
per cent of sugar (after excluding the fifty per cent which they have
G
to give for levy) as also the produce by the second and third pro· •
cesses, the loss if any caused to the petitioners would be minimal.
Lastly, it was urged that Sub-Clause (5)-which is Sub-Clause
(3) in the notification issued by the Madhya Pradesh Government-

H (1) [1974] 2 S.C.R. 398.
(2) [1978] 3 S.C.R. 293.
NEW INDIA SUGAR WORKS v. U.P. STATE (Fazal Ali, J.) 33

in the impugned notification· issued· by the U.P. Government is A
extremely arbitrary inasmuch as by insisting on certificates it
deprived the petitioners of the free ; sale of . sugar of the. remaining
amount of fifty per cent as also the Khandsari produced by second
and third processes. We see some force in this argument but the
Attorney General frankly conceded that he will see that no incon-
venience on this score is caused to the petitioners. He gave an B
undertaking to the Court that he will get the respective Sub-Clauses
5 and 3 of the impugned orders of the U.P. and Madhya Pradesh
Governments deleted or withdrawn so as to allow the petitioners to
sell the remaining amount of sugar as also the stock produced by
the second and third processes without any hitch or hindrance. , This·
will, however, be subject to routine and quick inspection. In view
of this undertaking, therefore we feel that a substantial part of the
grievances of the petitioners would be removed. To be on the safe
side, however we allow the stay granted in all the petitions to
continue until the provisions of respective Sub-Clauses 3 and 5
passed by the State Governments concerned are withdrawn.
• I .
D
We may also emphasise the fact that the amount of sugar taken
by the Government through levy should be properly stored and duly
protected froni.. rain and rot and be despatched .to the various
control depots expeditiously in order . to ensure a quick and.
equitable distribution of the commodity amongst the people at
moderate rates. .,. E
The Government may also consider the desirability of giving
a bare minimum hearing to the representative of the ·owners of the
cane crushers in future before fixing the rate at which. the levy is ..
' . ~ ,; I ' ' • -, ': , . ' ",
taken from the .owners so as ro see that the owners . of the crushers
'· aie'ii.oui~'t to such gr~at loss that they are completely wiped out.
from busi'ness. : 1 .. _,, ·'
F

With these observations the petitions are dismissed.
. '
N.K.A> .r Petitions· disrnlssed.·

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