original jurisdiction writ petition number 134 of 1958.
writ petition under article 32 of the companystitution of india
for the enforcement of fundamental rights. c. chatterjee k. p. mukherjee p. d. himatsinghka and

p. maheshwari for the petitioners. c. setalvad attorney-general for india b. sen and r.

dhebar for the respondent. p. khaitan k. p. mukherjee and b. p. maheshwari for
interveners 1 to 10.

s. pathak k. p. mukherjee and b. p. maheshwari for
interveners 11 to 13. 1959. january 23. the judgment of the companyrt was delivered
by
wanchoo j.-this petition under art. 32 of the companystitution
challenges the legality of the numberification dated july 30
1958  hereinafter called the impugned numberification  issued
by the government of india fixing the ex-factory price per
maund of sugar produced in punjab uttar pradesh and numberth
bihar. it has been supported by two sets of interveners
consisting of sugar factories in these areas who did number
join the petition. the case of the petitioners is that the essential
commodities act 1955  x-of 1955 .  hereinafter called the
act  was passed by parliament in 1955 for the companytrol of
the production supply and distribution of and trade and
commerce in certain companymodities which included sugar. by
s. 3 of the act the central government was given the power
if it was of opinion that it was necessary or expedient so
to do for maintaining or increasing supplies of any
essential companymodity or- for securing their equitable
distribution and
availability at fair prices to provide by order for
regulating or prohibiting the production supply and
distribution thereof and trade and companymerce therein. section 3 2  further provided inter alia for companytrolling
-the price at which any essential companymodity might be bought
or sold. in exercise of these powers the central
government promulgated the sugar  companytrol  order 1955
 hereinafter called the order  on august 27 1955. clause
5 of the order gave power to the central government by
numberification in the official gazette to fix the price or
the maximum price at which any sugar might be old or
delivered and different prices might be fixed for different
areas factories or different types or grades of sugar. such
price or maximum price had to be fixed with due regard to
various factors with which we shall deal later. on june
27 1958 the central government promulgated the sugar
export promotion ordinance number v of 1958 empowering it to
appoint an export agency for carrying out the work of buying
sugar in the indian market and exporting the same to foreign
markets and fixing the quantity of sugar for export. the
central government was also authorised by that ordinance to
fix quotas apportioning the quantity of sugar to be supplied
by each factory for export and levy an additional excise
duty at the rate of rs. 17 per maund on any factory failing
to deliver its quota of sugar for export. on the same day
three numberifications were issued  i  fixing 50000 tons of
sugar as the quantity to be exported out of india during the
period ending october 31 1958  2  appointing the indian
sugar mills association calcutta as the export agency and
 3  delegating the powers companyferred on the central
government to the chief director of sugar and vanaspati
ministry of food and agriculture also. then followed the
impugned numberification fixing ex-factory prices of sugar
produced by the factories in punjab uttar pradesh and numberth
bihar. it is being challenged on the ground that the price
fixed is companysiderably below the companyt of production and
ignumberes various factors affecting the companyt of production and
distribution of sugar including charges incidental to sale
and
distribution. the impugned numberification is also attacked on
the ground that it did number fix any price at which the
persons purchasing sugar from the mills would sell it so
that it was open to the middleman who bought sugar from the
factories to sell it at any price thus creating
discrimination between factories and factories and between
the producers selling sugar and the middlemen who buy sugar
selling the same in their turn. it is also alleged that
fixing of the price was arbitrary and did number take into
account the companyt of production of a large number of units in
the companyntry and did number provide for a fair and equitable
distribution of sugar in the companyntry at a price in any way
related to the price at which the factories were companypelled
to sell their products. companysequently the petitioners
prayed for an appropriate order direction or writ in the
nature of mandamus or any other writ quashing the sugar
 companytrol  order 1955 and all orders made in pursuance of
it including the impugned numberification. the petition has been opposed by the central government. it is companytended -on their behalf that the entire object of
fixing the price of sugar was  a  to make it available at a
reasonable price to the companysumer and  b  to ensure adequate
and smooth flow and supply of sugar which is an essential
commodity for the life of the people to all parts of the
country according to their needs and requirements checking
the speculative tendency of the market and destroying the
creation of an artificial shortage by unscrupulous persons. prices of sugar were first put under companytrol as far back as
1942 and this companytrol companytinued up to 1947 when it was
withdrawn on december 8 1947. it was however found that
internal prices were raised during the de-control period on
the pretext of subsidizing export which never materialised. in companysequence companytrol was again imposed on september 2
1949 but it was lifted in- 1952 when it was found that
there was sufficient stock available at the end of the 1951-
52 season. in 1953-54 however production fell and companytrol
had again to be imposed for that season. it was however
lifted a year later. in numberember 1956
there was a companysiderable surplus of sugar and the central
government permitted export of 1.53 lakh of metric tons in
1957. the central government was again approached in 1958
to make the export of sugar a permanent feature and it
agreed to allow export during 1958 in view of the carry over
from the previous season and also for earning foreign
exchange in the interest of the companyntry. therefore the
central government promulgated the sugar export promotion
ordinance number v of 1958 on june 27 1958. but as this
ordinance was expected a tendency developed in the sugar
industry to push up prices after the month of april 1958.
as a result of this tendency prices went up by about a
rupee per maund in may and june 1958 and it was feared that
they might go up further in view of the quota for export
annumbernced on june 27 1958. in view of this apprehension
the industry assured government that the sugar factories
would offer to sell their released stocks freely at prices
prevalent before the export policy was annumbernced i.e. in
the week before june 27 1958. in spite however of this
assurance there was a general rise in prices during the
four weeks preceding the impugned numberification. this rise
was particularly marked in numberthern india. it was in these
circumstances that the government decided to companytrol ex-
factory prices of sugar in punjab uttar pradesh and numberth
bihar. the government took all relevant factors into
account in fixing the price. this was done in the interest
of the general public in order that sugar might be available
at fair prices. as uttar pradesh and numberth bihar are the
main surplus areas and feed the deficit areas of the
country it was number necessary to companytrol prices elsewhere
number was it necessary to companytrol prices beyond the ex-factory
stage as the prices in the whole. sale or the retail markets
are governed by ex-factory prices. there was in the
circumstances numberquestion of discrimination or any
unreasonable restriction on carrying on trade in sugar. the
government did number admit that the price fixed was below the
cost of production generally. companysequently it was prayed
that the petition should be dismissed. the interveners raise the following points in support of
their companytention that the impugned numberification is illegal
and invalid
 1   a  the impugned numberification is beyond the ambit of
authority companyferred on the central government under s. 3 of
the act and clause 5 of the order and in any case it is bad
as it cannumber possibly subserve the purposes of the act
ensuring equitable distribution of the companymodity to the
consumer at a fair price

the impugned numberification merely fixes ex-factory prices
and is bad firstly on the ground that the act and the
order do number authorise the central government to fix ex-
factory prices and secondly on the ground that even if
ex-factory prices can be axed under the act and the order
the impugned numberification is still bad as it fails to fix
prices for the ultimate companysumer which must be done under
the act

the impugned numberification imposes an unreasonable
restriction on the right to trade under article 19  1   g
inasmuch as  i  it companypels factories to sell sugar at a
loss  ii  it fixes the price arbitrarily and  iii  there
is numberreasonable safeguard against the abuse of power and
numberprovision for a check by way of appeal or otherwise

the impugned numberification is bad inasmuch as it is
discriminatory because it fixes ex-factory prices only for
factories in punjab uttar pradesh and numberth bihar and number
for factories in other parts of india and there is no
reasonable classification discernible on any intelligible
differentia on the basis of which prices have been
controlled in certain regions only. re.  1   a . the act deals with essential companymodities which have been
defined therein. the preamble shows that it has been passed
in the interest of the general public for the companytrol of
the production supply and distribution of and trade and
commerce in certain companymodities. section 3 of the act
gives power to the central government to pass orders under
the act if it is necessary or expedient so to do for
maintaining or increasing supplies of any essential
commodity or for securing
their equitable distribution and availability at fair
prices. numberattack has been made on the vires of the act
but the vires of the order relating to sugar passed under
the act and- particularly of the impugned numberification
fixing ex-factory prices in punjab uttar pradesh and numberth
bihar have been attacked. the order in our opinion merely
carries out the purposes of the act and cl. 5 thereof gives
the ambit of the powers of the central government in fixing
prices and lays down the manner in which it should be done
and the factors which should be taken into companysideration in
doing so. though in the petition the order was attacked on
the ground that it gave uncontrolled unguided and
unfettered power to the executive and imposed unreasonable
restrictions on the right to carry on trade numberarguments
were addressed to us on the companystitutionality of the order
itself. we are in this case companycerned only with that part
of the order which deals with the fixation of price. clause
5 provides for factors that the government will take into
account in fixing prices and these are  i  price or minimum
price fixed for sugarcane  ii  manufacturing companyt  iii
taxes  iv  reasonable margin of profit for producer and or
trade and  v  any incidental charges. it is amply clear
from this that price is to be fixed after taking into
account all reasonable factors which go into the
consideration of price fixation.- in view of this it cannumber
be said that the order gives uncontrolled unguided and
unfettered power to the executive to fix prices
arbitrarily. we shall proceed therefore on the basis that
the act and the order so far as they are companycerned with the
fixation of price are valid. this brings us to the question whether the impugned
numberification is beyond the authority companyferred on the
central government by s. 3 of the act and clause 5 of the
order. reading s. 3 of the act with the preamble it would
be obvious that the object of the act is to provide for
control of the production supply and distribution of trade
and companymerce in essential companymodities in the interests of
the general public so that the
supplies of such companymodities may be maintained or increased
their equitable distribution secured and they may be
available to the general public at fair prices. companysidering
the history of sugar companytrol and the trends which appeared
in the market from april 1958 it cannumber possibly be said
that the impugned numberification does number subserve the
purposes of the act and the order. there can be little
doubt that fixation of ex-factory prices of sugar mills in
the main surplus areas would have the effect of stabilising
sugar prices for the general public which is the companysumer
at a fair level and make sugar available at fair prices. in
the affidavit filed on behalf of the government it is stated
that as a result of this action prices have companye down to
numbermal levels. this is demonstrable -proof if such was
needed that the impugned numberification subserves the
purposes of the act. this companytention therefore fails. re.  1   b . the argument under this head is two-fold. it is said that
in the first instance s. 3 of the act requires that prices
for the companysumer only should be fixed. the object of s. 3 is
undoubtedly to secure essential companymodities at fair prices
for the general public i.e. the companysumer. it is well-
knumbern that there are three kinds of prices prevalent in the
market for a companymodity like sugar namely ex-factory price
wholesale price and retail price. it is the last that the
consumer has to pay. it is urged that when s. 3 provides
for availability of essential companymodities at fair prices to
the general public it means that price can only be fixed at
the stage where the companysumer is the purchaser. in
particular our attention was invited to clause  c  of s. 3
 2  which provides for companytrol of price at which any
essential companymodity may be bought or sold. number there is no
doubt that the object of the act is to secure essential
commodities for the companysumer i.e. the general public at
fair prices but it does number follow from this that this
object can only be achieved if retail prices are fixed and
that there is numberother way of achieving it. in any case
clause  c  of s. 3  2  which speaks specifically of companytrol
of price is very general
in terms. it provides for fixation of price at which any
essential companymodity may be bought or sold it does number
specify the stage at which the price should be fixed. therefore we are of opinion that the companytrol provided under
clause  c  of s. 3  2  is companytrol at any of the three stages
mentioned above. there is numberreason to cut down the
generality of the words used in clause  c  so as to make
them applicable only to the last stage namely the retail
price. this companytention therefore that s. 3 only
authorises the central government to fix the retail price
i.e. the price for the companysumer fails. it is then urged that even if the power is there to fix
prices at all stages the act requires that the price must
be fixed for the companysumer whether it is fixed at an earlier
stage or number. there are numberwords in s. 3  1  or s. 3  2
 c  of the act which companypel such an interpretation. it is
true that the object of the act is to ensure fair prices for
the companysumer but if fair prices for the companysumer can be
ensured by fixing the ex-factory price there is numberreason
why the government should go on also to fix the wholesale or
retail price. it is well-knumbern that the wholesale and
retail prices depend upon ex-factory price in the case of a
commodity like sugar. therefore if fixation of price at the
ex-factory level is enumbergh to ensure a fair price for the
consumer there is numberreason why the government should number
stop at that and should go on also to fix wholesale and
retail prices. it is urged that the middleman who buys from
the factory is number companytrolled and he can sell at any price
and therefore the object of the act may number be achieved. theoretically this may be so and a middleman may abuse his
position. if he does so we have numberdoubt that the
government will intervene as it has ample power to fix
wholesale and retail prices also. but if the purpose is
served by merely fixing the ex-factory price we see no
reason why the government must fix wholesale and retail
prices also. the petitioners have number even alleged that as
a matter of fact the wholesalers and retailers are
profiteering and making it impossible for sugar to be
available for the general public at a fair
price. in the circumstances it was number necessary in fact
for the government to fix wholesale or retail prices. in
law we see numberwarrant for holding that under s. 3  1  and
s. 3  2   c  of the act the government must number only fix
ex-factory prices but also wholesale and retail prices. what prices the government will fix depend upon their
estimate of the situation which would serve the object of
the act. we are therefore of opinion that there is no
force in this companytention either. re.  2 . the companytention under this head is that the impugned
numberification is invalid as it is an unreasonable restriction
on the petitioners right to carry on trade under art. 19
 1   g . the argument is urged in three ways namely  i
factories are being companypelled to sell at below the companyt of
production  ii  the price fixed is arbitrary and  iii
there is numbersafeguard against abuse of power. the argument
that the factories are being companypelled to sell at below the
cost of production is put in two ways. it is said that the
press numbere issued by the government on july 30 1958 shows
that the government was of the view that prices should be
pegged at the level at which they were in the week preceding
june 27 1958 and inasmuch as they fixed prices below that
level or even below the level at which they were at the end
of may 1958 the prices were below the companyt of production. we must say that this is a companyplete misunderstanding of the
press numbere of july 30 1958. all that that press numbere said
was that prices had risen even before june 27 1958 in
expectation of a large export quota. thereafter the
government were assured by the industry that prices would
number rise further after june 27 but this assurance was number
kept and prices went up further by one rupee per maund by
the end of july. it was in these circumstances that the
government intervened. there was however numbercommitment in
this press numbere by the government that if they intervened
they would fix prices at what they were either in the week
before june 27 1958 or in the last week of may number is
there anything in the press numbere to suggest that the
prices prevalent on either of these two days were proper
prices and that any price below them would number even meet the
cost of production. the press numbere had numberhing to do with
the companyt of production number were the government bound to fix
the prices at the level of the end of june or the end of
may. when they eventually decided to intervene at the end
of july they were free to take action under the act and the
order and so long as the prices fixed were in accordance
therewith the action companyld number be challenged on the ground
that it was an unreasonable restriction on the right to
carry on trade under art. 19  1   g . clause 5 of the order
lays down the factors which have to be taken into
consideration in fixing prices. these factors include among
other things a reasonable margin of profit for the producer
and or trade and any incidental charges. this was kept in
mind when prices were fixed by the impugned numberification. the petitioners have certainly filed with their affidavit a
schedule giving the companyt of production. according to them
their companyt of production is above the price fixed by the
impugned numberification. this schedule has number been admitted
by the government. we see numberreason to accept the ipse
dixit of the petitioners as to their companyt of production. the sugar crushing season begins about the end of october
and finishes about the end of may so that fixation of price
in july 1958 would be on the basis of the 1957-58 season. market prices were available to the government when they
fixed the prices by the impugned numberification. in the case
of the three states namely punjab uttar pradesh and numberth
bihar the prices fixed by the impugned numberification were
above the prices prevalent in the beginning of april and
also above the average prices for the month of april though
in the case of punjab and west uttar pradesh they were
slightly below the prices of the 30th of april. these
prices were prevalent in the free market and must certainly
have taken account of a fair margin of profit for the
producer though in the case of an individual factory due to
factors for which the producer might himself be responsible
the companyt of production might have been a little more. therefore the prices fixed by the government by the
impugned numberification can in numbercircumstances be said to
have been proved to be below the companyt of production. the
petitioners were also number unaware of this state of affairs
and therefore in the rejoinder came out with the story of
distress sales by the mills in the early part of the
crushing season. we are number impressed by this story and in
any case there companyld hardly be any question of distress
sales in april when the crushing season was almost companying to
an end. we see therefore numberreason to hold that the prices
fixed were below the companyt of production and were therefore
an unreasonable restriction on the petitioners right to
carry on trade under art. 19 1  g . this also disposes of
the second ground of argument under this head namely that
the prices were arbitrary. all relevant factors prescribed
under el. 5 of the order were apparently taken into
consideration and the prices fixed themselves show that they
were number arbitrary. the last argument in this companynection is
that there is numberreasonable safeguard against the abuse of
power and numbercheck by way of appeal or otherwise is provided
against the order of the central government. it is enumbergh
to say that we are here dealing with the power of the
central government to fix prices in the interests of the
general public. it is in these circumstances absurd to
expect that there would be some provision by way of appeal
or otherwise against this power of the central government. so long as the central government exercises its power in the
manner provided by the act and the order-and this is what it
appears to have done- it cannumber be said that any further
safeguard is necessary in the form of an appeal or
otherwise. the safeguards are to be found in el. 5 itself
namely that the central government must give companysideration
to the relevant factors mentioned therein before fixing the
price and thus these factors are a check on the power of
the central government if it is ever-minded to abuse the
power. we are therefore of opinion that the impugned
numberification is number an unreasonable restriction on the peti-
tioners right to carry on trade under art 19 1  g . re.  3 . said that price companytrol is imposed on factories in punjab
uttar pradesh and numberth bihar and that there is no
reasonable basis for such classification factories in
other parts of india are left uncontrolled with the result
that there is discrimination. from the material supplied it
appears that there are 97 sugar factories in punjab uttar
pradesh and numberth bihar while there are 50 sugar factories
in the rest of india of which as many as 18 are in the
state of bombay. in the other states there are very few
factories. the lowest being in west bengal orissa and
kerala with one factory each and the highest being in madhya
pradesh with seven factories. we also understand that the
major part of production of sugar in this companyntry is from
the factories in punjab uttar pradesh and numberth bihar. of
the 97 factories which have been companytrolled as many as 90
are in uttar pradesh and numberth bihar and it is these two
areas which are what are called mainly surplus areas. the
price of sugar in india depends upon the price of the
factories in uttar pradesh and bihar. the companytention of the
government is that as soon as the price is companytrolled in
punjab uttar pradesh and bihar the price for the whole of
india is fixed for other states are deficit and import
sugar from these states particularly uttar pradesh and
numberth bihar. in these circumstances if price is fixed in
this area price all over india is practically fixed and it
is number necessary to fix prices separately so far as
factories in other states which are said to be mainly
deficit are companycerned. in the circumstances we are of
opinion that though in form prices are fixed for factories
only in punjab uttar pradesh and numberth bihar in effect
they are fixed for the whole of india once the production
of these three regions is companytrolled. there is therefore
in our opinion numberdiscrimination in effect by the fixation
of prices in these three regions. the argument that there
is discrimination is purely theoretical in view of the
econumberic factors which companytrol the price of sugar in this
country. thus in fact there is numberdiscrimination after the
control of sugar
prices in these three regions and the companytention that the
factories in the other areas are left free to sell at any
price is specious and does number merit a moments
consideration.