Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Official Citation: 2023 LHC 4778
Court / Jurisdiction: Lahore High Court
Year of Decision: 2023
Decision Date: 2023-10-02
Parties: Hamza Sugar Mills Ltd. & others vs Federation of Pakistan & others
Ruling Summary: This decision was rendered by the Lahore High Court on 2023-10-02, officially reported as 2023 LHC 4778. In this matter between Hamza Sugar Mills Ltd. & others and Federation of Pakistan & others, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2023LHC4778
Court Name: Lahore High Court Judge(s): Shahid Karim, Sultan Tanvir Ahmad Title: Hamza Sugar Mills Ltd. & others vs Federation of Pakistan & others Case No.: I.C.A No.61692 of 2021 Date of Judgment:2023-10-02 Reported As: 2023 LHC 4778 Result: Order Accordingly
Judgment Shahid Karim, J:-. This litigation includes a number of Intra Court Appeals arising out of a judgment passed by a learned Single Judge of this Court and reported as Munir Ahmad v. Government of Pakistan through Secretary Finance Islamabad and 19 others (PLD 2022 Lahore 108) as well as constitutional petitions which were filed on a subsequent time and raised a common issue of law. These appeals and constitutional petitions have been given in the appendix attached to this judgment as Appendix-I. There is a common thread running through these appeals and petitions and challenges converge on the following issue of law which is engaged before this Court: Does the power to fix price of essential commodities such as sugar in the present case lie in the Federal Government or the respective Provincial Governments under the Constitution of Islamic Republic of Pakistan, 1973; and Whether the Price Control and Prevention of Profiteering and Hoarding Act, 1977 is a valid piece of legislation. 2. Mr. Shehzad A. Elahi, Advocate, learned counsel for the appellants/petitioners has handed a brief which narrates the historical facts leading up to this litigation. It would be expedient to set out the brief (edited for our purposes) which is done hereunder: i. "On March 25, 2021, the Governor of the Punjab issued the Punjab Sugar (Supply-chain Management) Order 2021(the "Supply-chain Order") under the 1958 Act. ii. On April 02, 2021, the Director (Prices), Directorate General of Industries, Prices, Weights and Measures Punjab, issued a notice to all Commissioners and Deputy Commissioners of Punjab, directing them to fix the price of sugar (the "Director Notice"), based on purported calculations of cost of sugar production made by Federal Government, and directed them to convene a meeting of District Price Control Committee for this purpose. It is pertinent to highlight that an ex-mill price
---
## Page 2
of Rs. 80/kg was stated in the Director Notice, without referring to any data, notice or information on basis of which such rate was stated. The Director Notice also imposed a cap on retail price of sugar at Rs. 85/kg. iii. On April 4, 2021, the Secretary Industries Department, Government of Punjab issued a letter to all deputy commissioners in Punjab directing them to take certain actions under the Supply-chain Order in case of shortage of sugar in their districts. iv. A number of sugar mills filed Writ Petitions, including Writ Petition Nos. 23318/2021, 22970/2021, 22936/2021, 22977/2021, 30575/2021 and 30577/2021, before the Lahore High Court, Lahore, against, inter alia, the Supply-chain Order and the Director Notice dated April 2, 2021 and subsequent notifications issued by the concerned Deputy Commissioners. All of these petitions were heard together as connected matters. A learned Single Judge vide interim order dated April 7, 2021 allowed the respondents therein (Government of Punjab) to lift sugar up to the extent of 155,000 tons at a price of Rs. 80/kg as fixed by Government of Punjab on instructions of the Federal Government. The said quantity of sugar was lifted by the Government of Punjab. It was further directed that manner, mode of price fixation and the issue raised in the petition will be decided at the time of final hearing of the case. v. That subsequently, the Secretary, Ministry of Industries and Production, Government of Pakistan, in order to circumvent the orders of the Lahore High Court, Lahore, issued an order dated July 16, 2021, fixing consumer price of sugar at Rs. 88.24/kg. On the basis of said order, the Director General, Industries, Prices, Weight & Measures (Punjab) through notification dated July 16, 2021 fixed the ex-mill price of sugar at Rs. 83.24/kg while retail price at Rs. 88.24/kg. The aforesaid order and the notification were issued in an arbitrary manner without giving opportunity of hearing to the sugar mills. The sugar mills filed an application bearing C.M. No. 7 of 2021 for interim relief in the aforementioned Writ Petition No. 23318 of 2021 against the aforementioned order and notification. The C.M. was taken up for hearing by on July 23, 2021, on which date, the Court was pleased to pass an appropriate order. vi. In compliance of the aforementioned order of the Lahore High Court, Lahore dated July 23, 2021, the sugar mills and the Government representatives had a meeting on July 27, 2021. However, the Ministry of Industries and Production, Government of Pakistan illegally and in blatant disregard of the orders of Lahore High Court, Lahore, issued an order dated July 30, 2021 ("Secretary Order"), which fixed the maximum retail price of sugar at Rs. 89.50/kg and presumed an ex-mill maximum price at Rs. 84.50/kg (inclusive of sales tax). On the basis of the said order, the Director General of Industries, Prices, Weight & Measures (Punjab) also issued an order on the same date i.e. July 30, 2021 ("DG Order"), wherein the Secretary Order was reproduced in ditto, and fixed the ex-mill maximum price at Rs. 84.50/kg. In this new price fixation, the Secretary Order and the DG Order unilaterally changed the calculations for recovery rates of molasses, profit ratio, sucrose recovery, etc. which were earlier agreed. vii. Vide Writ Petition No. 48555 of 2021 and other writs filed by various sugar mills including Writ Petitions Nos. 49551/2021, 51051/2021, 51043/2021, 51045/2021, 51050/2021, inter alia, the Secretary Order and the DG Order both dated July 30, 2021, were challenged before the Honourable Lahore High Court, Lahore, wherein the Honourable Court was pleased to grant interim relief vide order dated August 3, 2021. viii. The Federation of Pakistan through its Secretary Ministry of Industries and Production challenged the Interim Relief Order before the Supreme Court of Pakistan through C.P. Nos. 4540 and 4541 of 2021 and the Supreme Court modified the interim relief order and disposed of the matter vide order dated August 12, 2021. ix. Thereafter, the Government of Pakistan promulgated the Price Control and Prevention of Profiteering and Hoarding Order, 2021 dated August 24, 2021 (the "2021 Order"), under Sections 3
---
## Page 3
and 4 of Price Control and Prevention of Profiteering and Hoarding Act, 1977 (the "1977 Act"). Additionally, the Schedule to the 1977 Act has also been substituted, in terms of SRO No. 1065(I)/2021 dated August 24, 2021. Under Section 3(b) of the 2021 Order, in respect of the commodities specified in Part II of the Schedule to the 1977 Act (which includes sugar), the business of determining price of sugar stands allocated to the Secretary, Ministry of National Food Security and Research, who shall exercise the powers of Controller General under the 2021 Order. x. The Lahore High Court, Lahore vide order dated August 26, 2021 of in Writ Petition No. 23318/2021 and connected petitions, held: "learned Additional Attorney General has undertaken on behalf of the Federal Government that sugar price shall be determined afresh in accordance with the SRO 1062 and the Appellate Authority shall also be notified accordingly." The High Court directed de novo proceedings to be undertaken to determine the price. xi. Subsequently, Pakistan Sugar Mills Association ("PSMA") received on September 6, 2021, a letter dated September 2, 2021, titled "Meeting on the Price Control and Prevention of Profiteering and Hoarding Order, 2021 and Price Fixation of Sugar". On September 07, 2021, PSMA submitted a detailed letter on subject of "Price of sugar" (the "PSMA Letter"), highlighting inter alia the background of the sugar industry and some of the adverse consequences of over-regulation and flawed government policies, how the ill-advised Government efforts to fix prices will completely distort the sugar supply chain and the blatant and repeated errors of the Government in its estimated cost of production of sugar. xii. In compliance with above noted orders of the Lahore High Court, PSMA held three meetings with the Committee of Ministry of National Food Security & Research, on the matter of determination of sugar rate: meetings dated September 08, 2021, September 09, 2021 and September 13, 2021 respectively (collectively, the "Meetings"). xiii. Without appreciating or even addressing the detailed submissions made on behalf of sugar mills by PSMA, vide the PSMA Letter and during the Meetings, the Controller General of Prices/ Secretary, Ministry of National Food Security & Research arbitrarily issued the order bearing No.F.1- 9/2014/DFSC-H/Sugarcane dated September 21, 2021 (the "2021 Sugar Price Order"), which fixed the maximum retail price of locally produced white crystalline sugar at Rs.89.75/kg and an ex-mill price maximum of Rs.84.75/Kg (inclusive of sales tax). The 2021 Sugar Price Order was issued in purported exercise of power under clause 3(b) of the 2021 Order. xiv. A number of sugar mills filed appeals against the 2021 Sugar Price Order before the Appellate Committee constituted vide SRO No. 1122(I)/2021 dated September 6, 2021 (which was later re- constituted). xv. Meanwhile Deputy Commissioners across Punjab issued orders pursuant to section 8 of the Supply-chain Order to sugar mills across the Province, arbitrarily directing mills to deliver sugar on daily basis to registered dealers in the concerned districts, at the ex-mill price of Rs. 84.75/kg as notified vide the 2021 Sugar Price Order, in complete and utter disregard of the pendency of the Appeals before the statutory appellate forum. xvi. Many sugar mills filed writ petitions, including WP Nos. 60005/2021, 59553/2021, 60010/2021, 59367/2021 and 60007/2021, before the Lahore Court, wherein the sugar mills challenged inter-alia the Supply-chain Order and orders of the respective Deputy Commissioners noted above. W.P. No. 59558/2021 titled 'Shahtaj Sugar Mills Limited etc. vs. Federation of Pakistan etc.' was also filed by various sugar mills raising, inter alia, several constitutional issues as well as the vires of the 1977 Act and all actions taken thereunder. The Court, vide consolidated order dated September 29, 2021, was pleased to refer to matter to the Appellate Committee, and dispose of the petitions. xvii. Meanwhile the earlier pending litigation mentioned above in para (4) above including Writ Petition Nos. 23318 of 2021 and 22977 of 2021 had been clubbed with a purported public interest litigation W.P. No. 3834/2020 titled 'Munir Ahmad vs Government of Pakistan etc.' filed before the
---
## Page 4
Lahore High Court in which a challenge was made to, inter alia, a purported price hike vis--vis 'white crystalline sugar'. All the aforementioned cases were disposed of by the learned Single Bench vide a consolidated Judgment dated September 29, 2021 (reported as PLD 2022 Lah 108). Against the stated judgment, various Intra Court Appeals have been preferred including the Intra- Court Appeal Nos. 61721/2021, 61692/2021, 61698/2021, 61701/2021, 61690/2021, 61698/2021, 61704/2021, 61716/2021, 61694/2021, 61715/2021, 61692/2021, 61655/2021, which are pending before a Division Bench of the Lahore High Court. xviii. Thereafter the Appellate Committee of the Ministry of National Food Security & Research, Government of Pakistan passed the decision dated October 07, 2021 (the "2021 Decision"). The assumption of jurisdiction by the Federal Government, including the vires of the 1977 Act, the promulgation of the 2021 Order dated August 24, 2021 and the 2021 Sugar Price Order passed by Secretary MNFSR dated September 21, 2021 and the 2021 Decision passed by the Appellate Committee dated October 07, 2021 were challenged by many sugar mills through various writ petitions before the Honourable Lahore High Court, including Writ Petitions 63163/2021, 63016/2021, 63011/2021, 63013/2021, 63015/2021, 63012/2021, 63014/202, 62989/2021, which are being heard alongwith the aforementioned ICAs and are pending adjudication. xix. Thereafter the Secretary, Ministry of National Food Security and Research arbitrarily, in undue haste, with mala fide and in an ex-parte manner issued the Order No.F.No.2-8/2022/SAB/A-IV dated April 20, 2023 (the "2023 Sugar Price Order") wherein he fixed the ex-mill and retail price of sugar at Rs. 95.57/kg and Rs. 98.82/kg respectively. The Respondent functionaries of the Government of Punjab, vide the letters dated April 20 and 26, 2023, sought to enforce the illegal 2023 Sugar Price Order on the sugar mills in Punjab and threatened illegal and coercive measures to unlawfully implement and enforce the same. The aforementioned illegal actions were challenged by various sugar mills including, inter alia, through appeals before the Appellate Committee and through Writ Petitions including W.P. No. 28772/2023, 28771/2023, 28767/2023, 28768/2023, 28769/2023, 28647/2023, 28773/2023, 28766/2023, 28770/2023, 28641/2023, 288891/2023, 28881/2023, 28891/2023 and 30156/202 wherein this honourable Court, vide order dated May 2, 2023 issued notice and restrained the Respondents from taking any coercive measures. Thereafter, vide order dated May 4, 2023, this Honourable Court suspended the 2023 Sugar Price Order as well as suspended the proceedings before the Appellate Committee where appeals of the sugar mills are pending. Thereafter, vide order dated May 24, 2023 these cases were transferred to be heard alongwith earlier cases (WPs and ICAs) pending before the learned Division Bench. xx. The Federal Government filed CPLAs against the aforementioned interim orders dated May 4, 2023 before the Supreme Court which were disposed on September 12, 2023 with no modification/withdrawal of the interim orders dated May 4, 2023. xxi. On July 28, 2023, the Governor of Punjab promulgated the Punjab Foodstuff (Sugar) Order, 2023 (the "2023 Sugar Order") (purportedly in exercise of powers under Section 3 of the 1958 Act). Thereafter on July 30, 2023, which was a holiday, a notice was sent to Punjab Zone of the Pakistan Sugar Mills Association (a trade association of sugar mills) ("PSMA"), through Whatsapp to its Manager Admin, titled "COST OF PRODUCTION OF SUGAR TO FIX THE EX-MILL SUGAR PRICES UNDER SECTION 4 OF PUNJAB FOODSTUFFS (SUGAR) ORDER, 2023". xxii. The 2023 Sugar Order as well above notices have been challenged by PSMA and a number of sugar mills through various writ petitions in the Honourable Lahore High Court (including Writ Petition Nos. 49812/2023, 49955/2023, 49833/2023, 49831/2023, 49826/2023, 49828/2023, 49825/2023, 49822/2023, 49824/2023, 49830/2023, 49829/2023, 50974/2023, 50982/2023,
---
## Page 5
49834/2023 and 50995/2023, herein vide interim order dated August 1, 2023 the Honourable Lahore High Court was pleased to grant interim relief. xxiii. Subsequently, on September 5, 2023, the aforementioned cases were also transferred by the learned Single Judge to be heard alongwith earlier cases (WPs and ICAs) pending before the learned Division Bench." 3. It can be seen from the narration set out above that the challenges were made primarily to the Price Control and Prevention of Profiteering & Hoarding Order, 2021 (the 2021 Order) dated August 24, 2021 issued under the powers conferred on the Federal Government by Sections 3 and 4 of Price Control and Prevention of Profiteering and Hoarding Act, 1977 (the 1977 Act). In addition to the above, the Schedule to the 1977 Act has also been substituted in terms of SRO No.1065(I)/2021 dated August 24, 2021. Under Section 3(b) of the 2021 Order in respect of the commodities specified in Part II of the Schedule to the 1977 Act (which include sugar) the business of determining price of sugar stands allocated to the Secretary, Ministry of National Food Security and Research who shall exercise the powers of the Controller General under the 2021 Order. 4. Learned counsel for the appellants/ petitioners contended firstly that the challenge before the learned Single Judge was to the legislative competence of the Parliament to enact a law and thereafter for the Federal Government to determine the price of sugar of which the present appellants and petitioners are manufacturer and producers within the Province of Punjab. Earlier, the law which governed such matters was the Punjab Foodstuffs (Control) Act, 1958 (the 1958 Act). While on the subject it may be expedient to state that another law which had relation to the subject matter was the Essential Commodities Act, 1957 which was repealed by the 1977 Act. The learned Single Judge however turned his focus to the public interest litigation which was already pending and in most parts based the impugned judgment on that litigation and the contentions raised therein. Learned counsel for the appellants/ petitioners have submitted that they took serious issue regarding Federal Government's power to fix price of sugar under the 1977 Act and at no point of time was there a concession on their part regarding this issue. It was held by the learned Single Judge that the 18th amendment had not taken away or affected the Federal Government's powers under the 1977 Act. Reliance was placed on a judgment of a Full Bench of this Court reported as LPG Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad and others (2021 CLD 214). In a nub, the impugned judgment by the learned Single Judge is based upon the concept of Inter-Provincial Trade as encapsulated in Article 151 of the Constitution of Islamic Republic of Pakistan, 1973 (the 1973 Constitution) and Entry 13 of Part II of the Fourth Schedule to the Constitution (Entry 13) which comprises the Federal Legislative List. In the present constitutional dispensation, there is only one list in our Constitution which is the Federal Legislative List on which the Parliament can legislate. The rest of the subjects which are not enumerated in the Federal Legislative List are within the competence of the Provincial Assemblies. During the oral arguments before us, learned D.A.G reiterated that competence of the Federal Government was derived from Article 151 read with Entry 13. In conclusion, it was held that the forum for price fixation had been determined by the 2021 Order and since the power lies with the Federal Government, the matter was referred in terms of the 2021 Order (SRO 1062) for decision by the Appellate Committee constituted thereby to be treated as a representation on the Court's direction and decided through speaking order. Learned counsel for the appellants/ petitioners have challenged the impugned judgment as well as the act of the Federal Government in enacting the 2021 Order and the price fixation under that Order on the premise that these questions have not been determined by the learned Single Judge and the entire gemut of legal arguments raised in relation to the constitutionality of the 1977 Act and the 2021 Order have escaped the attention of the learned Single Judge.
---
## Page 6
5. At the outset, we would like to refer to the position taken by the learned Advocate General, Punjab in his submissions under Order XXVII-A of the Code of Civil Procedure, 1908 whose notice was issued by this Court. It has been stated that: "i. Previously Essential Commodities Act, 1957and Punjab Foodstuff (Control) Act, 1958 clearly defined the limits of authority of each Federal Government and Provincial Government i.e Provincial Governments were to fix price the maximum retail price of sugar in a province and if sugar is transported between provinces, the regulation and price fixation of the same shall be administered by Federal Government. ii. The promulgation of Price Control and Prevention of Profiteering and Hoarding Act, 1977 claiming jurisdiction of the whole of Pakistan and repeal of Essential Commodities Act, 1957 blurred the scenario since Punjab Foodstuff (Control) Act, 1958 was still in force but a Federal Law hindered its operation. iii. Since Punjab Provincial Government was acting under authority given to it by Entry No.14 of the Concurrent Legislative List, it started following the mandate of Price Control and Prevention of Profiteering and Hoarding Act, 1977 and kept acting under the delegated authority of Federal Government under Section 4 of Price Control and Prevention of Profiteering and Hoarding Act, 1977. iv. With the omission of Concurrent Legislative List, the Federal Government was stripped of the power to administer the subject of price fixation of sugar within the territorial limits of a Province. The promulgation and later lapse of Price Control and Prevention of Profiteering and Hoarding Ordinance, 2022 does not leave the Punjab Provincial Government without any statutory authority to govern and administer the subject since (a) another provincial and valid law i.e Punjab Foodstuff (Control) Act, 1958 exists and after removal of the hurdle of a Federal Law, it can start functioning as before, and (b) Price Control and Prevention of Profiteering and Hoarding Act, 1977 has, automatically, become a Provincial Law clothing the Punjab Government with enough power to administer the provisions of it in light of PLD 2016 Lah. 433 & PLD 2016 Lah. 699." 6. Therefore, the Province of Punjab is in no manner of doubt that it has the capacity and the competence to control and fix prices of the essential food commodities including sugar and it is outwith the authority of the Federal Government under the Constitution. We approve the statement by the learned Advocate General Punjab which hews more closely to the constitutional scheme. Our reasons for holding so would be brought forth in the following paragraphs. It may also be noted that contentions and arguments of learned counsel for the parties shall be dealt with during the course of this judgment and will not be stated separately. 7. We firstly turn to the contentions raised by the learned D.A.G and the reliance on various provisions of law and the Constitution to seek an authority to vest in the Federal Government regarding price control and fixation of prices of essential foodstuff commodities. Learned D.A.G firstly referred to Article 151 of the Constitution which provides that: "151. (1) Subject to clause (2), trade, commerce and intercourse throughout Pakistan shall be free. (2) 1 [Majlis-e-Shoora (Parliament)] may by law impose such restrictions on the freedom of trade, commerce or inter-course between one Province and another or within any part of Pakistan as may be required in the public interest. (3) A Provincial Assembly or a Provincial Government shall not have power to-- (a) make any law, or take any executive action, prohibiting or restricting the entry into, or the export from, the Province of goods of any class or description, or (b) impose a tax which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former goods or which, in the case of goods manufactured or produced outside the Province discriminates between goods manufactured or produced in any area in Pakistan and similar goods manufactured or produced in any other area in Pakistan.
---
## Page 7
(4) An Act of a Provincial Assembly which imposes any reasonable restriction in the interest of public health, public order or morality, or for the purpose of protecting animals or plants from disease or preventing or alleviating any serious shortage in the Province of any essential commodity shall not, if it was made with the consent of the President, be invalid." 8. The above provision in the Constitution relates to Inter-Provincial trade and clearly states that the trade, commerce and intercourse throughout Pakistan shall be free. This is the essential and primary purpose of Article 151 and it cannot be extended to encapsulate powers which are not envisaged and which do not reside in either the Federal Government or a Provincial Government. By clause 3, a Provincial Assembly and a Provincial Government has been enjoined from making any law or taking any executive action prohibiting or restricting the entry into or the export from the Province of goods of any class or description and by paragraph (b) of clause 3, a tax which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former goods or which, in the case of goods manufactured or produced outside the Province discriminates between goods manufactured or produced in any area in Pakistan and similar goods manufactured or produced in any other area in Pakistan. This was elaborated in a judgment reported as Murree Brewery Company Limited through Chief Executive v. Province of Punjab…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.