Full Judgment Text
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CASE NO.:
Appeal (civil) 9453 of 1996
PETITIONER:
WEST U.P. SUGAR MILLS ASSOCIATION AND ORS.
RESPONDENT:
STATE OF U.P. AND ORS.
DATE OF JUDGMENT: 07/02/2002
BENCH:
V.N. KHARE & S.N. PHUKAN & ASHOK BHAN
JUDGMENT:
JUDGMENT
2002 (1) SCR 897
The Judgment of the Court was delivered by
V.N. KHARE, J. Appellant nos. 4 to 22 before us 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. After the existing rate of commission was enhanced, the
appellant jointly submitted representation before the State Government,
inter alia, contending that enhancement is excessive and arbitrary.
Simultaneously, the appellants also filed writ petition challenging the
enhancement of society commission. However, in January 1992, the writ
petition was withdrawn.
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. The notification
dated 24.4.92 runs as under :
"1. (1) These rules may be called the Uttar Pradesh Sugarcane (Regulation
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of supply and Purchase) (Amendment) Rules, 1992.
(2) They shall remain in force with effect from 1.10.91 to 30.9.92.
2. In the Uttar Pradesh Sugarcane (Regulation of Supply and Purchases)
Rules, 1954, for the rules set out in column 1 below, the rules as set out
in column 2 shall be substituted :-
------------------------------------------------------------
Column 1. Column
Existing Rules Rules as hereby substituted
49. The occupier of a factory 49.The occupier of a factory
shall pay a commission on cane Shall pay a commission on cane
purchased at the rate of five per cent purchased at the rate of 2.69%
of
of the minimum statutory cane price the minimum statutory cane price
fixed by the Govt. of India, out of fixed by the Govt. of India, out
of
which seventy five per cent shall be which seventy five per cent
shall be payable to the cane growers’ payable to the cane growers’
co-cooperative society and twenty five operative society and twenty
five per percent to the Council. cent to the
Council.
Amount thus calculated at the rate of 2.69% per quintal will be calculated
to the nearest round figure to facilitate maintaining proper accounts."
(Emphasis is mine)
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The affect of the aforesaid notification was that existing rule 49 was
deleted and in its place new rule 49 was substituted. However, the
substituted rule remained operative from 1.10.91 to 30.9.92. It is not
disputed that the appellants herein continued to pay the society commission
on the basis of substituted rule 49 i.e. @ 2.69% of the minimum statutory
price of sugarcane. 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.
One of the grounds of challenge of the said circular was that once the old
rule 49 having been deleted and substituted by new rule 49 providing for
2.69% of the minimum statutory price of sugarcane even though it has ceased
to be operative after 30.9.92, the old fuel does not revive and the
respondents have no authority in law to charge society commission @ 5% of
the minimum statutory price of sugarcane. 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 and there is also a
connected writ petition under Article 32 of the Constitution, challenging
the impugned society commission.
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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.
On the argument of learned counsel for the parties, the first question that
arise for our consideration is that once the old rule has been deleted or
repealed and substituted by a new rule, whether the old rule would revive
when the substituted rule ceased to be operative.
In B.N. Tiwari v. Union of India and Ors., [1965] 2 SCR 421, the question
whether the old rule revives after the substituted rule was struck down
came up for consideration before this Court. In the said case, the Central
Services Rule of 1952 provided for carry forward rule whereby the unfilled
reserved vacancy of a particular year could be carried forward for one
year. In the year 1955, the said 1952 rule was substituted by another rule
providing that unfilled reserved vacancies of a particular year would be
carried forward for two years. Subsequently, the 1955 rule was declared
ultra vires. In that context, the question arose whether the 1952 rule had
revived after the 1955 rule was struck down. A Constitution Bench of this
Court held that old 1952 rule having repealed and substituted by the 1955
rule, the old 1952 rule would not revive after the 1955 rule was struck
down by this Court.
In Firm A.T.B. Mehtab Majid and Co. v. State of Madras and Anr., (1963)
Suppl. (2) 435, it was 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.
In Indian Express Newspaper (Bom.) Pvt. Ltd. and Ors. v. Union of India and
Ors., [1985] 1 SCC 641, the Government of India issued a notification dated
July 15, 1977, which was in force prior to March 1, 1981 under which total
exemption had been granted. Subsequently, the said notification was
substituted by another notification dated March 1,1981. The question arose
whether the old notification dated July 15, 1977 would revive on quashing
of the notification dated March 1, 1981. This Court held that on striking
down of subsequent notification, the repealed notification does not revive.
We are in total agreement with the statement of law declared by this Court
in the aforesaid decisions.
In the present case, sub-section (1) of Section 18 of the Act provides that
there shall be paid by the occupier of a factory or a Gur, Rab or Khandsari
sugar manufacturing unit a commission for every one maund of cane purchased
by the factory or sugarcane manufacturing unit. Sub-section (2) of the said
Section further provides that a commission payable under sub-section (1)
shall be at such rates as may be prescribed by the State government. Under
Section 28 of the Act, the State government is empowered to frame rules
prescribing the rate of commission payable by the occupier of the factory
or manufacturing unit.
The government of U.P., in exercise of power under Section 28 read with
Section 18 of the Act, amended rule 49 by deleting it and substituting the
same by a new rule 49 which provided the society commission @ 2.69% of the
minimum statutory cane price fixed by the Government of India. The
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notification dated 24.4.94 which has been extensively extracted above very
clearly and in an unambiguous terms provided that old rule set out in
column 1 below the rules shall be substituted by the rule set out in column
2. In fact, by doing so, the government was very clear in its intention
that it is substituting an old rule by a new one. Had the government ever
intended that after 30.9.92 the old rule would revive, it could have added
a proviso to the old rule 49 providing for society commission @ 2.69% with
effect from 1.10.91 to 30.9.92. The deliberate omission to provide what has
been contained in the new rule 49 by way of a proviso to old rule 49 shows
that the State government intended to repeal the old rule and substitute it
by a new rule 49.
It would have been a different case where a subsequent law which modified
the earlier law held to be void. In such a case, the earlier law shall be
deemed to have never been modified or repealed and, therefore, continued to
be in force. Where it is found that the legislature lacked competence to
enact a law, still amends the existing law and subsequently it is found
that the legislature or the authority was denuded with the power to amend
the existing law, in such a case the old law would revive and continue. But
it is not the case here. It is not disputed that the State government under
Section 28 read with Section 18 of the Act, has power to frame rule
prescribing the society commission. The State government by substituting
new rule 49 never intended to keep alive the old rule. The totality of the
circumstances shows that the old rule was deleted and came to be
substituted by new rule 49 and, therefore, we are of the view that after
new rule 49 ceased to be operative, the old rule 49 did not revive.
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.
It was, therefore, strongly argued that on application of Section 6-C of
the U.P. General Clauses Act, After substituted rule 49 ceased to be
operative and the same having been not re-enacted, the old rule 49 revived.
The contention has no merit. Section 6-C of the U.P. General Clauses Act
runs as under:
"6-C. Repeal or expiration of law-making textual, amendments in other
laws.-(l) Except as provided by sub-section (2), where any Uttar Pradesh
Act amends the text of any Uttar Pradesh Act or Regulation by the express
omission, insertion or substitution of any matter, the amending enactment
is subsequently repealed, the repeal shall not affect the continuance or
any such amendment made by the enactment so repealed and in operation at
the time of such repeal.
(2) Where any such amendment of text is made by any temporary Uttar Pradesh
Act or by an Ordinance or by any law made in exercise of the power of the
State Legislature by the President or other authority referred to in sub-
clause (a) of clause (1) of Article 357 of the Constitution, and such Act,
Ordinance or other law ceases to operate without being re-enacted (with or
without modifications) the amendment of text made thereby shall also cease
to operate."
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.
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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 us, 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.
For the aforesaid reasons, we are of the view that these matters deserve to
be allowed.
Before we part with the case, we would like to observe that learned counsel
for the appellant stated that they have paid the society commission on the
basis of substituted rule or whatever they have paid towards the society
commission, as per the respondents’ demand, they would not claim any refund
of the same. Under such circumstances, we feel that no further order is
required to be passed in that regard.
In view of what we have stated above, the judgment and order under
challenge is set aside. The appeal as well as the writ petition are
allowed. There shall be no order as to costs.