Deciding Authority: The Supreme Court of India
Name of the Judges: V.N. KHARE & S.N. PHUKAN & ASHOK BHAN
Date of Judgement: 07/02/2002
Facts: Appellant nos. 4 to 22 before this Court are the companies incorporated under the Indian Companies Act and are engaged in the business of production and sale of sugar. These appellants own sugar factories (hereinafter referred to as ’sugar factories’) which are located in various parts of the State of Uttar Pradesh. One of the raw material required for production of sugar is sugarcane which is purchased from sugarcane growers through sugarcane cooperative societies-which are the respondents in these matters. The purchase of sugarcane by the sugar factories is regulated under the provisions of U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (hereinafter referred to as the Act). In exercise of power conferred under Section 28 of the Act, the State Government has framed rules known as the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as the Rules). Section 18 of the Act requires the sugar factories to pay a commission known as society commission to the cooperative cane societies a share of which is also transferred to the Cane Development Council. The rate at which the said commission is payable is left to be determined and prescribed by the State Government by the statutory Rules. The share of commission which comes to the cooperative societies is to cover their administrative costs, which include mainly the maintenance of staff deputed for undertaking various cooperative activities connected with the sale of sugarcane to the sugar factories. In the year 1985, the government of Uttar Pradesh by amending rule 49 of the Rules raised the society commission to .50 paise per quintal vide notification dated 11.7.85 Subsequently, the government of Uttar Pradesh by a subsequent notification dated 1.6.91 again amended rule 49 and revised the rate of society commission from the existing rate of .50 paise per quintal to 5% of the minimum statutory cane price fixed by the Central Government. It appears, the State Government on the representation of the appellants reduced the rate of society commission from 5% of the minimum statutory price of sugarcane to 2.69% of the minimum statutory price of sugarcane which worked out to .70 paise per quintal. This was done by the amendment of rule 49 of the Rules by notification dated 24.4.92. They shall remain in force with effect from 1.10.91 to 30.9.92. After 30.9.92, the Cane Commissioner of Uttar Pradesh issued a circular to the effect that the society commission after 30.9.92 shall be charged @ 5% of the minimum statutory price of sugarcane fixed by the Central Government on the premise that since the substituted rule came to be inoperative after 30.9.92, the old rule 49 has revived. Since the respondents insisted to charge society commission @ 5% of the minimum statutory price of sugarcane fixed by the Central Government, it is alleged that the appellants were compelled to file a writ petition before the High Court of Judicature at Allahabad. In the said writ petition, the appellants challenged the order dated 5.1.93 passed by the Cane Commissioner whereby and whereunder the Cane Commissioner issued direction to realise society commission @ 5% of the minimum statutory price of sugarcane, fixed by the Central Government. The High Court was of the view that on the application of Section 6-C of the U.P. General Clauses Act, the repealed or deleted rule 49 revived after the substituted rule 49 ceased to be operative. In that view of the matter, the writ petition was dismissed. It is against the said judgment and order of the High Court, the appellants have filed the present appeal by way of special leave petition.
Judgement: Learned counsel for the appellants raised two submissions. The first submission is that, after the statutory rule 49 providing for society commission @ 5% of the minimum statutory price of sugarcane having been deleted or repealed and substituted by a new rule 49, providing for society commission @ 2.69% of the minimum statutory price of sugarcane, the old rule 49 does not revive even after the substituted rule ceased to be operative. The second argument is that, in any event of the matter, the High Court was not legally justified in applying Section 6-C of U.P. General Clauses Act for holding that after the substituted rules having become inoperative, the old rule 49 would revive. Whereas, learned counsel appearing for the respondents urged that since the substituted rule in pith and substance has been rendered non-existent, the old rule would revive and the respondents have a right to charge society commission at the rate under the old rules. Pursuant to the first question, the Court, citing the cases of B.N. Tiwari v. Union of India and Ors., [1965] 2 SCR 421, Firm A.T.B. Mehtab Majid and Co. v. State of Madras and Anr., (1963) Suppl. (2) 435, Indian Express Newspaper (Bom.) Pvt. Ltd. and Ors. v. Union of India and Ors., [1985] 1 SCC 641, held that where an old rule has been substituted by a new rule, it ceases to exist and does not get revive when the new rule is held invalid. Regarding the second question Learned counsel for the respondent then pressed into service sub-section (2) of Section 6-C of the U.P. General Clauses Act and contented that where any amendment of text is made by any temporary U.P. Act or by an Ordinance, or by any law made in exercise of the power of the State Legislature by the President, such Act, Ordinance or other law ceases to operate without being re-enacted, the amendment of text made thereby shall also cease to operate. But the Court has found no merit. Section 20 of the U.P. General Clauses Act provides that where, by any Uttar Pradesh Act, a power to issue any statutory amendment is conferred, then expressions used in the statutory instruments shall, unless there is anything repugnant in the subject or context, have the same respective meanings as in the Act conferring the power. Sub-section (2) thereof further provides that the provisions of Section 4, 4A, 6, 6A, 6B, 7, 8, 9, 10, 10C, 11, 12, 13, 14, 15, 16, 17, 18, 19, 19A and 28 shall mutatis mutandis apply in relation to any statutory instrument issued under any Uttar Pradesh Act as they apply in relation to any Uttar Pradesh Act. A perusal of Section 20 shows that several provisions of Uttar Pradesh General Clauses Act have been made applicable in relation to statutory instruments including the statutory rules issued under any Uttar Pradesh Act. However, Section 6-C does not find place in sub-section (2) of Section 20 of the U.P. General Clauses Act. In absence of application of Section 6- C to the statutory instrument, including the statutory rule, which is the case before this Court, the contention of the respondents deserves to be rejected. Since Section 6-C of the U.P. General Clauses Act has not been applied to the statutory rule framed by the government of Uttar Pradesh, the substituted rule after it became inoperative, old rule 49 would not revive.
Decision:
The appeal is allowed.
Sudipta Bhowmick, 4th Year, KIIT School of Law.
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