N.S.P. Pandian and Others vs The State of Tamil Nadu and Others

Padmanabhan, J.—The Petitioners in Writ Petition Nos. 2470 and 2675 of 1982 are whole sale dealers in rice, while the Petitioner in Writ Petition No. 3034 of 1982 is the Madras City Paddy and Rice Wholesale Dealers Association. The prayer in the writ petitions is for the issue of a writ of certiorari to quash G.O. Ms. No. 33, dated 20th January 1981 as amended by G.O Ms No. 785, dated 1st October, 1981 and further extended by G.O. Ms. No. 948, dated 17th December 1981. In G.O. Ms. No. 33, dated 20tb January 1981 the Government directed that the wholesale dealer in paddy or rice shall deliver 40 per cent of paddy or rice purchased by him to Government or the agency nominated by it. The G.O. also stated that in respect of paddy stocks delivered by the wholesale dealers towards levy, payment shall be levied at the following rates.:

Item (1)

Price (2)

Common variety Fine ,, Super Fine ,,

Rs. 105 per quintal. Rs. 109 Do. Rs. 113 Do.

In respect of rice stocks delivered by the whole-sale dealer the following price was fixed:

Item (1)

Price (2)

Common variety Fine Super Fine ,,

Rs. 165-50 per quintal. Rs. 171-50 Do. Rs. 177-50 Do.

By G.O. Ms. No. 785, dated 1st October 1981 the Government increased the levy on wholesale dealers and whole-sale rice millers for the procurement of paddy and rice from 40 percent to 50 per cent of paddy and rice purchased by them. The Government also refixed the price of paddy as follows:

Item (1)

Price (2)

Common variety Fine " Super Fine "

Rs. 115 per quintal. Rs. 119 Do. Rs. 123 Do.

Consequent on this the price of fine variety of rice with which only we are concerned in these writ petitions was fixed by the State Government at Rs. 190-75. It is in these circumstances these writ petitions have teen filed.

Before I deal with the contentions urged before me by the Counsel for the Petitioners, it is necessary to refer to the relevant statutory provisions under which the above Government Orders came to be issued. Section 3(1) of the Essential Commodities Act (called the Act) reads as follows:

3(1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing then equitable distribution and availability at fair prices, or for securing any essential commodity for the defense of India or the efficient conduct of military operations it may, by order provide for regulating or prohibiting the production supply and distribution thereof and trade and commerce therein.

Section 3(2) states:

3(2). Without prejudice to the generality of the powers conferred by Sub-section (1), an order made there under may provide;

(a)....

(b) ....

(c) for controlling the price at which any essential commodity may be bought or sold.

(d) for regulating by licences, premise or otherwise the storage, transport distribution, disposal acquisition use or consumption of, any essential commodity.

(e) for prohibiting the withholding from sale of any essential commodity ordinarily rept for sale,

(f) for requiring any person holding in stock, or engaged in the production or in the business of buying or selling of any essential commodity:

(a) to sell the whole or a specified part of the quantity held in stock or produced or received by him, or

(b) in the case of any such commodity which is likely to be produced or received by him, to sell the whole or a specified part of such commodity when produced or received by him.

to the Central Government or a State Government to an Officer or agent of such Government or to a Corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order.

Explanation (1). An order made under this clause in relation to food grains, edible oilseeds or edible oils may, having regard to the estimated production, in the concerned area.

of such food grains, edible oilseeds and edible oils, fix the quantity to be sold by the producers in such area and may also fix, or provide for the fixation of such quantity on a graded basis having regard to the aggregate of the area held by, under the cultivation of, the producers.

Explanation(2)-Omitted.

Section 3(3)(B) of the Act reads thus:

Where any person is required by an order made with reference to Clause (f) of Sub-section (2), to sell to -be Central Government or a State Government or to an officer or agent of such government or to a Corporation owned controlled by such Government, any grade or variety of food grains edible oilseeds or edible oils in relation to which no notification this beer issued u/s 3A or such notification having been issued, has ceased to be in force, the shall be paid to the person concerned, notwithstanding anything to the contrary contained in Sub-section (3), an amount equal to the procurement price of such food grains, edible oilseeds or edible oils, as the case may be specified by the State Government with the previous approval of the Central Government having regard:

(a) the controlled price if any fixed under this section or by under any otter law for the time being in force for such grade or variety of food grains, edible oilseeds or edible oils.

(b) the general crop prospects.

(c) the need for making such grade or variety of food grains, edible oilseeds or edible oils available at reasonable Pi ices to the consumers, particularly, the vulnerable sections of the consumer and

(d) the recommendations, if any, of the Agricultural Prices Commission with regard to the price of the concerned grade or variety of food grains, edible oilseeds or edible oils.

Section 5 of the Act provides;

The Central Government may, by notified order direct that the power to make orders or issue notifications u/s (3) shall, in relation to such matters and subject to such conditions, if any, as may be specified in that directions, be exercisable also by:

(a) such officer or authority subordinate to the Central Government; or

(b) such State Government or such officer or authority subordinate to the State Government:

as may be specified in the direction.

The State Government in exercise of the powers conferred on it by Section 3 of the Act, promulgated the Tamil Nadu Paddy and Rice (Regulation of Trade) Order, 1974 (called the order Clause 2(H) of the order defines controlled price as the price notified in this behalf u/s 3 of the Essential Commodities Act, 1955. Clause 5 of the Order reads:

Every dealer, other than a retail dealer, who either by himself or his agent or any other person acting on his behalf purchases paddy or rice in such area as may be specified by the Government shall, as soon as may be and in any case not later than three days after the date of such purchases, deliver such portion of the stock of paddy or rice purchased as the Government may specify and subject to a maximum of fifty percentum, at such price as may be fixed by the Government in this, behalf, to such agencies or officers of the Government as the licensing authority or the authorised officer may specify in this behalf.

It is in pursuance of the above provisions of the Act and the order that the State Government issued G.O. Ms. No. 33 dated 20th January, 1981, G.O. Ms. No. 785, dated 1st October 1981 and G.O. Ms. No. 948, dated 17th December, 1981

The main contention of the Petitioners is that the fixation of the price of one quintal of fine variety of paddy at Rs. 119 and the price of one quintal of fine variety of rice at Rs. 190.75 is arbitrary and cannot be allowed to stand. Section 3(2)(f) (a) of the Act confers power on the authorities to promulgate an order for requiring any person holding in stock, or engaged in the production or in the business of buying or selling of any essential commodity to sell the whole or a specified part of the quantity held in stock or produced or received by him to the Government. Section 3(3A) and Clause 5 of the Order provides that every dealer who either by himself or through his agent purchase paddy or rice in a notified area on shall deliver, such portion as may be specified, subject to a maximum of 50 per cent. Such quantity of rice or paddy may be delivered a such price as may be fixed by the Government in that behalf. The contention of the Petitioners is that u/s 3(3B) of the Act, it is for the State Government to fix the price with the previous approval of the Central Government. Further before fixing the price the Stave Government as well as the Central Government shall have regard to various factors referred to in Clauses (a) to (d) of Section 3(3B) of the Act. In fixing the price of one quintal of fine paddy at Rs 119 and fine variety of rice at Rs. 190.75, the State Government bad merely taken into account the puce adopted by the Central Government on the basis of the report of the Agricultural Prices Commission It is the further case that neither the Central Government No. the State Government have applied their independent mind to the cost of production of one quintal of paddy incurred by an agriculturist in the Stave. Reference is made to the fact that even the State Government bad, alter extensive investigation through its agencies, come to the conclusion that an agriculturist would incur a sum of Rs. 147 towards cost of production of one quintal of paddy and had written to the Central Government for approval for fixing the procurement price of paddy as contemplated u/s 3(3B) of the Act at Rs. 147. Notwithstanding the above fact the State Government had fixed the price of paddy at Rs. 119 which is far below the cost price. Even though the wholesale who purchase paddy or rice from the producers pay much more than Rs. 119, or Rs. 190.75 as the case may be, and would be entitled to be paid the price at the open market rate, the Petitioners would be entitled at least to the price calculated in terms of the actual cost of production of one quintal of paddy to the producer plus a reasonable margin of profit to the wholesale dealer.

The Stale Government in its counter has stated as follows:

In pursuance of Clause (i) of the Tamil Nadu Paddy and Rice (Regulation of Trade) Order, 1974 the Government also fixed th prices for paddy delivered by the Traders towards levy, which are the procurement pi ices fixed by the Government of India.

After mentioning the prices of paddy as fixed by the Government of India, iv is further stated in the counter affidavit.

As regards the prices of rice, they were fixed in G.O. Md. No. 225, Food and Co-operation Department, dated 24th March.1981 as follows, taking into account the procurement prices of paddy fixed in G.O. Ms. No. 33, Food and Cooperation Department, dated 20ih January 1981, the outturn at 68 percent and other costs involved in conversion of paddy into rice, with the approval of Government of India. It is also stated that consequent on the revision of procurement prices of paddy for the crop year 1981-82 by the Government of India the prices payable for levy paddy was refixed by the State Government.

After justifying the levy fixed under the relevant G. Os. the counter affidavit has further stated that the levy price is fixed on the basis of the procurement price of paddy fixed by tie Government of India and other incidental costs involved. As regards rice it is stated that rates have been fixed taking into account the procurement prices of paddy and other incidental costs involved. In paragraph 25of the counter affidavit it is stated that the Government of India has fixed the price of paddy in the light of the recommendations of the Agricultural Prices Commission. The said prices, according to the State Government, are in the nature of support price and therefore it is illogical to demand payment for the levy stock at a rate equal to the cost of cultivation estimated by the State Government and furnished to the Agricultural Prices Commission or Government of India as the procurement price or paddy. The State Government have admitted in their counter affidavit that a recommendation was made to the Agricultural Prices Commission and Government of India to fix the procurement price of paddy at Rs. 147 per quintal of paddy. The counter-affidavit also admits that the cost of cultivation of food grains will vary from State to State depending on several factors. It is also stated in the counter-affidavit filed by the State Government that the wholesalers would not be put to any loss of profit since they are obliged to sell only 50 pet cent of the stock to the Government at Rs. 190.75 per quintal of fine rice and while they would be at liberty to sell the test 50 percent of the stock at the price they want.

In paragraph 10 of the counter affidavit filed by the Central Government it is stated that:

The procurement price of paddy at Rs. 115 per quintal for common, Rs. 119 for a fine, and Rs. 123 for superfine for the 1981-82 kharif marketing seasons has been fixed by the Central Government on the basis of the recommendations of the agricultural prices commission and in consultation with the different State Governments. The agricultural prices commission while making these recommendations take into account inter alia cost of production, state of economy, margin to farmers, etc. The procurement prices announced is in the nature of a guarantee to the farmers that, if the price falls below the level of price fixed, the Government agencies'' will come forward and provide the farmers with the price support''.

The question for consideration is whether the Petitioners are entitled to any relief and if so to what extent. I have already referred to Section 3(3)(B) of the Act. Under the said section any person may be required by an order to sell to the Central Government or a State Government or to an officer or agent of such Government or to a Corporation owned or controlled by such Government any grade or variety of food grains, edible oilseeds Or edible oils in relation to which no notification has been issued under Sub-section (3-A). There shall be paid to the person concerned, notwithstanding anything to the contrary contained in Sub-section (3), an amount equal to the procurement price of such food grains, edible oilseeds or edible oils, as the case may be, specified by the State Government. The State Government will have to fix the price with the approval of the Central Government. In fixing the price with the previous approval of the Central Government, the State Government shall have regard to (a) the controlled price if any fixed under this section or by or under any other law for the time being in force for such grade or variety of food-grains edible oilseeds or edible oils (b) the genial crop prospects (c) the need for making such grade 01 variety of food grains, edible oilseeds or edible oils available at reasonable prices to the consumers, particularly the vulnerable sections of the consumers and (d) the recommendations, if any, of the agricultural prices commission with regard to the price of the concerned grade or variety of food grains edible oilseeds or edible oils. From the above, it is clear that the authority empowered to specify the price is the State Government, though the State Government has to obtain the previous approval of the Central Government. Further, in specifying the price the State Government shall have regard to the various factors mentioned in (a) to (d) of Section 3(3)(B)of the Act. The recommendations of the agricultural prices commission is only one of the factors which the State Government has to take into account in fixing the price, and it is not the concluding factor. Section 3(3B)(b) of the Act refers to the general crop prospects. Thai means the general crop prospects of the State of Tamil Nadu and not any other State. Admittedly, there is no control price fixed for faddy or rice. Section 3(3)(B) of the Act speaks of procurement price. Procurement price is not defined in the Act. procurement price cannot be the control price because the very Section 3(3)(B) itself says that the State Government shall specify the procurement price having regard to the control price. From the counter-affidavit filed by the Central Government as well as the State Government, it is clear that the price of paddy has been fixed by the Central Government on the basis of the recommendations of the agricultural prices commission. The counter-affidavit of the Central Government farther makes it clear that the procurement price announced is in the nature of a guarantee to the farmers, that if the price falls below the level of price fixed, the Government agencies will come forward and provide the farmers with the pi ice support. In other words, it is admitted in the counter-affidavit that the price of Rs. 119 for fine variety of paddy fixed by the Central Government is a support price in the nature of a guarantee to the farmer that if the price fell below the level of the price fixed, the farmer would be given the said price. From the Economic Survey, 1980-81 published by the Government of India at page 29 it is seen that the minimum support procurement prices of agricultural commodities have been fixed. The argument of the learned Counsel for the Petitioners that what is meant by support price is the minimum price that would be paid by the Government or its agency to the farmers, if the farmers are not able to sell their produce at reasonable price, is admitted by the counter-affidavit filed by the Central Government. It is further supported by the following passage which occurs in the report of the Sixth Five Year Plan, 1980-85, published by the Government of India at page 111, paragraph 9.80 which reads:

The motivation to produce more finally comes from the prices that the farmer is able to get for his produce. Production gluts leading to depression in prices received by the farmer have in the past frequently led to set back in production in succeeding years. This has been more so in the case of perishable commodities like onions, potatoes, sugarcane, etc., where, for want of adequate preservation and processing facilities, the farmer has been wholly exposed to exploitative trading forces, without the consumer benefiting in any way. A marketing system which protects the interests of both producers and consumers is, therefore, the backbone of agricultural development. It must have three essential elements: (i) a suitable structure of support prices for various agricultural commodities adjusted from time to time in the light of cost of production so as to ensure fair return to the farmers; (ii) adequate arrangements for procurement of agricultural produce on support prices, if the prices fall below that level; and (iii) a well spread-out and regulated infrastructure of marketing which will ensure fair price to the producer in open market conditions and help eliminate non functional marketing margins of inter mediaries.

The above would mean that the support price is that price which the farmer is guaranteed, if the prices fell below that level. In other words, it means the minimum price which the Government will guarantee to the farmer in the event of the prices of the produce falling below that level. It is clear from the counter-affidavit filed by the Central Government that the price fixed by the agricultural prices commission in only a support price, which is, to quote the language of the counter affidavit:

The procurement prices announced is in the nature of a guarantee to the farmers, that if the price falls below the level of price fixed, the Government agencies will come for ward and provide the farmers with the price support.

In the circumstances, the sum of Rs. 119 fixed by the Central Government on the basis of the report of the agricultural prices commission can only be the support price as explained by the Central Government itself in its counter-affidavit.

What has to be fixed by the State Government no doubt with the previous approval of the Central Government u/s 3(3)(B) of the Act is the procurement price. The procurement price is not specified in the Act or even in the order. Procurement price cannot be said to mean control, price because even u/s 3(3)(B)of the Act, the Government bad to specify the price at which it will call upon the dealer to sell any grade or variety of food grains, edible oilseeds or edible oils having regard to the control price. As already stated, there is no control price so far as paddy and rice are concerned. It must naturally follow that procurement price is a price which is specified by the State Government with the previous approval of the Central Government for the purchase of food grains, edible oilseeds or edible oils in accordance with Section 3(3B) of the Act. Such a procurement price has to be fixed having regard to the various factors mentioned in Section 3(3B) of the Act namely control price, general crop prospects, need for making such grade or variety of food grains, edible oilseeds Or edible oils available at reasonable prices to the consumers, particularly the vulnerable sections of the consumers and recommendations if any of the agricultural prices commissioner with regard to the price of the concerned grade of variety of food grains, edible, oilseeds or edible oils. The fact that the recommendations of the agricultural prices commission had to be taken into account in specifying the price u/s 3(3B) of the Act along with the other factors mentioned in (a) to (c), will go to show that the recommendations of the agricultural prices commission will not be the concluding factor in the matter of fixing of the price u/s 3(3B) of the Act. The recommendation of the agricultural prices commission shall be only one of the factors which may be taken into account by the State Government in fixing the prices and also the Central Government in approving the prices. I have already referred in detail to the counter affidavit filed on behalf of the State Government. The substance of the counter-affidavit filed by the State Government is that the State Government has fixed the price only on the basis of the price fixed by the Central Government. There is no whisper in the counter affidavit, filed on behalf of the State Government, not was urged before me by the learned Advocate General on behalf of the State Government that the State Government was influenced by any other considerations in the matter of fixing of the price of paddy or rice. On behalf of the Central Government a counter-affidavit was filed on 21st July, 19P2 wherein a I have already stated, a stand is taken that the price of Rs. 119 for fine variety of paddy has been fixed by the Central Government on the basis of the recommendations of the agricultural prices commission which is in the nature of a guarantee to the farmers i.e., if the prices fall below the price fixed the Government or its agencies will come forward and provide farmers the price support. Apart from that, no other details have been given in the counter affidavit. When the matter came up on the 12th August, 1982 it was mentioned by the learned Counsel for the Central Government that the Central Government was not interested in the fixation of the prices by the State Government, inasmuch as the State Government was not sending rice to the central pool. I recorded the statement of the learned Standing Counsel by an order dated 12tb August 1982. However, on the next adjournment date viz., 23rd August 1982 the learned Standing Counsel took time to file a supplemental counter affidavit, though he admitted that what bad been mentioned by me in my order dated 12th August, 1982 was correct. What happened on 23rd August 1982 was also recorded. Accordingly, a supplemental affidavit was filed on 21st August, 1982. Paragraph 3 of the said supplemental affidavit states:

I submit that the Central Government fixed the procurement price of paddy keeping in view the recommendations of the agricultural prices commission and other relevant factors.

It is again stated in paragraph 4 of the counter:

I respectfully submit that the Central Government after considering all the relevant factors mentioned in Section 3(3B) fixed Rs. 119 as the pace of fine variety of paddy for the season 1981-82 marketing season. The State Government is bound to adopt this price only as the procurement price of paddy (fine variety). I also respectfully submit that the State Government by their letter dated 27tb October 1981 had sought for the concurrence of Central Government with regard to prices of rice fixed by the State Government and the State Government had furnished detailed costing sheet showing how the prices of rice proposed by them were with reference to the procurement prices of paddy decided by the Central Government. The cost structure was persued by the Central Government and since it was obvious that rice prices proposed by State Government were derived from paddy prices in a rational way and also since the State Government was not making any contribution to Central Stocks, the Central Government replies in their letter dated 27th November 1981 to the Slate Government that no comments were necessary. In other words, the Central Government had no objection to the fixation of those prices by State Government.

The learned Standing Counsel was not in a position clearly to explain the stand of the Central Government, excepting reading the, Counter affidavit. Inspire of my repeated equerries was not able to get clear clarification as to the exact stand of the Central Government as disclosed by the averments in paragraph 4 of the supplemental ''affidavit. Though in paragraph 3 of the counter, it is stated that the Central Government fixed the procurement price of paddy keeping in view the recommendations of the agricultural prices commission and other relevant factors, no materials were placed before me as to what were the factors that were taken into consideration by the Central Government in arriving at the procurement price of paddy and in what connection the Central Government fixed that price. It was not disputed by the learned Standing Counsel that u/s 3(3B) of the Act it is for the State Government to specify the price which they will pay to dealers who are called upon to sell food grains, edible oil seeds and edible oils, but with the prior approval of the Central Government. In this case, it is not disputed that the State Government wrote to the Central Government on 10th July 1981 that the procurement price of common variety of paddy should be fixed at Rs. 145 per quintal for the kharif season for 1981-82. It will be informative to extract certain passages from the comments of the State Government on the recommendations of the agricultural prices commission.

The details of the cost of cultivation of paddy in Tamil Nadu have been furnished by the Government of Tamil Nadu on the basis of the technical opinion of the officers of the agriculture department and the experts of the Tamil Nadu Agriculture University at Coimbtaore. It was after such thorough and broad based consultation that the figures regarding the cost of cultivation were arrived at. The agriculture prices commission has in its report given no reason at all why in their opinion they considered the fully documented figures furnished by the Government of Tamil Nadu are unacceptable. The cost of cultivation as worked out by the Government of Tamil Nadu is Rs. 14.10 per quintal of paddy. The procurement price of paddy should therefore be fixed taking this as the basis and allowing for a reasonable return. This procurement price would be in the region of Rs. 145. In Tamil Nadu paddy production will be just sufficient for the consumption within the State if both the monsoons are good. In such a situation therefore it is necessary to offer a remunerative price over and above the cost of cultivation a so as to prevent any reversal of the growth trend. The variation between the procurement price fixed by the Government of India and open market price of paddy is very high. The farmers are therefore not willing to sell their produce to the Government. In fact, the Government of Tamil Nadu were able to buy only about 500 tones of paddy direct from the producers inspite of giving higher prices than the prices fixed by the Government of India, and this is the main set back in procurement operations. If the price recommended by the agricultural prices commission is accepted by the Government of India, it will not be possible for this Government to purchase any quantity from the agriculturists. The issue discussed above will conclusively establish that justice has to be done in the fixation of procurement price of paddy viz-a-viz, wheat. Unless the procurement price of paddy is fixed above the of cultivation price of Rs. 145.00per quintal the discrimination will continue to exist.

This was followed by the letter dated 13th August 1981 by the Chief Minister addressed to the Union Minister for Agricultural Rural Reconstruction wherein it has been stated that the procurement price of paddy should be fixed at Rs. 147 per quintal. Thereafter on 27th October 1981 the Commissioner and Secretary to Government, Food and Corporation Departments, Madras addressed a letter to the Chief Minister of the State stating that since the Government of India bad fixed the price of paddy at Rs. 115, Rs. 119 and Rs. 123 the Government had decided to fix the procurement price at Rs. 184.90, 190.75 and 196.80 and that the concurrence of the Government of India might be obtained. To the letter, dated 27th October, 1981 of the State Government, the Central Government sent a reply stating that as stocks of rice procured would remain on State amount they have no comments to offer on the prices of rice fixed by the State Government. It is therefore seen that neither at the State level, not an the level of the Central Government has any price been fixed for paddy in terms of Section 3(3)B of the Act. In this connection, it will be useful to refer to two decisions. One is Sitaram Jwala Prasad and Others Vs. State of Uttar Pradesh and Others, . In the said case, the Allahabad High Court was concerned with the validity of the U.P. Course Food grains (Levy) Order, 1974. Clause 3(1) of the said orders a(sic)ed:

(1) Every licensed dealer shall sell to the State Government at the scheduled price at a purchasing centre:

(a) Fifty per cent of coarse food gains in stock on the date of commencement of this order or coming into his custody or possession after the commencement of this order,

(b) Fifty per cent of coarse food grains purchased by him or coming into his custody or possession for sale or disposal thorough him on commission basis or in any other manner every day beginning with the date of commencement of this order and until such time as the State Government may otherwise direct.

Section 3(3)B of the Essential Commodities Act prevailing at the time read as follows:

Where any person is required by an order made with-: reference to Clause (f) of Sub-section (2) to sell any grade or variety of food grains, edible oilseeds or edible oils to the Central Government or a State Government or to an Officer or agent of such Government and either no notification in respect of such food grains, edible oilseeds or edible oils has been issued under Sub-section (3)A or any such notification having been issued has ceased to remain in force by efflux of time then notwithstanding anything contained in Sub-section (3), there shall be paid as the price for the food grains, edible oilseeds or edible oils.

(1) The controlled price, if any, fixed under this section or by 01 under any other law for the time being in force for such grade or variety of food grains, edible oilseeds or edible oils'' or

(II) Where no such price is fixed the price for such grade or variety of food grains, edible oilseeds or edible oils prevailing or likely to prevail during the post harvest period in the area to which that order applies. Explanation omitted.

It was contended before the learned Judges that in view of the mandatory provisions contained in Sub-section (3)(B) the State Government was bound to pay to the Petitioners the price of the food grains which they have been required to sell to it in the manner contained in the Section 3(3)B of the Act. In other words, according to the Petitioners, the Government was bound to pay either the controlled price as contemplated by Clause (i) or the price prevailing or likely to prevail during the post harvest period in the area where the Petitioners are carrying on their business. Inasmuch as there was no control puce it was further contended that the Petitioners were entitled to get he pi ice of the food grains which they were required to sell to the State Government as contemplated by Clause (ii). It was contended on behalf of the State by the learned Advocate General that the Government bad fixed the price at Rs. 74 per quintal and that must be deemed to be the control price. The learned Judges observed thus:

The question however, is whether the requirement that 50 percent of food grains are to be sold to the State Government at the price mentioned in schedule I viz., Rs. 74 per quintal can be treated as controlled price of the grade or variety of food grains required to be delivered to any person in pursuance of an order made u/s 3(2)(c) of the Act, as contemplated by Clause (i) to Section 3(3)(B). Clause (i) of Sub-section (3)B) speaks of controlled price, if any, for the grade or variety of food grains, edible oilseeds or edible oil and not in regard to a particular transaction of sale of such food grains, edible oilseed of edible oil. The controlled price contemplated by Clause (i) therefore has to be with reference to either the grade of food grains or its variety. If the Government issues a direction, as in the instant case, that 50 per cent of the food grains are to be sold to it, it will have to pay to the seller a price as contemplated either by Clause (i) or Clause (ii) or Sub-section (3)(B). It cannot say that whatever price it choses to mention in order as price payable in respect of the stock requisitioned by it would automatically become the controlled price of the grade or variety of the concerned food grains, as contemplated by Clause (i).

A further contention was raised before the Allahabad High Court, as was also attempted to be done before me by the learned Advocate General, that since only 50 per cent of the course food grains were required to be sold to tie State Government, it was open to the dealers to sell the remaining 50 per cent of the food grains at any price which trey liked to enable them to compensate themselves for any loss that they may suffer on account of the 50 per cent of the food grains being sold to the Government at the rate of Rs. 74 per quintal. With regard to this, the learned Judges observed thus:

This argument of the learned Advocate General, based on economic equity, does not in our opinion help us in interpreting the meaning of the word controlled price as used in Clause (i) of Section 3(3)(B). Moreover, the Legislature has achieved the aforesaid object in the case of stock of sugar required to be delivered in pursuance of an order made u/s 3(2)(c) by enacting Section 3(3)(C) and wording it differently. If what the learned Advocate General urges was the real intention of the legislature, it would have enacted Sub-section (3B) on lines similar to Sub-section (3C) but it has not done so.

Accordingly, we are of opinion that even though the State Government had fill authority to require 50 per cent of the food grains to be sold to it as contemplated by the impugned Order it was not open to it to have fixed Rs. 74 per quintal as the price payable in respect of such food grains, If the State Government desires to purchase 50 per cent of the food grains as contemplated by the Order, it mast pay its price as contemplated by Sub-section (3)(B)

This Bench decision of the Allahabad High Court highlights the necessity for the State Government to fix the price of food grains, edible oilseeds and edible oils in a manner provided u/s 3(3)(B) of the Act.

The Orissa High Court had to consider the validity of the provisions of the Orissa Paddy Procurement (Levy) Order, 1974 in Bijoy Kumar Routrai and Others Vs. State of Orissa and Others, . The order bad been promulgated under the Essential Commodities Act. In that case also Section 3(3B) of the Essential Commodities Act was the same as in the case before the Allahabad High Court. Admittedly, there was not control price for paddy either fixed u/s 3(2) of the Essential Commodities Act or under any other law for the time being in force. Among others, it was contended on behalf of the State Government that in fixing the price the State Government has taken into consideration the price fixed by the Government of India on the recommendations made by agricultural prices commission in September, 1974 regarding price policy for kharif cereals for the 1974-75 secession, that the agricultural prices commission was an All India body which collects rate regarding relevant issues like the cost of production of the cereals from the States and other sources including agricultural universities and formulates its recommendations and the price thus fixed bad been accepted by all States in India. It was further stated that the State Government had taken into consideration the open market pace of paddy that was prevalent during the last year during the period from December to March and that taking all the factors into consideration, the Government bad fixed and declared the price for paddy and rice for the purpose of the Order which according to the Government was the price likely to prevail during the post harvest period. The learned Judges after considering the contentions of the Counsel on both sides observed thus (at page 151):

The Petitioner has also produced a press note issued by the State Government, dated 31st of October, 1974, which would go to show that the State Government had as early as October, 1974 taken the view that the price of Rs. 74 per quintal should be fixed for the coarse variety in view of 1he fact that the Government of India had fixed that same for the entire country. The price of Rs. 74 as fixed by the State Government appears to be the outcome of its decision to adopt the price fixed by the Government of India on the recommendation of the Agricultural Prices Commission and not keeping the requirements of the, law in view.... We have already indicated that in the matter of fixation of the price these aspects were not indeed given due weight. Appropriate materials were not collected and the dominant consideration in adopting the rate of Rs. 74 per quintal of coarse paddy and with small increases for better varieties thereof was the Government of India''s decision to fix a on form price through out the country on the recommendation of the Agricultural Prices Commission In the note given by the Deputy Secretary for the matter of fixation of price to which we have already adverted, no other feature was taken note of. We agree that it was open to Government to take other relevant and germane aspects into account along with the prevailing price as also the post harvest price. But in view of the facts disclosed in the note of the Deputy Secretary (supra) it is not possible for us to hold that due regard was given to these aspects of the matter.

We have already seated that it is not the intention of the Act to be exproprietary in any manner. Therefore, it must be taken that Parliament intended to pay a reasonable price of the statutory purchase. The use of the word price must also be given due weight in disposing of the dispute. Price according to the Shorter Oxford English Dictionary means value, worth, estimation of value, money of the like paid for something. We have already noted the huge gap between the actual prevailing price on the price which was likely to prevail in the post harvest period on one side and the declared price on the other. According to us, it could not have been the intention of the Parliament to fix such a price in exercise of powers u/s 3(3)(B) of the Act. Therefore, the direction to ell at a price not in terms of the Act is an infraction and beyond the authority of delegation.

No doubt, there is a difference in language between Section 3(3B) of the Act which came up for consideration before the Allahabad and Orissa High Courts and the language of Section 3(3B) of the Act with which we are concerned in this case. However, that does not really affect the position. As already pointed out, the authority which has to specify the price u/s 3(3B) of the Act is the State Government. The State Government has to fix the price having regard to various factors mentioned in (a) to (d) of the said section. The price has almost be specified with the previous approval of the Central Government. Unlike in the case before the Orissa High Court, no attempt has been made in this case on the part of the State Government, that the price was fixed having regard to the various considerations mentioned in Section 3(3)(B) of the Act. On the other hand, there is clear documentary evidence in the case to show that the actual cost of production for a quintal of paddy for farmer in the State would be Rs. 147 and that the State Government recommended to the Central Government to give concurrence thereto. However, it is now a matter of admission that the State Government has fixed the price of fine variety paddy at Rs. 119 only because the Government of India bad fixed the price of fine variety paddy at Rs. 119 which in turn was the support price fixed by the agricultural price commission. In merely adopting the price of paddy fixed by the Government of India on the basis of the recommendations of the agricultural prices commission, the State Government an only be said to have abdicated its powers u/s 3(3B) of the Act. The primary authority to specify the prices u/s 3(3)(B) of the Apt is the State Government. The Central Government has to give its concurrence. If it does not agree with the State Government then the duty of the Central Government is to refuse the concurrence for reasons stated and then it will be for the State Government to reconsider the matter in the light of the comments that might be made by the Central Government. Though it is unnecessary to quote authorities in this context the passage from Wade on Administrative law, fourth edition page 305, will be useful.

An element which is essential to the lawful exercise of power is that it should be exercised by the authority upon when it is conferred, and by no one else. This principle is strictly, applied, even where it cause administrative inconvenience, except in causes where it may reasonably be inferred that the power was intended to be delegable. Normally the courts are rigorous in requiring the power to be exercised by the precise person or body stated in the statute, and in condoning as ultra vires action taken by agents, sub committees or delegates, however expressly authorized by the authority endowed with the power.

There is the further conspicuous fact in this case even the Central Government has not placed before the Court whether they took into consideration any of the matters referred to in Section 3(3B) of the Act in giving or refusing concurrence to the State Government and, if so what are the relevant factors. To repeat the Central Government has also been guided only by the recommendations of the agricultural prices com mission which can only be one of the factors which can be taken into considerations in determining the price u/s 3(3B) of the Act. No doubt, it is not open to a seller to claim that should be paid any particular price in the sense that be should be paid the market price or the just equivalent thereto since the scheme of the Act is that the essential commodity should be made available to the community at reasonable and fair price. That would not however mean that the State Government or the Central Government could fix any price without having regard to the relevant considerations mentioned in Section 3(3B) of the Act. In specifying the price to be paid the State Government as well as the Central Government are bound to follow the provisions contained in Section 3(3B) of the Act and determine the price accordingly. I am of the view that the fixation of the price of fine variety of paddy at Rs. 119 has not been done in accordance with Section 3(3)(B) of the Act. The prayer in the writ petition is for quashing of G.O. Ms. No. 33 dated 20tb January 1981, G.O. Ms. No. 785, dated 1st October 1981 and G.O. Ms. No. 949 dated 17th December 1981. The G.Os. cannot be quashed to the extent that they make a levy on wholesale dealers and wholesale rice millers to sell 50 percent of paddy and rice purchased by them to the State Government. G.O. Ms. No. 785 dated 1st October 1981 is quashed to the extent that it has fixed the price of fine variety of paddy at Rs. 119 per quintal and the price of rice calculated on that basis. It will be certainly open to the State Government to specify the price over again in terms of Section 3(3B) of the Act. The writ petitions are allowed to this extent. There will be no order as to costs.

The learned Additional Government Pleader pray that the order may be held in abeyance to enable the Government to decide whether an appeal should be filed and stay obtained or whether they should work out the price on the basis of this order. In view of the request made by the learned Government Pleader, there will be a stay of the order for a period of four weeks.