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Petitioner: FAUJI SUGAR MILLS VS Respondent: PROVINCE OF THE PUNJAB and others
Court Name: Lahore High Court Judge(s): Sh. Abdul Manan Title: FAUJI SUGAR MILLS vs PROVINCE OF THE PUNJAB and others Case No.: Writ Petition No, 8460 of 1992 and Civil Miscellaneous No, 1192 of 1993 Date of Judgment:1994-12-22 Reported As: 1996 CLC 592 Result: Petition accepted
JUDGMENT
JUDGMENT ' Writ Petitions Nos.8460, 8464, 8465, 8526, of 1992, 4740, 4741, 4742, 4759 of 1986, 5110, 4973, 407 of 1987, 5719, 5720, 5721 of 1988, 4655, 4656, 7616, 7927 of 1990, 128, 9527 of 1992, 7116 of 1993, 9277 and 11780 of 1994 were accepted by a short order dated 22-12-1994 and the reasons for such disposal are as hereunder. In all the writ petitions, common question of law and facts is involved. 2. Petitioners are factory owners and produce sugar after purchasing sugarcane from the cane growers. This purchase of sugarcane is regulated under the provisions of Sugar Factories Control Act, 1950, hereinafter called the Act and Sugar Factories Control Rules, 1950, hereinafter called the Rules. Section 16 of the Act empowers the Provincial Government to fix minimum price of the cane and the same is reproduced as under:- "16. Powers to Provincial Government to fix minimum price.--(i) The Provincial Government, after consultation with the . Board, may by notification, determine in respect of any area the minimum price to be paid by occupiers of factories or purchasing agents for cane purchased in that are either generally or related to the sugar contents of the cane or direct that such minimum price shall be calculated in the manner prescribed. (ii) The Provincial Government may, from time to time, vary, by notification, the price fixed under subsection (i).. (iii) The occupier of a factory or a purchasing agent shall not make any deduction from the amount due for the cane sold to him by a cane grower or a Cane Growers' Cooperative Society, except such deductions as may be prescribed or as the Provincial Government may, by notification, from time to time allow.
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(iv) The Provincial Government may, after consultation with the Board, by notification, direct that in addition to the minimum price to be paid for cane, the occupier of a factory shall pay for special varieties of cane to be specified in the notification and which the cane grower or Cane Growers' Cooperative Society has agreed to supply, such additional price as the Provincial Government may direct." ' It is manifestly clear that under subsection (i) of section 16, aforementioned, a notification has to be issued fixing the minimum price to be paid by the occupiers of factories or purchasing agents for cane purchased and under rule 13 of the Rules the factory owners shall not nay the price of cane below the minimum price fixed under section 16 of the Act. In case of special varieties of cane, a notification has to be issued under subsection (iv) of section 16 on the terms mentioned therein. 3. In all the writ petitions, a notification under subsections (i), (ii) of section 16 was issued fixing the minimum price of the sugarcane for each crushing season. For instance, in Writ Petition No,4740-86 Notification dated 6-1-1986 issued by the Government is as follows: Government of the Punjab, Food Department. Dated Lahore, the 16th January, 1986. NOTIFICATION ' No, SOF (Sugar) 13(127)185.--In exercise of the powers conferred on him by subsections (i) and (ii) of section 16 of the Sugar Factories Control Act, 1950 (N.-W.F.P. Act No,XXII of 1950), the Governor of the Punjab is pleased to fix the minimum price of Sugarcane for the crushing season 1985-86 as given below:-- {{TABLE}} 1. Price payable at factory gate. Price payable at a purchasing centre established under sub-rule (4) of rule 11 of the Sugar Factories Control Rules, 1950. Rs,24.11 per quintal. Or Rs,241.10 per M. Ton. Paisas 5 per quintal per kilometre (Paisas 8 per quintal per mile) less than the price payable at the factory gate subject to the maximum deduction for a distance of 40 kilometres from the factory gate. {{TABLE}} BY ORDER OF THE GOVERNOR OF THE PUNJAB, MUHAMMAD AZHAR SECRETARY TO GOVERNMENT OF THE PUNJAB FOOD DEPARTMENT ' Another Notification dated 14-1-1986 was issued by the Government of Punjab and the same is as under:- Government of the Punjab, Food Department. Dated Lahore, the 14th January, 1986. NOTIFICATION ' No, SOF (Sugar) 13(71)182.--In exercise of the powers conferred on him by subsections (i), (ii) and (iv) of section 16 of the Sugar Factories Control Act, 1950, the Governor of the Punjab is pleased to order payment of quality premium by the sugar mills to the cane growers for the crushing season 1985-86 as under:-- "Quality premium at the rate of 11 paisas per maund of cane for each 0.1% of excess recovery on account of higher sucrose contents over and above 8.55% than the recovery assumed in the official price formula should be allowed to the cane growers and paid at the end of the season. This premium will not be admissible for non-approved varieties. The premium would be worked out on the basis of a crushing season of 160 days. However, if the crushing season is prolonged due to excess production of cane in the mills zones, the entire crushing season may be taken as the base for calculating the excess recovery."
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BY ORDER OF THE GOVERNOR OF THE PUNJAB MUHAMMAD AZHAR SECRETARY TO GOVERNMENT OF THE PUNJAB FOOD DEPARTMENT ' In Writ Petition 8460-92, Notification dated 6-8-1991 has been issued in the following manner combining both notifications one for fixing the minimum purchasing price of sugarcane and the other to pay quality premium-- GOVERNMENT OF THE PUNJAB FOOD DEPARTMENT. Dated Lahore, the 6th August, 1991. NOTIFICATION ' No, SOF (SUGAR) 13(343)/91.--In exercise of the powers conferred on him by section 16 of the Sugar Factories Control Act, 1950, the Governor of the Punjab is pleased to fix the minimum purchase price of sugarcane at the factory gate for the crushing season 1991-92 at Rs,16.75 per kgs. Or Rs,41.875 per 100 kgs. (per quintal) or Rs,418.75 per M. Tonne. However, the Sugar Factories may deduct from the purchase price the transportation charges incurred by them on the cane purchased at purchase centres or at other locations away from the factory gate at the rate of paisas 5 per quintal (100 kgs) per kilometre subject to a maximum deduction for distance of 40 kilometres from the factory gate. ' In addition, quality premium will be payable by the Sugar Factories at the rate of paisas 22 per 40 kgs. Of cane delivered to the Sugar Factories for each 0.1% excess recovery above the average base recovery of 8.5%. BY ORDER OF THE GOVERNOR OF THE PUNJAB KHALID SAEED SECRETARY TO GOVERNMENT OF THE PUNJAB FOOD DEPARTMENT 4. The petitioners do not assail the notification issued under section 16 fixing the minimum purchase price of sugaracane but assail vehemently the other notification directing them to pay quality premium as being without jurisdiction. In pursuance of second notification, respondent/Cane Commissioner has raised financial demand which according to the petitioners is equally without jurisdiction. 5. Learned counsel appearing on behalf of petitioners inter alia contend that there is no legal sanction for the second notification directing the petitioners to pay an extra sum in term of ' quality premium' as used in the relevant notification in each writ petition. According to them, the extra demand. Or additional price as quality premium is wholly unwarranted and is unconstitutional and invalid in the eye of law on the following pleas:-- (a) That there is no legal concept of quality premium to be paid in addition to the price paid under sub-section (i) of section 16 of the Act. Elaborating this point further, it is submitted that in case of special varieties of cane, a notification has to be issued under section 16(iv) of the Act and this requirement has not been fulfilled in anyone of the writ petitions. Further, contended that they have already paid the price of sugarcane fixed under subsection (i) of section 16 and they cannot be afflicted with a burden of additional price on account of higher sucrose contents over and above a particular base level fixed by the respondents. Learned counsel repeatedly submit that higher sucrose contents are achieved from the cane for which price has already been paid. (b) That there was no law directing the petitioners to pay quality premium and this necessitated the respondents to promulgate various Ordinances on the same subject one after the other and finally there was an amendment in the Sugar Factories Control Act, 1950 by Act II of 1991 adding section 16-A and the same is reproduced as under:-- "16-A. Quality premium.--The Provincial Government may direct the Factories to pay quality premium at the end of the crushing season at such rate as may be specified by the Provincial
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Government in proportion to the sucrose recovery of each factory in excess of base level sucrose contents determined by the Provincial Government, from time to time." ' Elaborating the plea, learned counsel contends - that before insertion of section 16-A, aforementioned, various notifications/demands by he respondents to pay quality premium were wholly void and without jurisdiction otherwise, according to them, there could not be any amendment as aforesaid. According to learned counsel, demand of quality premium, therefore, is not covered under any of the provisions of section 16. (c) That the amendment in the nature of section 16-A is unconstitutional and against law as the respondents are only empowered to fix the purchase price of sugarcane under subsection (i) of section 16 and in case of special varieties of cane to direct payment of additional price. It is contended that this can be termed as statutory contract between petitioners and respondent/Government and that the former are only liable to pay the price determined under section 16(i) and additional price under section 16(iv) in case of special varieties of cane and no other financial obligation such as quality premium. (d) That the amendment is uncertain, vague, arbitrary, unreasonable and also suffers from the vices of excessive delegation and that it can be termed as financial bill. 6. Before examining the case of petitioners, it is necessary to reproduce some of the legislation before Act II of 1991 inserting section 16-A in the Act of 1950: (I) Section 16-A was inserted in the Act by Ordinance IV of 1990 promulgated on 19-3-1990 and is as hereunder: "16-A. The Provincial Government may direct the Factories to pay quality premium at the end of the crushing season at such rate as may be specified by the Provincial Government in proportion to the sucrose recovery of each factory in excess of base level sucrose contents determined by the Provincial Government, from time to time." (II) Then there was Ordinance X of 1990 promulgated on 29-5-1990, Ordinance XX of 1990 on 8-9- 1990, Ordinance XXX of 1990 on 7-12-1990 and Ordinance VII of 1991 on 23-2-1991 inserting section 16-A exactly in the same language as reproduced above. (III) Finally the aforementioned section 16-A was added in the Sugar Factories Control Act, 1950 by way of Act II of 1991 on 16-3-1991. 7. The case of all the petitioners is that amendment/notification directing payment of quality premium is void and without jurisdiction and similarly the demand raised by respondent/Cane Commissioner in pursuance of aforementioned notification in each writ petition. 8. As to the first contention of petitioners, after examining various provisions of section 16 it is crystal clear that in each case notification has been issued under section 16(i)(ii) directing that minimum purchase price of sugarcane be paid by-the petitioners for production of sugar and it is a common ground that quality premium is in respect of sugarcane for which the price has already been paid. Under section 16(iv) the respondent/Government can ask the petitioners to pay additional price but the same is subject to the following limitations:-- (a) That the special variety of cane has to be specified in the notification. (b) That the exercise has to be done after consultation with the Board; and (c) That the cane growers or Cane Growers' Cooperative Society has agreed to supply the special varieties of cane. 9. Admittedly no such notification as envisaged under section 16(iv) has been issued nor the same has been brought to the notice of this Court despite the fact that representative of Cane Commissioner was appearing during the course of arguments alongwith Mr. Irfan Qadir, learned Additional Advocate-General. In this view of the matter it is not understandable how the respondents are insisting upon the petitioners for the payment of extra price in the form of quality premium. This alone is sufficient to hold that the action of respondents in raising this extra demand
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is not only arbitrary but illegal and unconstitutional. The petitioners are liable to pay only the price for cane under subsection (i) and additional price under subsection (iv) of section 16 and no other extra demand can be raised upon them. In this background, it would be necessary precisely to examine section 16-A which has been made the basis of demand. According to the language used if the petitioners are able to achieve higher percentage of sucrose contents in excess of base level sucrose contents determined by the Provincial Government then for the difference payment has to be made according to the rates determined by the respondents and this is called ' quality premium'. For instance, in para. 2 of notification dated 6-8-1991 in Writ Petition No,8460-92, average base level of sugar contents is fixed as 8.5% and if higher sugar contents are achieved, the petitioners have been directed to pay at a particular rate for excess recovery of sugar contents. In case, however, the petitioners are unable to achieve the higher sucrose contents or in many cases below the average base level fixed by the Government, the price of cane purchased by petitioners would be the same and there will be no reduction therein. This situation would give rise to find out what is meant by the word 'premium'. 10. In Black's Law Dictionary {Fifth Edition), 'premium' is defined as "a reward for an act done. Brown v. Board of Police Commissioners of City of Los Angeles, 58 Cal. App. 2d. 473, 136 P. 2d. 617, 619. See also Bonus. A bounty or bonus; a consideration given to invite a loan or a bargain, as the consideration paid to the assignor by the assignee of a lease, or to the transferor by the transferee of shares of stock, etc. So stock is said to be "at a premium" when its market price exceeds its nominal or fact value. The excess of issue (or market) price over par value. See Par. In granting a lease, part of the rent is sometimes capitalized and paid in a lump sum at the time the lease is granted. This is called a 'premium'. The sum paid or agreed to be paid by an insured to the underwriter (insurer) as the consideration for the insurance. The price for insurance protection for a specified period of exposure". In Legal Thesaurus by William C. Burton, 'premium' means "amount over par, bonus, bounty, charge beyond normal, charge to excess, excessive charge, extra, incentive, increased value, over charge, prize. It is further stated as "amount paid periodically, annual commitment, annual encumbrance, annual fee, annual instalment, annual liability, annual obligation, annual payment, annual rate of insurance, annual remittance, contract payment, periodic payment, yearly payment. In Ballentine's Law Dictionary (1979) (Third Edition) "a premium is a reward or recompense for some act done. Alvord v. Smith, 63 Ind. 58), an amount offered by way of a prize to a successful competitor in a contest. 24 AmJ Ist Gaming & 100 et seq. A purse, prize, stake or sweepstake; some valuable thing offered by a person for the doing of something by others, into the strife for which he does not enter. Harris v. White, 81 NY 532. Something given a purchaser of merchandise in addition to the article or commodity purchased. 52 AmJ Ist Trade ST & 11. An amount paid above par value because of quality or of demand. An advance payment of rent in a lump sum, calculated on the basis of present worth of sums to be paid in the future. A sum paid to the master under a contract of apprenticeship, to cover instruction and maintenance. An amount paid by a borrower for the privilege of receiving a loan in preference to other applicants. 13 AmJ2d B & L Assoc & 54". 11. In view of above meaning of 'premium', it is settled that 'premium' is a reward or a bonus for an act done and the persons so doing is entitled to such a reward, If the petitioners are achieving higher percentage of sucrose contents than the base level fixed by the respondents then it is the petitioners alone entitled to claim premium from the Government and not the other way round. But in the above illustration I am of the considered opinion that the petitioners cannot claim such a premium because there is no such agreement with the respondents. Similarly they cannot be asked to pay some extra money for the simple reason that they are doing something good by obtaining higher percentage of sucrose. Some of the petitioners have vehemently raised that they have installed very valuable and latest machinery for producing sugar as compared to the other
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factory owners and this is the basis for obtaining higher sucrose contents and instead of rewarding, they are being punished to pay the quality premium in the form of additional price which no system of law would permit on facts and circumstances of the case. The plea of petitioners that they have already paid the price of sugarcane under section 16(i) of the Act and, therefore, they cannot be compelled twice to pay the additional price of the same sugarcane is valid and has to be accepted. They are agreeable to pay the additional price for special varieties of sugarcane provided the same is specified in the notification under section 16(iv) of the Act which, as stated above, is riot the case of respondent in anyone of the writ petitions. On this ground alone, extra demand by the respondent/Cane Commissioner against the petitioner in writ petition is without lawful authority and stands on no better footings than without jurisdiction. 12. Various provisions of section 16 of the Act, when examined, clearly postulate, that subsections (i) and (iv) of section 16 are independent of each other and the first could be treated as general provision while the other as special and that there is no ambiguity in anyone of the provisions of this section rather tend to harmonize with each other and this is the proper rule of interpretation of statute. In 1988 SCM R 91 "Messrs Standard Printing Press v. Sindh Employees' Social Security Institution" while analysing the provisions of West Pakistan Employees' Social Security Ordinance it is laid down in para. 7 as follows:-- "The result of these several statements is that construing any statute the Court should adhere to the ordinary meaning of the words used, and to their grammatical construction, unless the words when so read produce some manifest absurdity or injustice, inconsistency, inconvenience or incongruity; or unless the meaning so given be repugnant to the context, or at variance with the intention of the Legislature as it is stated expressly or by implication, or as it may be collected from other parts of the same statute." ' This has been considered to be the first elementary principle which has come to be known as a 'golden rule' stated in the Statute Law by Edward Wilberforce (page 112). Keeping in view the aforementioned ' golden rule', it is settled once for all that various provisions of a section/statute must be interpreted harmoniously to each other and one provision cannot be interpreted in such a manner so that the other becomes nugatory. Mr. Irfan Qadir, learned Additional Advocate-General filed a brief note of his submissions and placed reliance on AIR 1958 SC 677 "Babulal Bhuramal v. Nandram Shivram" by pointing out that it is the duty of the Court to construe the various provisions in harmony with each other. There is, therefore, no cavil with the proposition and keeping this principle in view, it is amply demonstrated that respondent/ Government can only charge price of sugarcane generally under section 16(i) and additional price under section 16(iv) in case of special varieties which must be specified in the notification which, admittedly, is not issued and neither placed by the respondents in anyone of the writ petitions. This being the case, the petitioners, in law, are not liable to pay any extra demand in the form of quality premium. 13. In AIR 1967 SC 1895 "M/s. Devi Das Gopal Krishnan, etc. v. State of Punjab and others" there was amendment in the Punjab General Sales Tax Act, 1948 of the word 'purchase' so that tax may be levied on a particular goods twice and while analysing the same in para. 25 it was observed as follows:-- "25. Bearing that in mind let us look at clause (ff) in section 2 of the Principal Act in which the said clause was inserted. The ingredients of the definition of 'purchase' are as follows: (i) there shall be acquisition of goods; (ii) the acquisition shall be for cash or deferred payment or other valuable consideration; (iii) the said valuable consideration shall not be other than under a mortgage, hypothecation, charge or pledge. Clause (h) of section 2 defines 'sale' thus: --sale' means any transfer of property in goods other than goods specified in Schedule C for cash or deferred payment or other valuable consideration but does not include a mortgage,
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hypothecation, charge or pledge." If we turn to the Sale of Goods Act, section 4, therefore, defines a contract of sale of goods. It reads: 'Contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price....' ' The essential requisite of sale or (i) there shall be a transfer of property or agreement to transfer property by one party to another, and (ii) it shall be for consideration of money payment or promise thereof by the buyer. A sale and purchase are different aspects of the same transaction. If look at it from the stand point of a purchaser it is purchase and if we look at it from the stand of the seller it is sale. Whether purchase or sale it shall have the said ingredients both in common law and under the Indian Contract Act. 'Price' has been defined in the Sale of Goods Act to mean money consideration for the sale of goods: see section 2(10) of the Indian Sale of Goods Act. It will, therefore, be seen that the definition of 'purchase' in the Act prima facie appears to be wider in scope than 'sale'. While transfer of goods from one person to another is the ingredients of 'sale' in general law, acquisition of goods, which may in its comprehensive sense take in voluntary as well as involuntary transfers is an ingredient of ',purchase' in clause (ff). While 'price', i,e,, money consideration, is the ingredient of ' sale', cash deferred payment or any valuable consideration is an ingredient of 'purchase'. But a closer scrutiny compels us to give a restricted meaning to the expression 'acquisition' and 'price'. Acquisition is the act by which a person acquires property in a thing. 'Acquire' is to become the owner of the property. One can, therefore, acquire a property either by voluntary or involuntary transfer. But the Sales Tax Act applies only to "sale" as defined in the Act. Under clause (ff) of section 2 of the Act it is defined as a transfer of property. As purchase is only a different aspect of sale, looked at from the stand point of the purchaser, and as the Act imposes tax at different points in respect of sales, having regard to the purpose of the sale, it is unreasonable to assume that the Legislature contemplated . Different categories of transactions when the taxable event is at the purchase point. Whether it is sale or purchase the transaction is the same. If it was a transfer inter vivos, in the case of a sale, it must equally be so in the case of purchase. Context, consistency mid avoidance of anomaly demand a restricted meaning. That it must only mean transfer is also made clear by the'nature of the transactions excluded from the acquisition, namely, mortgage, hypothecation, charge of pledge -- all of them belong to the species of transfer. We must, therefore, hold that the expression ' acquisition' in clause (ff) of section 2 of the Act means only ' transfer' ." ' Thereafter, conclusions are drawn in para. 29 to the effect 'then it is contended that while section 15 of the Central Sales Tax Act, 1956 (Act 74 of 1956) imposes a restriction on the State not to tax at more than one stage, the Amending Act by introducing the definition of…
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