PETITIONER:
JANKI SUGAR MILLS & CO.
Vs.
RESPONDENT:
COMMISSIONER OF MEERUT DIVISION, MEERUT
DATE OF JUDGMENT14/12/1978
BENCH:
TULZAPURKAR, V.D.
BENCH:
TULZAPURKAR, V.D.
SARKARIA, RANJIT SINGH
CITATION:
1979 AIR 616 1979 SCR (2) 778
1979 SCC (1) 524
ACT:
“Bonded Cane”, meaning of,-True effect of the
provisions of sub-clauses (2) and (3) of cl. 3 of the U.P.
Sugarcane Supply and Purchase Order, 1954, issued under s.
16 of the U.P. Sugarcane (Regulation of Supply and Purchase)
Act, 1953.
HEADNOTE:
The Government of India notified its decision that
certain deductions in the minimum cane price, on the basis
of recovery of sugar from sugarcane will be allowed to
sugarcane factories in U.P. on the cane supplied to them on
and after May 1, 1955 but that the deductions will be
allowed only on “unbonded cane” crushed by each factory and
not on ”bonded cane”, the latter of which shall have to be
purchased by each factory at the minimum cane price already
fixed for the season. In exercise of the powers delegated to
him under s. 3 of the Essential Commodities Act, 1955, the
Cane Commissioner U.P. issued a Notification on June, 1,
1955, whereunder “the producers of sugar by vacuum pan
process were allowed to make deductions as specified in the
Schedule thereto from the minimum price of per maund of cane
fixed for the season 1954-55 in respect of the unbonded
sugarcane crushed on and after May 1, 1955.
The appellant firm taking advantage of this
Notification granting concession in the minimum price, made
payment to Laskar Co-operative Cane Development Union Ltd;
after making deductions in respect of 2 lac maunds of
sugarcane supplied to it, under an agreement entered into
pursuant to the offer made to it on March 22, 1955. However,
on December 21, 1955 the Cane Commissioner issued a Recovery
Certificate under Sections 17 and 18 of U.P. Sugarcane
(Regulation of Supply and Purchase) Act, 1953 against the
appellant firm for a sum of Rs. 53,879.10 being the amount
deducted by the appellant firm while making payments to
Laskar Co-operative Union. On a challenge to legality of the
Recovery Certificate, the dispute was referred to the sole
arbitrator, the District Cane Officer under Rule 108 of the
U.P. Sugarcane (Regulation of Supply and Purchase) Rules,
1954. The arbitrator found that the supply of sugarcane was
“bonded cane” and therefore gave an award that the appellant
was not entitled to the concession and was liable to pay the
minimum price therefor.
An appeal to the Divisional Commissioner having been
dismissed, the appellant-firm filed a Writ Petition in the
Allahabad High Court which also was rejected. A further
special appeal also proving unsuccessful the appellant firm
appealed to the Supreme Court after obtaining a certificate
of fitness.
Dismissing the appeal, the Court,
^
HELD: 1. Neither the expression “bonded sugarcane” nor
“unbonded sugar cane” has been defined either in the Statute
or in the U.P. Sugarcane Supply and Purchase Order, 1954.
Having regard to the ordinary dictionary
779
meaning of the said expressions, the expression “bonded
sugarcane” must mean Sugar Cane secured by a bond or deed.
[783 G-H, 784 A]
2. Under the Notification of the Cane Commissioner
dated June 1, 1955 certain deductions from the minimum price
per maund of cane fixed for the season 1954-55 had been
notified in respect of the “unbonded sugarcane” crushed on
or after May 1, 1955. In other words, the concession is
granted in respect of the supply of ‘unbonded sugarcane in
contradistinction with supply of ‘bonded sugarcane. There is
nothing in the Notification to suggest that any particular
bond or a bond in accordance with the provisions of the U.P.
Sugarcane Supply and Purchase Order 1954 was intended and
therefore supply of bonded sugarcane’ would mean supply of
sugarcane which has been secured by a bond or an agreement
and such supply will not be entitled to the concession. On a
plain reading of the Notification in question, therefore, it
will appear clear that since the supply of two lac maunds of
sugarcane made by respondent no. 4 to the appellant-firm had
been secured by the agreement that was entered into between
the parties on May 4, 1955 the said supply will have to be
regarded as supply of ”bonded sugarcane” and as such the
appellant-firm was not entitled to the concession in the
minimum price payable in respect thereof to respondent no.
4, Laskar Co-operative Cane Development Union. [784 B-E]
3. On a fair reading of the sub-cls. (2) and (3) of cl.
3 of the Order two or there things become at once clear. In
the first place sub-cl. (2) uses the expression ‘may’ and
provides that a cane-grower or cane-growers’ cooperative
Society may within 14 days of the issue of an order
reserving an area for a factory make an offer to supply the
cane grown in the reserved area to the factory. That the
period of 14 days mentioned in this subclause is not
imperative or mandatory is also clear from sub-cl. (4) which
confers power upon the Cane Commissioner to extend the date
for making offer in respect of any reserved area. Secondly,
sub-cl. (3) uses the expression ‘shall’ indicating that an
imperative obligation is cast upon the factory to accept the
offer within 14 days from the receipt of the offer. Reading
the two sub-clauses together, it becomes clear that if a
cane-grower or cane-growers’ Co-operative Society makes an
offer within 14 days mentioned in sub-cl. (2) it is
obligatory upon the occupier of the factory to accept that
offer within 14 days of the receipt of the offer; this only
means that if the offer is made by cane-grower or cane-
growers’ Co-operative Society beyond the period specified in
sub-cl. (2) or the extended time under sub-cl. (4) it would
not be obligatory but optional for the occupier of the
factory to accept the said offer but if such offer made
beyond the prescribed or extended period is accepted by the
occupier of the factory a binding agreement comes into
existence between the parties and sugarcane supplied
thereunder would be bonded sugarcane’, more so when the
agreement is entered into in the prescribed form. Merely
because the offer from the cane-grower or cane-growers’ Co-
operative Society emanates after the expiry of the period
mentioned in sub-cl. (2) it does not mean that the parties
are preventive from entering in to an agreement in the
prescribed form and if they do, as was the case here, the
sugar cane supplied there-under would be ‘bonded sugarcane’.
Therefore, considering the question in the context of sub-
cl. (2) and sub-cl. (3) of the U.P. sugarcane supply and
Purchase Order 1954, also the appellant-firm was not
entitled to the benefit of the Cane Commissioner’s
Notification dated June 1,
780
4. The contention that sugarcane supplied by the cane-
growers or cane-growers’ Co-operative Society could be
regarded as “bonded sugarcane” only if offer of the
Canegrower or the Canegrowers Co-operative Society emanates
within the period prescribed by sub-clause (2) and the same
is accepted by the occupier within the period prescribed by
sub-cl. (3) is not correct. [786 D-F]
5. The true effect of sub-clauses (2) and (3) read
together is that the compulsion or obligation to accept the
offer on the part of the occupier of the factory arises only
when the offer is made by the cane-grower or Cane-growers’
Co-operative Society within the time prescribed by sub-cl.
(2) or the extended time under sub-cl. (4) but if the offer
is made after the expiry of that period it is optional for
the factory occupier to accept it or not but in cases where
he accepts such offer a binding agreement comes into
existence, and the sugarcane supplied thereunder becomes
“bonded sugarcane”. [786 E-M].
6. In the instant case the offer of additional quantity
of two lac maunds of sugarcane was undoubtedly made long
after the expiry of the period of sub-cl. (2) but the same
was accepted by the appellant-firm and a binding agreement
came into existence and what is more a binding agreement was
executed by the parties in the prescribed Form ‘C’. Further
the conduct on the part of the appellant-firm in referring
the dispute to arbitration and filing an appeal against the
arbitrator’s award under the relevant Rules clearly shows
that the parties, particularly the appellant-firm, treated
the agreement dated May 4, 1955 as one under the Act and the
U.P. Sugarcane Supply and Purchase Order, 1954. [786 F-H]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1083 of
1969.
Appeal from the Judgment and Order dated 5-12-1967 of
the Allahabad High Court in Special Appeal No. 1068 of 1967.
J. P. Goyal and Sobhagmal Jain for the Appellant.
G. N. Dikshit and O. P. Rana for Respondents 1-3.
Yogeshwar Prashad and Mrs. S. Bagga for Respondent No.
4.
The Judgment of the Court was delivered by
TULZAPURKAR, J. This appeal by certificate is directed
against the judgment rendered by the Allahabad High Court on
December 5, 1967 in Special Appeal No. 1068 of 1967 and
raises a short question whether the appellant is entitled to
the benefit of certain concessions (deductions) in the
minimum price notified by the Cane Commissioner in his order
issued on June 1, 1955 ?
The appellant (Shri Janki Sugar Mills & Company) is a
partnership firm carrying on the business of manufacturing
sugar. By an order passed on November 1, 1954 under s. 15 of
the Uttar Pradesh Sugar Cane (Regulation of Supply and
Purchase) Act 1953, the Cane Commissioner reserved certain
sugarcane centres for the appellant’s sugar
781
factory. On November 12, 1954 (i.e. within 14 days of the
reservation of the sugarcane centres) the respondent No. 4
(Laskar Co-operative Cane Development Union Ltd.) made an
offer for the 1954-55 crushing season for the supply of 6
lac maunds of sugarcane out of a total estimated yield of 12
lac maunds of sugarcane from certain centres. This offer was
accepted by the appellant-firm on November 27, 1954 (i.e.
within 14 days of the receipt of the offer) and an agreement
in the prescribed Form ‘C’ was duly executed on February 9,
1955. It contained the usual term that the appellant-firm
will pay for the sugarcane supplied to it “at the minimum
price notified by the Government subject to such deductions,
if any, as may be notified by the Government from time to
time”. On March 22, 1955 the respondent No. 4 made another
offer for supplying additional quantity of 2 lac maunds of
sugarcane to the appellant-firm, which offer was also
accepted on May 4, 1955 and a composite agreement in
prescribed Form ‘C’ was entered into on that very day for
the supply of 8 lac maunds of sugarcane (inclusive of the
initial 6 lac maunds). This agreement also contained the
usual term with regard to the payment being made “at the
minimum price subject to such deductions as may be notified
by the Government from time to time”. By a Press Note dated
May 23, 1955 the Government of India notified its decision
that certain deductions in the minimum cane price, on the
basis of recovery of sugar from sugarcane, will be allowed
to sugarcane factories in Uttar Pradesh on the cane supplied
to them on and after May 1, 1955 but that the deductions
will be allowed only on “unbonded cane” crushed by each
factory and not on “bonded cane”, the latter of which shall
have to be purchased by each factory at the minimum cane
price already fixed for the season. In exercise of the
powers under s. 3 of the Essential Commodities Act, 1955,
(delegated to him by the Government of India under a
Notification dated April 25, 1955), the Cane Commissioner,
Uttar Pradesh issued a Notification on June 1, 1955
whereunder “the producers of sugar by vacuum pan process
were allowed to make deductions as specified in the Schedule
thereto from the minimum price of per maund of cane fixed
for the season 1954-55 in respect of the unbonded sugarcane
crushed on and after May 1, 1955″. The appellant-firm taking
advantage of this Notification granting concessions in the
minimum price, made payments to Respondent No. 4 after
making deductions in respect of the two lac maunds of
sugarcane supplied to it, in respect whereof the offer had
been made to it on March 22, 1955. However, a Recovery
Certificate under ss. 17 and 18 of Uttar Pradesh Sugar Cane
(Regulation of Supply and Purchase) Act, 1953 against the
appellant firm for a sum of Rs. 53,878/10/- being the
amounts deducted by the
782
appellant-firm while making payments to Respondent No. 4.
The appellant-firm disputed the legality of the Recovery
Certificate on the ground that it had the right to make the
deductions in view of the Cane Commissioner’s Notification
dated June 1, 1955. The said dispute was referred by the
Cane Commissioner to the District Cane Officer, Bulandshahr
as the sole arbitrator under Rule 108 of the U.P. Sugarcane
(Regulation of Supply & Purchase) Rules, 1954. By his award
dated May 30, 1962, the District Cane Officer held that the
appellant-firm had wrongly made the deductions in respect of
the supply of two lac maunds of sugarcane which was “bonded
cane” and that the appellant-firm was liable to pay the
minimum price therefor.
Aggrieved by the award the appellant-firm preferred an
appeal to the Divisional Commissioner, Meerut under Rule 118
of the said Rules, but the appeal was dismissed on March 30,
1963. The appellant-firm challenged the legality of the
award of the District Cane Officer as also the appellate
order of the Divisional Commissioner by means of a writ
Petition in the Allahabad High Court being Civil
Miscellaneous Writ No. 2003 of 1963. The learned Single
Judge who heard the writ petition dismissed the same by his
judgment and order dated October 24, 1967. A further Special
Appeal No. 1068 of 1967 carried by the appellant-firm to the
Division Bench of that Court also proved unsuccessful on
December 5, 1967. The appellant-firm has come up in appeal
to this Court.
The only contention that was urged by counsel for the
appellant firm before us in this appeal was that the supply
of two lac maunds of sugarcane made by respondent No. 4 to
the appellant-firm was not bonded sugarcane at all and as
such the appellant-firm was entitled to the concessions
(deductions) in the minimum price payable in respect thereof
to respondent No. 4 in view of the Cane Commissioner’s
Notification dated June 1, 1955. In support of this
contention counsel relied upon sub-cls. (2) and (3) of cl. 3
of the U.P. Sugarcane Supply and Purchase Order, 1956 issued
under s. 16 of the Uttar Pradesh Sugarcane (Regulation of
Supply & Purchase) Act, 1953 and it was pointed out that
under sub-cl. (2) within 14 days of issue of the reserving
certain areas for a factory a cane-grower or a Cane-growers’
Cooperative Society has to make an offer to supply cane
grown in the reserved area to the occupier of the factory
and under sub-cl. (3) it was obligatory upon the occupier of
the factory for which such area has been reserved to accept
the same within 14 days of the receipt of the offer and
enter into an agreement in the prescribed form and it was
urged that unless such offer was made within 14 days as
prescribed
783
by sub-cl. (2) and was accepted within 14 days as prescribed
by sub-cl. (3) the supply of sugarcane thereunder could not
be regarded as supply of bonded-sugarcane. Counsel pointed
out that the offer of two lac maunds of sugarcane in the
instant case was made by respondent No. 4 long after the
expiry of 14 days from the issuance of the order reserving
certain areas for the appellant firm’s factory and that
offer had been accepted not within the limit prescribed in
sub-cl. (3) and, therefore, the sugarcane so supplied by
respondent No. 4 to the appellant-firm was not bonded
sugarcane but ought to be classified as ‘unbonded sugarcane’
and as such the appellant-firm was entitled to the
concessions in the minimum price notified in the Cane
Commissioner’s Notification dated June 1, 1955. It was
further pointed out that though under sub-cl. (4) of cl. 3
of the U.P. Sugarcane supply and Purchase Order, 1954, the
Cane Commissioner had the power to extend the date for
making offers in respect of any reserved area, no such
extension had been granted by the Cane Commissioner in the
instant case, and, therefore, the offer of two lac maunds of
sugarcane which was made by respondent No. 4 on March 22,
1955, long after the expiry of 14 days from the issuance of
the order of the Cane Commissioner on November 1, 1954
reserving certain sugarcane centres for the appellant’s
factory under s. 15 of the Act, could not culminate into an
agreement under the statute or the U.P. Sugarcane Supply and
Purchase Order, 1954, that the agreement entered into
between the parties on May 4, 1955 in respect of the said
supply must be regarded as an ordinary contract under the
Indian Contract Act and that the sugarcane supplied under
such ordinary contract must be regarded as unbonded
sugarcane. In other words, the contention was that only such
sugarcane as would be supplied by a cane-grower or a Cane-
growers’ Cooperative Society under an agreement made in
strict compliance of sub-cls. (2) and (3) of cl. 3 of the
U.P. Sugarcane Supply and Purchase Order, 1954 could be
regarded as bonded sugarcane.
The question raised in the appeal really turns upon
what is meant by the expression “unbonded sugarcane”
occurring in the Cane Commissioner’s Notification dated June
1, 1955 and the true effect of sub-cls. (2) and (3) of cl. 3
of the U.P. Sugarcane Supply and Purchase Order, 1954. It
must be stated, however, that neither the expression “bonded
sugarcane” nor ”unbonded sugarcane” has been defined either
in the statute or in the U.P. Sugarcane Supply and Purchase
Order 1954 and, therefore, regard must be had to the
ordinary dictionary meaning of the said expressions. In
Shorter Oxford English Dictionary the legal and technical
meaning of the expression ‘ “bond”
784
is given as “a deed by which the Obliger binds himself, his
heirs, executors, or assigns to pay a certain sum to the
obligee”. In Stroud’s Judicial Dictionary (4th Edn.) the
expression “bond” is explained as: “an obligation by deed”.
It will thus be clear that the expression “bonded sugarcane”
must mean sugarcane secured by a bond or deed. Under the
Notification of the Cane Commissioner dated June 1, 1955
certain deductions from the minimum price per maund of cane
fixed for the season 1954-55 had been notified in respect of
the “unbonded sugarcane” crushed on or after May 1, 1955. In
other words, the concession is granted in respect of the
supply of ‘unbonded sugarcane’ in contradistinction with
supply of ‘bonded sugarcane’. There is nothing in the
Notification to suggest that any particular bond or a bond
in accordance with the provisions of the U.P. Sugarcane
Supply and Purchase Order 1954 was intended and therefore
supply of ‘bonded sugarcane’ would mean supply of sugarcane
which has been secured by a bond or an agreement and such
supply will not be entitled to the concession. On a plain
reading of the Notification in question, therefore, it will
appear clear that since the supply of two lac maunds of
sugarcane made by respondent No. 4 to the appellant-firm had
been secured by the agreement that was entered into between
the parties on May 4, 1955 the said supply will have to be
regarded as supply of ”bonded sugarcane” and as such the
appellant-firm was not entitled to the concession in the
minimum price payable in respect thereof to respondent No.
4.
Considering the question in the context of sub-cls.(2)
and (3) of cl.3 of the U.P. Sugarcane Supply and Purchase
Order 1954 also we are clearly of the view that the
appellant firm was not entitled to the benefit of the Cane
Commissioner’s Notification dated June 1, 1955. For this
purpose it will be necessary to refer to s. 15 of the U.P.
Sugarcane (Regulation of Supply and Purchase) Act, 1953 and
set out Cl. 3 of the U.P. Sugarcane Supply and Purchase
Order, 1954. Under s.15(1) of the Act power has been
conferred upon the Cane Commissioner after consulting the
factory and the cane-grower/Canegrowers’ Co-operative
Society to (a) reserve any area (hereinafter called the
reserved area) or, (b) assign any area (hereinafter called
an assigned area) for the purpose of the supply of sugarcane
to a factory in accordance with the provisions of s.16
during one or more crushing seasons as may be specified. It
was under this provision that the Cane Commissioner has
passed order dated November 1, 1954 reserving certain
sugarcane centres (reserved area) for the appellant firm for
the 1954-55 season.
785
Clause 3 of the U.P. Sugarcane Supply and Purchase Order
1954 runs thus:
“3. Purchase of cane in reserved areas.-(1) The
occupier of a factory shall estimate or cause to be
estimated by the 31st day of October or such later date
in a crushing season as, on an application being made
to the Cane Commissioner by the occupier of a factory,
may be fixed by the Cane Commissioner, the quantity of
cane with each grower enrolled in the Grower’s Register
and shall on demand submit the estimate to the Cane
Commissioner and the Collector.
(2) A cane-grower or a Cane-growers’ Co-operative
Society may within 14 days of the issue of an order
reserving an area for a factory, offer in Form A of the
Appendix, to supply cane grown in the reserved area, to
the occupier of the factory.
(3) The occupier of the factory for which an area
has been reserved, shall, within fourteen days of the
receipt of the offer enter into an agreement in Form B
or Form C of the Appendix, with the Cane-grower or the
Canegrowers’ Cooperative Society, as the case may be,
in respect of the cane offered:
Provided that any purchase of cane made before the
execution of the prescribed agreement shall be deemed
to have been made in accordance with such agreement.
(4) The Cane Commissioner may, for reasons to be
recorded in writing, extend the date for making offers
in respect of any reserved area.
On a fair reading of the sub-cls.(2) & (3) of cl. 3 of
the Order two or three things become at once clear. In the
first place sub-cl.(2) uses the expression ‘may’ and
provides that a cane-grower or Canegrowers’ Co-operative
Society may within 14 days of the issue of an order
reserving an area for a factory make an offer to supply the
cane grown in the reserved area to the factory. That the
period of 14 days mentioned in this sub-clause is not
imperative or mandatory is also clear from sub-cl.(4) which
confers power upon the Cane Commissioner to extend the date
for making offer in respect of any reserved area. Secondly,
sub-cl.(3) uses the expression ‘shall’ indicating that an
imperative obligation is cast upon the factory to accept the
offer
786
within 14 days from the receipt of the offer. Reading the
two sub-clauses together, it becomes clear that if a cane-
grower or Canegrowers’ Cooperative Society makes an offer
within 14 days mentioned in sub-cl.(2) it is obligatory upon
the occupier of the factory to accept that offer within 14
days of the receipt of the offer, this only means that if
the offer is made by the cane-grower or Cane-growers’
Cooperative Society beyond the period specified in sub-
cl.(2) or the extended time under sub-cl.(4) it would not be
obligatory but optional for the occupier of the factory to
accept the said offer but if such offer made beyond the
prescribed or extended period is accepted by the occupier of
the factory a binding agreement comes into existence between
the parties and sugarcane supplied thereunder would be
‘bonded sugarcane’, more so when the agreement is entered
into in the prescribed form. Merely because the offer from
the cane-grower or Cane-growers’ Co-operative Society
emanates after the expiry of the period mentioned in sub-
cl.(2) it does not mean that the parties are prevented from
entering into an agreement in the prescribed form and if
they do enter into an agreement in the prescribed form, as
was the case here, the sugarcane supplied thereunder would
be ‘bonded sugarcane’. It is not possible to accept the
contention of learned counsel for the appellant that
sugarcane supplied by the cane-growers or Canegrowers’
Cooperative Society could be regarded as ‘bonded Sugar Cane’
only if offer of the Cane-grower or the Cane-Growers’ Co
operative Society emanates within the period prescribed by
sub-cl.(2) and the same is accepted by the occupier within
the period prescribed by sub-cl. (3). As stated earlier, the
true effect of sub-cls. (2) and (3) read together is that
the compulsion or obligation to accept the offer on the part
of the occupier of the factory arises only when the offer is
made by the cane-grower or Cane-growers’ Co-operative
Society within the time prescribed by sub-cl.(2) or the
extended time under sub-cl.(4) but if the offer is made
after the expiry of that period it is optional for the
factory occupier to accept it or not but in cases where he
accepts such offer a binding agreement comes into existence,
and the sugarcane supplied thereunder becomes “bonded
sugarcane”. In the instant case the offer of additional
quantity of two lac maunds of sugarcane was undoubtedly made
long after the expiry of the period of sub-cl.(2) but the
same was accepted by the appellant-firm and a binding
agreement came into existence and what is more that a
binding agreement was executed by the parties in the
prescribed Form ‘C’. Further the conduct on the part of the
appellant-firm in referring the dispute to arbitration and
filing an appeal against the arbitrator’s award under the
relevant Rules clearly shows that the parties, particularly
the appellant-firm, treated the agreement dated May 4, 1955
787
as one under the Act and the U.P. Sugarcane and purchase
Order, 1954.
We are, therefore, of the view that the authorities
below were right in coming to the conclusion that the said
additional supply of two lac maunds of sugarcane by
respondent No.4 to the appellant-firm was the supply of
“bonded sugarcane” and, therefore, the appellant-firm was
not entitled to the benefit of the Cane Commissioner’s
Notification dated June 1, 1955. In the result the appeal
fails and is dismissed with costs.
V.D.K. Appeal dismissed.
788