Case Note & Summary
The dispute arose between the United Commercial Syndicate, acting as the purchasing agent for Lingo Sulphite Corporation, and the U.P. State Sugar Corporation regarding the pricing of molasses, a key raw material for various industries. The Syndicate entered into an agreement to purchase 28,300 quintals of molasses at a statutory price of Rs. 9 per quintal, with a provision to pay Rs. 25.10 per quintal if the statutory price was invalid. After paying Rs. 2 lakhs, the Corporation sought to charge the higher price, claiming the molasses was not covered by an order under section 8 of the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964. The Syndicate filed petitions in the High Court, which were dismissed, leading to an appeal to the Supreme Court. The Supreme Court analyzed the relevant provisions of the Act, concluding that the occupier of a sugar factory could sell molasses released in their favour at market price, as the controlled price applied only to molasses specified in the Controller's order. The court emphasized that the classification of molasses under different rules was reasonable and did not violate constitutional provisions. The court dismissed the appeal and the writ petition, affirming the binding nature of the agreement made by the Syndicate. No costs were awarded.
Headnote
A) Administrative Law - Pricing of Molasses - The occupier of a sugar factory can sell molasses released in his favour at market price. - Uttar Pradesh Sheera Niyantran Adhiniyam, 1964, Sections 8, 10 - The court held that the controlled price applies only to molasses for which an order has been passed by the Controller, allowing the occupier to sell released molasses at market price. (Paras 73 B-E) B) Contract Law - Estoppel by Conduct - Parties cannot contract out of law regarding controlled pricing. - Uttar Pradesh Sheera Niyantran Adhiniyam, 1964, Sections 8, 10 - The court found that the appellant, having agreed to a higher price, could not later claim entitlement to the statutory price, affirming the binding nature of the agreement. (Paras 73 P-G) C) Constitutional Law - Reasonable Classification - Classification of molasses under rule 22(1) and rule 22(2) is reasonable and does not violate Article 14. - Uttar Pradesh Sheera Niyantran Adhiniyam, 1964, Sections 8, 10 - The court upheld the classification as valid, noting that similar provisions exist in other enactments. (Paras 73 B-E)
Issue of Consideration
Whether the molasses released in favour of the occupier by the Controller can be sold at market price or must be sold at the controlled rate.
Final Decision
The Supreme Court dismissed the appeal and the writ petition, affirming that the occupier could sell released molasses at market price and that the classification under the rules was reasonable.
Law Points
- Controlled pricing
- reasonable classification
- statutory price
- administrative charges
- estoppel by conduct
