State of U.P. can fix 'advised price' for sugarcane, over and above 'minimum price' fixed by centre - not void under Art 254: SC

The SC on April 22, 2020 {WEST U.P. SUGAR MILLS ASSOCIATION & ORS. v. THE STATE OF UTTAR PRADESH & ORS.} held that by virtue of Entries 33 and 34 List III of seventh Schedule, both the Central Government as well as the State Government have the power to fix the price of sugarcane. It was held that the Central Government having exercised the power and fixed the “minimum price”, the State Government   cannot   fix   the   “minimum   price”   of sugarcane. However, at the same time, it was held that it is always open for the State Government to fix the “advised price”   which   is always   higher than   the “minimum price”,   in   view   of   the   relevant   provisions   of   the Sugarcane   (Control)   Order,   1966,  which   has   been issued in exercise of powers under Section 16 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953.

In the present reference before the Constitutional Bench of SC, comprising of Justice Arun Mishra, Justice Indira Banerjee, Justice Vineet Saran, Justice M.R. Shah & Justice Aniruddha Bose, it was held by the SC that the Sugarcane (Control) Order, 1966 which has been issued   under   Section   16   of   the   U.P.   Sugarcane (Regulation   of   Supply   and   Purchase)   Act,   1953 confers power upon the State Government to fix the remunerative/advised price at which sugarcane can be bought or sold which shall always be higher than the minimum price fixed by the Central Government.

It was further held that Section   16   of   the   U.P.   Sugarcane   (Regulation   of Supply and Purchase) Act, 1953 is not repugnant to Section   3(2)(c)   of   the   Essential   Commodities   Act, 1955 and Clause 3 of the Sugarcane (Control) Order, 1966 as, the price which is fixed by the Central Government is the “minimum price”   and   the   price   which   is   fixed   by   the   State Government is the “advised price” which is always higher than the “minimum price” fixed by the Central Government and therefore, there is no conflict. It was held that it is only in a case where the “advised price” fixed by the State Government is lower than the “minimum price” fixed by the Central Government, the provisions of the   Central   enactments   will   prevail   and   the “minimum price” fixed by the   Central Government would prevail. It was observed that so long as the “advised price” fixed by the State Government is higher than the “minimum price”   fixed   by the   Central   Government,   the   same cannot be said to be void under Article 254 of the Constitution of India.

It was concluded that the view earlier taken by the Constitutional Bench of the Supreme Court in the case of U.P. Cooperative Cane Unions Federations vs. West U.P. Sugar Mills Association and Others (2004) 5   SCC 430, is the correct law.

The   core   issue  before the SC in present reference was whether  the   State   of   U.P.   has   the authority to fix the State Advised Price (SAP) [referred to as “SAP”], which is required to be paid over and above the minimum price fixed by the Central Government?

The same was answered in affirmative, and the reference was disposed of by Five Judges Bench of the SC - remitting the matter back to the concerned three judges Bench, which has sent the reference, for disposal of remaining & actual controversy in the cases.