T.V.R Tatachari, J.:— These three letters Patent Appeals, Nos. 17, 45, and 18 of 1970, can be disposed of by a common judgment. The appellants in letters Patent Appeal No. 17 of 1970 are (1) R.D Aggarwala and (2) Dalmia Dadri Cement Limited having its registered Office at Charkhi-Dadri, District Mohinder Garh, Haryana. The appellants in Letters Patent Appeal No. 45 of 1970 are (1) Dalmia Cement (Bharat) Limited having its Registered Office at Dalmia Puram in the State of Tamil Nadu and its Head Office at New Delhi, and (2) Shri J.C Dawar. The appellants in letters Patent Appeal No. 18 of 1970 are Musadi Lal, Smt. Shanti Devi, Raghunath Das and Shiv Shankar Lal. The respondents in all the three appeals are (1) the Union of India, through the Secretary, Ministry of Industrial Development and Company Affairs, Department of Industrial Development and (2) the Cement Corporation of India Ltd. having its Registered Office at New Delhi. In Letters Patent Appeal No. 18 of 1970, however, there are two more respondents, namely (3) Dalmia Dadri Cement Limited, Charkhi-Dadri, and (4) Dadri Cement Co., Delhi. During the pendency of the appeals, a Joint Secretary in the Ministry of Industrial Development and Company Affairs (Department of Industrial Development), who was appointed as the Controller for the purposes of the Cement Control Order, 1967, in addition to his own duties as Joint Secretary, with effect from October 12, 1968, was added as respondent in all the three appeals.

The appellants in the appeals. L.P.A Nos. 17 and 45 of 1970 are producers of cement, while the appellants in the appeal, L.P.A No. 18 of 1970, are consumers. The appeals have been filed against the judgment of a learned Judge of this Court (V.S Deshpande, J.) dated December 5, 1969, in Civil Writ Petitions Nos. 220, 319 and 725 of 1968, by the three sets of appellants respectively, whereby the learned Judge rejected the contentions of the appellants impugning the validity of the Cement Control Order, 1967, issued in exercise of the power under Section 18G of the Industries (Development and Regulation) Act, 1951, and dismissed the writ petitions. Another set of consumers also filed Civil Writ Petition No. 726 of 1968 raising the same contentions, and that was also dismissed by the learned Judge by the same judgment. But, no appeal has been filed by the said set of consumers. We have thus only two appeals by the producers and one appeal by the consumers before us.

After pronouncing the judgment on December 5, 1969, Deshpande, J. by a separate order of the same date, granted certificate under Article 132 (1) of the Constitution of India that the cases involved a substantial question of law as to the interpretation of the Constitution. On the basis of the said certificates, he petitioners in the writ petitions filed appeals in the Supreme Court. On February 23, 1970, the Supreme Court cancelled the said certificates and left the parties free to file appeals in the High Court, if they so desired. Thereafter, the three aforesaid sets of appellants filed the present three appeals with applications for condonation of delay. The delay was condoned and the Letters Patent Appeals were admitted. It is thus, that the present appeals, L.P.As Nos. 17, 45 and 18 of 1970, have come before us for disposal.

The circumstances in which the writ petitions came to be filed may be stated first. We have been given a chronological list of events by the learned counsel for the appellants and the correctness of the same was not disputed by the learned counsel for the respondents. The said list is borne out by the report of the Tariff Commission, 1961, on the revision of fair prices payable to cement producers, a copy of which has been furnished to us.

The history of the prices of cement since 1926 was set out in paragraphs 8.2.1 to 8.2.6 of the aforesaid report. From 1920 to July, 1942, the market price of cement was free. During the said period, the indigenous industry is stated to have been struggling for its existence against foreign competition, and its then seven constituent units formed themselves into an association called the Indian Cement Manufacturers' Association. The said Association used to fix and regulate the selling prices. From August 1942, to September, 1946, the Government imposed under the defence of india rules control over production, prices, and distribution of cement, and 90 per cent of the country's production was taken up for Defence purposes. As consumption on Government account decreased in later years, the Government, in consultation with the A.C.C (Associated Cement Companies Limited) and the Dalmia Group of Factories, agreed to release the surplus cement for public consumption and the price of such supplies was fixed in March, 1944, at Rs. 70/- per tonne f.o.r (free on rail) destination. The price was being revised from time to time and varied between Rs. 70/- and Rs. 60/- per tonne during the period from March, 1944, to the end of 1946, From October, 1946, to the end of June, 1956, after the lapse of the defence of india rules, the Government exercised an informal control by fixing prices from time to time by executive orders. During that period, in 1953, the Tariff Commission conducted, for the first time, an inquiry into the prices of cement and, on the basis of the recommendations of the Commission the Government fixed revised prices of cement. The price structure recommended by the Commission followed the previous pattern and was a uniform f.o.r destination price based on the A.C.C's. costs of production taking them as fairly representative for the industry.

From July 1, 1956, the State Trading Corporation of India (S.T.C) took over the distribution of cement and, as a result, the f.o.r destination prices which were in force previously underwent revision. Each producer was given a retention price for his cement on the basis of his ex-works cost, the uniform f.o.r destination price being determined by the State Trading Corporation adding a pooled freight to the average of retention prices. In 1958, the Tariff Commission held a second inquiry into the prices of cement, and recommended individual ex-works prices for producers in accordance with the prevalent prices. The recommendation was accepted by the Government and the ex-works prices were revised from July 1, 1958. There was a further revision with effect from January 1, 1960. With effect from February 20, 1961, the equalised f.o.r destination price was fixed for naked cement, and packing charge was notified separately every quarter and collected from consumers. By a resolution, dated October 20, 1960, the Government of India, being of the opinion that a comprehensive review of the cement industry taking into account all aspects of the industry, such as production, prices, distribution, development, etc. was necessary, requested the Tariff Commission to conduct a fresh inquiry. The Commission, on conclusion of its inquiry, submitted its report on August 26, 1961, which is the report which we have been referring to. The final fair ex-works selling prices of naked cement for 19 units in the industry were given in paragraph 14.2 of the report. The said prices varied from 67.50 to Rs. 103.00 per tonne. The Government considered the report, and passed a resolution on October 31, 1961 (vide Annexure R. 1 to the affidavit of Shri G. Ramanathan, Under Secretary to the Government of India, Department of Industrial Development, Internal Trade and Company Affairs, New Delhi, dated May 7, 1970, filed in opposition to the stay petition, C.M No. 590 of 1970). In that resolution, the Government, while agreeing in general with the approach of the Tariff Commission in its report, did not feel the increase, in full, recommended by the Commission to be necessary, and fixed the uniform ex-works price of naked cement at Rs. 69.50 per tonne for the industry. The Government allowed an extra price for certain units. The other ancillary recommendations made by the Tariff Commission were just noted by the Government, and it was stated that appropriate action thereon would be taken in due course. The Government further stated in their resolution as under: —

“Government are of the considered view that the existing system of differential prices, based on individual costs, is not conductive to efficiency and greater production, and that there should be a uniform price for the industry, so that greater pressure is exercised on units having higher costs to find economies and there is a measure of reward for those units able to achieve economies.”

On the same date, the Government of India made the Cement Control Order, 1961, in exercise of the powers conferred by Section 18G of the Industries (Development and Regulation) Act 1951 (65 of 1951), and in supersession of Cement Control Order, 1958. In the schedule to the Order were set out the prices per metric tonne at which each producer could sell cement free on rail ex-works. Out of the 21 factories mentioned in the Schedule, ex-factory price of Rs. 69.50 was fixed for twelve factories, Rs. 72.50 was fixed for five factories, Rs. 75/- was fixed for three factories and Rs. 95/- was fixed for one factory. Subsequently, the Government made an ad hoc increase of Rs. 2.75 per tonne on July 1, 1963, a further increase of Rs. 4/- per tonne on July 1, 1965, and a still further increase of Rs. 13/- per tonne on January 1, 1966. Thus, on January 1, 1966, the ex-factory prices ranged approximately between Rs. 90.50 and Rs. 115/-.

On August 26, 1965, the Prime Minister made an announcement in the Parliament that it had been decided in principle to decontrol cement except for the quantities required for the Government For the purposes of implementation of the said announcement, the Cement Manufacturers' Association, Bombay, submitted on November 5, 1965, a Memorandum regarding the decontrol of cement (vide Annexure R-2 to the counter affidavit, dated April 8, 1968, filed on behalf of respondent 1). The said Annexure shows that after examining the said memorandum, and after discussions with the industry on November 12, 1965, the Government agreed to certain arrangements to be made by the Cement Manufacturers' Association. The Government agreed, inter alia, (a) that with effect from January 1, 1966, cement would be decontrolled, that the Government would revoke the cement Control Order, 1961, and also advise the State Governments to cancel their State Cement Control Orders, and that the powers delegated to the State Governments under the Industries (Development and Regulation) Act and the Essential Commodities Act would be withdrawn: (b) that with effect from January 1, 1966, there would be no legal authority to control the production, price and distribution of cement throughout India, that the State Trading Corporation of India would also go out of the picture and the Department of Industry would no longer be responsible for the distribution of cement to various Government consumers. State Governments, and other sponsoring authorities, and that each authority/consumer would, therefore, have to contact the Cement Manufacturers' Association for guidance; (c) that, however, to enable a smooth change over from a long period of control to a period of decontrol, and to ensure that prices do not shoot up immediately after decontrol, the Cement Manufacturers' Association agreed to form their own Central Organisation called the “Cement Manufacturers Sales Co-ordinating Organisation” with Headquarters in Bombay to take over the functions of the State Trading Corporation of India Limited so far as they relate to cement distribution; and (d) a quantity equivalent to 50 per cent of the total production of cement (all varieties of cement) by each unit would be reserved for supply to Government indentors under the rate contract as per allotment indicated by the Department of Industry. By a letter, dated December 16, 1965, the President of the Cement Manufacturers' Association replied to the Government of India appreciating and expressing gratitude for the Government's decision to implement the policy of decontrol, and informing the Government that under legal advice the Association decided that the producers Organisation would be known as the “Cement Allocation and Co-ordinating Organisation” (CACO). The President also made certain comments on the scheme of decontrol. But, it is not necessary to mention them in detail for the purposes of these appeals.

Thus, cement was decontrolled with effect from January 1, 1966, and the statutory control on price and distribution gave place to a form of informal self regulating control by the industry itself through CACO.

The above position continued till December 23, 1967, when the Government of India decided to introduce control again. In a letter, dated December 23, 1967 (Annexure R-9 to the counter affidavit, dated April 8, 1968), written by the Department of Industrial Development to the Managing Director, Cement Corporation of India Limited, it was stated that the distribution of cement in the country was at that time regulated by an organisation of the cement industry called the CACO, that the said organisation had been functioning since January 1, 1966, and had been asked by the Government to ensure proper distribution of cement in the country on the basis of a uniform f.o.r destination price, that in view of certain defects and difficulties noticed in the working of the said organisation, the Government have decided that the said organisation should not be entrusted with the distribution of cement from January 1, 1968, onwards, that the functions performed by it should be taken over by a Government controlled agency, that the Ministry of Commerce had not agreed to the said work being entrusted to the State Trading Corporation, that it was, therefore, decided by the Government that the work relating to the distribution of cement in the country should be taken over by the Cement Corporation of India with effect from January 1, 1968, and that Cement Control Order, 1967, would be issued so as to take effect from January 1, 1968. Accordingly, the Cement Control Order, 1967, was issued, and it came into force on January 1, 1968. Aggrieved by the provisions in the said Cement Control Order, 1967, the writ petitions which have given rise to the present Letters Patent Appeals were filed by the producers of cement and the consumers of cement.

Mr. Manchanda and Mr. Anil Kumar, learned counsel for the appellants-producers in L.P.A Nos. 17 and 45 of 1970, respectively, contended firstly that the Cement Control Order, 1967, is ultra vires being beyond the power conferred by Sections 18G (1) and 25 of the Industries (Development and Regulation) Act, 1951, and based on extraneous considerations, and that the Government had not applied its mind to the question as to whether there was necessity or expediency-for making the Order. This contention was urged before the learned single Judge, but was rejected.

In order to appreciate the contention, reference has to be made to the provisions in Sections 18 G (1) and 25 of the aforesaid Act as well as the preamble to the Cement Control Order, 1967. Section 18 G (1) of the Act reads as under: —

“18 G. Power to control supply, distribution, price, etc. of certain articles —

(1) The Central Government, so far as it appears to it to be necessary or expedient for securing the equitable distribution and availability at fair prices of any article or class of articles relatable to any scheduled industry may, notwithstanding anything contained in any other provision of this Act, by notified order, provide for regulating the supply and distribution thereof and trade and commerce therein.”

Section 25 deals with delegation of powers. Sub-section (1) of Section 25 reads as under: —

“25. Delegation of powers —

(1) The Central Government may, by notified order, direct that any power exercisable by it under this Act (other than the power given to it by Sections 16 and 18 A) shall, in relation to such matters and subject to such conditions if any, as may be specified in the direction, be exercisable also by such officer or authority (including in the said expressions any Development Council, State Government or officer or authority subordinate to the Central Government) as may be specified in the direction.”

It is in exercise of the power under the above provisions that the Cement Control Order, 1967, was made. Its preamble reads as under: —

“S.O 4590-IDRA/18G/67 — Whereas it appears to the Central Government that for the purpose of securing the equitable distribution and availability at fair prices of cement, the supply and distribution of, and trade and commerce in, cement should be regulated;

Now, therefore, in exercise of the powers conferred by Section 18G and Section 25 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and all other powers enabling it in that behalf, the Central Government hereby makes the following order, namely —

. . . . . . . . . .”

. . . . . . . . . .”

The appellants-producers alleged in their writ petitions that cement had been a controlled commodity over a long number of years until December, 1965, that in 1965 the first respondent reviewed the position of production of cement and distribution at fair price and came to the conclusion that control was no longer necessary, and that cement was, therefore, decontrolled with effect from January 1, 1966. They averred that before the said decontrol there was shortage of cement generally in all parts of the country resulting in a lot of inconvenience to the consumers, that the production of cement in the country in the year 1965 was 10.58 million tonnes against its production capacity of 11.70 million tonnes, that the entire cement so produced was despatched to the consumers, but still the demand of the public remained unsatisfied and that in the years 1966 and 1967, i.e during the period of decontrol, the production capacity rose to 12.1 million tonnes and 12.5 million tonnes respectively, and the production of cement rose to 11.05 million tonnes in the year 1966 and to 11.15 million tonnes in 1967. According to them, even after meeting the requirement of the Government and priority consumers in full, the industry was able to make larger supplies to the general public as compared to the previous years and there was still a small surplus of cement. They also averred that during the said years 1966 and 1967, cement was freely available to the consumers at the prices approved by the Government and there had been no complaint about any sort of mal-distribution, and that it was expected that the production capacity of cement during the year 1968 would be about 15 million tonnes which was likely to further increase to about 16.5 million tonnes in the year 1969, but the consumption was not likely to increase correspondingly. They filed a copy of a Note (Annexure D to Letters Patent Appeal No. 17 of 1970) which is stated to have been submitted by the Ministry of Industrial Development and Company Affairs to the Central Advisory Council of Industries which met in New Delhi on November 10, 1967. The Note reads as under: —

“The distribution arrangements after decontrol have been satisfactory as the total despatches of cement during 1966-67 have increased over the figures of 1965-66 by about 1 million tonnes. The CACO has also ensured the supply of cement all over the country at a uniform price on the basis of past pattern of despatches. No serious complaints of shortage have been received from any corner.”

They submitted that Section 18G (1) required the Central Government to form an opinion on the basis of factual data before it that regulation of supply and distribution of any article relatable to any scheduled industry is necessary, and also to form an opinion in regard to the extent of the regulation, and that the Central Government was also required to be satisfied about the expediency of securing equitable distribution of cement and its availability at fair prices. It was asserted that it was clear from the position of cement during the years 1966 and 1967 that there was neither any such necessity nor expediency for regulating the supply and distribution of cement in the year 1968, particularly when, as late as November 10, 1967, the Ministry of Industrial Development and Company Affairs unmistakably admitted in its Note that distribution arrangements after decontrol of cement had been satisfactory and the total despatches of cement during 1966-67 had increased over the despatches of 1965-66 by about one million tonnes, while the prices of cement were uniform throughout the country. It was emphasised that the said Note clearly established that the Central Government have, in promulgating the Cement Control Order, 1967, acted on extraneous considerations and not on relevant considerations, and that there were thus no grounds at all which could justify the imposition of any Control over cement. It was submitted that in the circumstances of the case no one could reasonably arrive at the opinion or satisfaction requisite under Section 18G (1) of the Act for introducing Control, and the Central Government did not honestly form its opinion, and that in forming it did not apply its mind to the relevant facts and thus acted with mala fides in law in Promulgating the impugned Cement Control Order, 1967.

In the counter affidavit of Mr. G. Ramanathan, Under Secretary, Department of Industrial Development, dated April 8, 1968, filed on behalf of respondent 1 in Letters Patent Appeal No. 17 of 1970, the aforesaid allegations and averments were denied, and it was averred that during the period of informal control by the industry in 1965-67, the Governments purchases fell much below the anticipated level of 50 per cent and came down gradually to about 35 per cent due to the reduction in the Government's activities as a result of enforcement of economy measures, that the demand of the organised industry also fell because of the recession, and that those factors resulted in a larger quantity of cement becoming available to the public which contributed to the slight improvement in the supply position. The statistical report for the month of December, 1967, was annexed to the counter affidavit as Annexure R-4. It was submitted that the improvement during the said years was not attributable to decontrol or to a more efficient distribution by the industry, that, on the other hand, there were complaints from the Government of Punjab and Haryana about the shortage of cement in those States, that there was deterioration in the supply position during April-June, 1966, and the rainy season, that the demand in the non-Government Sector had increased considerably, and in the light of the improvement in the agricultural economy, demand of the rural section was also expected to be considerable, and that there was, therefore, no basis for the assumption of the producers-petitioners that the demand for cement would not increase correspondingly with the production.

As regards the necessity for making the Control Order, it was averred that the working of the informal control arrangement was reviewed by the Government towards the end of 1967 as the approval given was only up to the end of 1966-67, and that certain defects were noticed. The said defects were: —

(i) The industry did not accept the Government's suggestion that the saving on account of the non-payment of oil subsidy should be utilised for freight equalisation purposes. But, on the other hand, the industry wanted to utilise those savings for levelling up the retention prices at the highest level and make up the loss on increased freight by increasing the f.o.r price. The relevant correspondence between the Government and the Cement Manufacturers Association was Annexed as R-8;

(ii) The industry did not accept the Government's suggestion that the deterioration in the supply position during April-June, 1966, and the rainy season should be avoided by building up proper storage facilities near the consumption centres when production was good and wagons were available, on the plea of lack of finance;

(iii) The industry ignored the directive of the Government to continue the system of three differential retention prices, and instead introduced a system of two prices without taking into account properly the resources available to them and without specific sanction of the Government in violation of the agreement between the Government and the industry at the time of the decontrol;

(iv) CACO, the organisation set up by the industry to enforce the informal control, developed internal dissensions and could not enforce effective control over the members and could not even prevent a member (Dalmia Dadri Cement Limited) from walking out of the organisation;

(v) The Unit, Dalmia Dadri Cement Limited, sent a notice to CACO stating that it ceased to be member of CACO from October 1, 1967. By virtue of the location of the factory of the said unit near the consumption centres, the average freight incurred by the unit was less than the average freight provision in the f.o.r destination price. The said unit misappropriated the entire freight provision paid by the buyer to which it was not entitled and did not credit to CACO what was due to it from October 1, 1966, onwards in violation of the agreement and contrary to the assurances given by the industry at the time of the decontrol. The unit did not thus show the intention to co-operate with CACO in spite of requests from the Government;

(vi) At the time of decontrol, the industry was asked to pay up a sum of Rs. 39.91 lakhs due to the State Trading Corporation to wipe off their deficit in the Cement Agency Account. In spite of repeated instructions, the same was not paid till after the introduction of the control from January 1, 1968.

(vii) The industry ignored the suggestion of the Government to try and export cement; and

(viii) It came to the notice of the Government that the funds placed by CACO at the disposal of its President, allegedly for the furtherance of the objective of the Association, were in fact spent on political donations.

In support of the aforesaid averments, reliance was placed upon the correspondence filed as Annexure R-8 collectively.

It was further averred in the counter affidavit that the Government also considered that a Central Organisation was necessary (a) to keep a continuous watch over the production to see that the production was not allowed to fall intentionally to create scarcity conditions; (b) to see that the expansion reserve account was utilised properly by placing orders for plant and machinery and the expansion of the capacity takes place as intended; (c) to build an export market for cement and (d) to ensure that remote areas not having cement factories continue to be supplied adequately. It was submitted that the Government, after a careful and impartial review of the arrangements and in the circumstances explained above, came to the conclusion that the private organisation (CACO) set up by the industry could be effective only if all the producers were united and accommodating and if the entire production of cement was taken over by them for distribution on a uniform f.o.r price system, that as the Government observed that the organisation had lost its unity and could no longer distribute the entire production, it came to the conclusion that it would be desirable to substitute a Government controlled organisation to be incharge of distribution in the interests of equitable distribution of cement in the country, and that in those circumstances the Government's decision to re-introduce control from January 1, 1968, was neither based on extraneous considerations nor on insufficient grounds or mala fide in law but purely due to the compulsion of the circumstances and to prevent misappropriations of the freight collections paid by the purchasers to which the producers were not entitled.

In the rejoinders to the aforesaid counter affidavit, the producers either denied or merely averred that all the various reasons set out above were irrelevant to the present case and did not justify the promulgation of the impugned order. There was no attempt to rebut or disprove the correctness of the eight reasons and the other considerations which weighed with the Government in deciding to introduce control again from January 1, 1968.

Section 18G (1) of the Industries (Development and Regulation) Act, 1951, enables the Central Government to provide, by a notified order, for regulating the supply and distribution of any article or class of articles relatable to any scheduled industry, if it appears to it to be necessary or expedient for securing the equitable distribution and availability at fair prices of such article or class of articles. The section prescribes that before the Government exercises the power under Section 18G (1), it must appear to it that the said exercise is necessary or expedient for securing an equitable distribution and availability at fair prices of such article or class of articles. The learned Solicitor-General, Shri Lal Narain Sinha, suggested that the word “appears” in Section 18G (1) indicates the subjective satisfaction of the Government. We do not think so. The exercise of the power under Section 18G (1) is restrictive of freedom of trade, and the legislature, in the absence of any indication to that effect, cannot be assumed to have intended to leave the matter to the subjective satisfaction of the Government. In the context, the word “appears” in Section 18G (1) suggests an objective process and not a subjective process. In other words, the Government has to consider the existing circumstances or state of affairs objectively, and come to a conclusion that it is necessary or expedient for exercising the said power. When the exercise of the power has been challenged in a court of law, the Government has to show that such circumstances did exist, and that on a consideration of those circumstances the Government considered it necessary and expedient to exercise the power. Obviously, the circumstances have to be relevant to the object sought to be achieved. However, the Court is concerned only with the existence of such relevant circumstances. It is not concerned with nor can it go into the sufficiency of the said circumstances or the propriety of the exercise of the power. The scrutiny by the Court has thus only a limited scope. In this connection, reference may usefully be made to the observations of the Supreme Court in Rampur Distillery Company Ltd. v. Company Law Board and another (1970) 2 S.C.R 177, 182, 183 and 184. (1). In that case, the Supreme Court considered the nature of the satisfaction contemplated by Section 326 of the Companies Act, 1956, and made the following observations: —

“The satisfaction contemplated by S. 326 must, therefore, be the result of an objective appraisal of the relevant materials. The reason is clear. By Section 326 several restrictions upon the power of the Companies and individuals to carry on business are imposed in the interest of the shareholders, the creditors, and in the larger interests of the public . . . . . Exercise of the power conferred upon the Central Government is restrictive of valuable rights of the Company and of the proposed managing agent, and severally restricts the liberty of contract . . . . . The satisfaction of the Government which is determinative is satisfaction as to existence of certain objective facts . . . . . . . . The courts however are not concerned with the sufficiency of the grounds on which the satisfaction is reached. What is relevant is the satisfaction of the Central Government about the existence of the conditions in cls. (a), (b) & (c) of sub-s. (2) of S. 326. The enquiry before the Court, therefore, is whether the Central Government was satisfied as to the existence of the conditions. The existence of the satisfaction cannot be challenged except probably on the ground that the authority acted mala fide. But, if in reaching its satisfaction the Central Government misapprehends the nature of the conditions or proceeds upon irrelevant materials, or ignores relevant materials, the jurisdiction of the Courts to examine the satisfaction is not excluded. The power, in our judgment, is a quasijudicial power and not administrative: it necessarily implies a duty arising from the nature of the act empowered to be done, the object for which it is to be done, the conditions in which it is to be done, and its repercussion upon the power of the Company, the shareholders, the creditors, and the general public for whose benefit the power is to be exercised.”

In the present case, we have referred to the various circumstances on a consideration of which the Government considered it necessary or expedient to exercise the power under Section 18 G (1). Nothing has been brought to our notice by the learned counsel for the appellants to show that the said circumstances were non-existent. Nor can those circumstances be said to be irrelevant to the purpose sought to be achieved by the Control Order, namely, equitable distribution of cement and its availability at fair prices. It is true that it was stated in the Note of the Ministry of Industrial Development, dated November 10, 1967 (Annexure D to the rejoinder to the Civil Writ Petition No. 220 of 1968), that the distribution arrangements after decontrol have been satisfactory as the total despatch of cement during 1966-67 had increased over the figures of 1965-66 by about 1 million tonnes, that the CACO had also ensured the supply of cement all over the country at a uniform price on the basis of past pattern of despatches, and that no serious complaints of shortage had been received from any cornor. But, according to the counter affidavit of the Government there were various other circumstances, which have already been set out above, on the basis of which it appeared to the Government that it was necessary or expedient to exercise the power under section 18G (1) to regulate the supply and distribution of cement and trade and commerce therein in order to secure equitable distribution and its availability at fair prices. The circumstances were that the Government noticed certain defects in the working of the CACO during the period of decontrol. The defects were the following. The industry did not accept the suggestion of the Government that the saving on account of the non-payment of oil subsidy should be used for freight equalisation, and also the suggestion of the Government that deterioration of supply should be avoided by building up proper storage facilities. The industry also ignored the direction of the Government to continue the system of three different prices and instead introduced a system of two prices. Internal dissensions developed in CACO. The Dalmia Dadri Cement Limited (petitioner in Civil Writ petition No. 220 of 1968), appropriated the difference between the average freight provided in the f.o.r destination price and the average freight actually incurred by it, and did not credit to the CACO what was due to it from October 1, 1966. The industry also ignored the suggestion of the Government to improve exports of cement. Funds placed by the CACO at the disposal of its President were spent on political donations. As already stated, it is not for this court to consider the propriety of the exercise of the power or the sufficiency of the aforesaid circumstances. There is no reason to disbelieve the averments in the counter affidavit about the existence of the aforesaid circumstances or defects, and they cannot be said to be irrelevant to the purpose sought to be achieved. There is nothing on the record to show that the Government did not apply its mind and consider the aforesaid circumstances before making the Control Order. The learned counsel for the producers submitted as regards the first circumstances that Annexure R. 8 shows that the appellants in L.P.A 17 of 1970 had in fact agreed to the oil subsidy. On the other hand, the said Annexure shows that the said appellants and the industry in general did not give a clear assent to adjust oil subsidy towards freight equalisation. In the matter of taking a decision as to the desirability of re-introducing control, what was said or done by one or two individual producers is not the deciding factor. The material factor is what the industry in general through its representative Association had said or done. In the circumstances it has to be held, agreeing with the view taken by the learned single Judge, that it is not possible to say that it was not necessary or expedient for the Government to have issued the Cement Control Order, 1967, under Section 18G (1). The contention of the learned counsel on behalf of the producers cannot, therefore, be accepted.

The second contention of the learned counsel for the producers was that the material clauses of the Cement Control Order, 1967, are ultra vires Article 14 and 19 (1) (f) and (g) of the Constitution. The Cement Control Order contains 14 clauses. Broadly stated, clause 1 sets out the short title, extent and commencement of the Order, and Clause 2 contains definitions of the words “cement” “Controller” and “producer”. Clauses 3 to 6 deal with control of distribution. Clause 7 deals with retention prices. Clauses 8, 9, 11 and 14 deal with fixation of uniform prices. Clause 10 deals with wholesale and retail prices, clause 12 deals with power to vary the prices and to alter the schedule, and clause 13 deals with delegation of powers. It is convenient to deal with the challenge against the clauses as grouped above seriatum.

Clauses 3 to 6, as stated earlier, deal with control of distribution and read as under: —

“3. Power to prohibit removal. — No producer shall remove or permit the removal of any cement, whether sold or unsold, from the precincts of his factory or from any other part of his premises to any place outside the precincts of such factory or premises except with the previous permission in writing of the Central Government.

4. Power to direct sale or transport. — The Central Government may, by order, require any producer to sell cement to such person or class of persons or to transfer cement to such destinations by such modes of transport, and on such terms and conditions, as may be specified in the Order.

5. Power to direct disposal of stock. — The Central Government may, with a view to securing proper distribution of cement, issue such orders, general or special, as may be necessary, to any producers as to the disposal of his stock.

6. Maintenance and production of accounts, etc. — (1) Every producer shall keep such books, accounts and records, relating to the production, sale and transport of cement as the Central Government may require.

(2) Every producer and every person employed by him in connection with the production, sale and transport of cement shall, on being required so to do by the Central Government, and within such period as may be allowed in this behalf —

(a) produce such books, accounts, records or other documents, and

(b) furnish such returns and other information relating to the business as may be specified by the Central Government.”

As regards clause 3, the learned counsel for the producers contained (a) that the provision prohibiting the removal of the cement by the producer from his factory or premises except with the permission in writing of the Central Government exceeds the power conferred under Section 18G of the Act as it is worded in absolute terms and the Controller is not bound to issue order for removal of the cement, nor can he be compelled to issue appropriate order for removal of cement, and (b) that since the provision in the clause does not fix any limit of time for issuing an order for removal of cement, any delay in issuing the order might result in the cement getting spoiled and the producer might be forced to stop the production of cement for want of sufficient storage space and undergo serious loss, and that since such an uncanalised power has been given, the provision offends Article 14 of the Constitution. There is no force in either of the contentions. The provision in clause 3 does not offend Section 18G as clause (b) of sub-section (2) of Section 18G specifically empowers the Central Government to regulate distribution, transport, disposal, etc. by a notified order. As regards the plea that the Central Government is not bound, nor can he be compelled to grant permission for removal and that there might be delay, it is just an apprehension without any basis. As averred in paragraph 23 (a) of the counter affidavit of Shri G. Ramanathan, dated April, 8, 1968, in Civil Writ Petition No. 220 of 1968, the Control Order was issued primarily to ensure the proper and continuous supply of cement and make it available for purchase by consumers. It is averred in the counter affidavit that “in fact the movement of cement is planned in advance for each quarter on the basis of information collected regarding production of individual units and the areas where cement is required”, and that “the control order has been issued primarily to rationalise movement, . . . . . and to avoid the development of surplus conditions near the producing centres and scarcity conditions near the remote consumption points in the deficit areas”. This is indeed implicit in the Preamble to the Control Order in which it is clearly stated that the Control Order was made for “securing” the equitable “distribution” and “availability” at fair prices of cement, and for regulation of “supply” and “distribution” of cement. The said intention and the purpose of the Control Order is, in our opinion, sufficient guide line in acting under the provision in clause 3, and it cannot be said that an unguided or uncanalised power has been conferred thereunder. As such, the provision cannot be said to offend Article 14 of the Constitution. Further, if the Central Government does not grant permission or delays the same without any valid reason, the same would be a ground for questioning the action of the Central Government, but does not render the provision in the Control Order itself invalid. The challenge against clause 3 has, therefore, to be held to be untenable.

As regards clause 4, the learned counsel for the producers contended that under this clause the Central Government has been empowered to require a producer to sell cement to any person or class of persons or to transport cement to such destinations by such modes of transport as may be specified by it, and that no guide lines haves been laid down and the power is an uncancalised one. There is no force in the contention. Section 18G (1) under which the Control Order has been made refers to regulation of supply and equitable distribution as the object of making the Control Order. The preamble to the Control Order also states the same object. It is implicit in that object that the supply or equitable distribution is intended for persons or class of persons who are in need of cement, or for areas which are deficit in cement and need the same. This, in our opinion, serves as a clear and sufficient guide line in passing orders under clause 4. The learned counsel also contended that the clause empowers the Government to prescribe the mode of transport, and the same goes beyond the scope of the provision in Section 18G (2) (d). It is true that section 18g (2) (d) refers only to sale to such person or class of persons and in such circumstances as may be specified, and does not refer specifically to transport. But, the said person or class of persons may be at a place which is distant from the factory of the producer. Section 18G (1) specifies the object of making a Control Order as, inter alia, securing availability of the controlled article (cement in the present case) at fair prices. It is quite conceivable that for making cement available at a fair price at any specified area where the person or class of persons are, it may be necessary to prescribe the mode of transport instead of leaving it to the producer in order to keep the price at a fair level. The power to prescribe the mode of transport thus seems to be auxiliary to the power envisaged by Section 18 (2) (1) (d).

The learned counsel sought to urge that the power under clause 4 to prescribe the mode of transport is an unreasonable restriction on the fundamental right of freedom of trade and is thus violative of Article 19 (1) (f) and (g) of the Constitution. The learned Solicitor-General did not raise the objection that Article 19 cannot be invoked by reason of the declaration of emergency which is still in force in view of the decision of the Supreme Court in Rustom Cavasjee Cooper v. Union Of India, A.I.R 1970 Supreme Court 564 (2). The learned single Judge pointed out that the producers, petitioners in the writ Petitions, being companies registered under the Companies Act, are not citizens and are not, therefore, entitled to the enforcement of the fundamental rights guaranteed by Article 19 (1) (f) and (g), and that it is doubtful if the shareholdres who have joined as petitioners could claim to enforce the aforesaid fundamental rights when the cement was produced not by the shareholders but by the companies. Even otherwise, in the view taken by us above that the power to prescribe the mode of transport is auxiliary to the power envisaged by section 18g (2) (d), the said auxiliary power to achieve the object of securing availability of cement at a fair price has to be held to be a reasonable restriction on the fundamental rights guaranteed by Article 19 (1) (f) and (g).

It follows from the above discussion that the challenge against clause 4 also cannot be accepted.

No argument challenging clauses 5 and 6 was addressed before us by the learned counsel.

The next clause challenged by the learned counsel for the producers is clause 7. It reads as under: —

“7. Retention Prices. — The ex-factory prices admissible to the producer for the different verities of cement shall be as specified in the schedule.”

The schedule contains a list of all the 25 cement manufacturers that existed in 1967-68 in the various States of India. It shows the prices of cement per tonne ex-factory payable to each manufacturer. The ex-factory prices range between Rs. 90.50 and Rs. 129.75 and in some cases different prices for the same factory on different slabs of production have been shown. In the case of the appellants in L.P.A Nos. 17 and 18 of 1970, the ex-factory price has been fixed as Rs. 90.50 per tonne, while they were getting Rs. 96/- in 1966 and 1967 as fixed by CACO since January 1, 1966.

It is common ground that the scheme of the order is that the ex-factory prices are the amounts that can be retained by the producers, and that is why the clause has been given the heading “retention prices”. One of the contention of the appellants is as to whether such fixation of retention prices is valid. It is convenient to consider this amount in dealing with the fixation of f.o.r price under clause 8. For the present, we shall consider the other contentions urged regarding clause 7 referring to the prices in the schedule as ex-factory prices.

It cannot be disputed that fixation of ex-factory price was not by itself invalid. In M/s. Diwan Sugar and General Mills (Private) Ltd. and others v. The Union of India, A.I.R 1959 S.C 626, 631 (para 7) (3), the Supreme Court, while dealing with the Sugar Control Order, 1955, observed that it is well, known that there are three kinds of prices prevalent in the market for a commodity like sugar, namely, ex-factory price, wholesale price, and retail price, and held that clause (c) of Section 3 (2) of the aforesaid Sugar Control Order which provided for fixation of price at which any essential commodity may be bought or sold was very general in terms, and that the control provided under the said clause was, therefore, control at any of the three stages mentioned above.

The learned counsel contended that the fixation of the ex-factory prices was arbitrary and without any basis, that the reduction of the ex-factory price in respect of the appellants in L.P.As Nos. 17 and 18 of 1970 from Rs. 96/- per tonne to Rs. 90.50 per tonne was made without any notice or opportunity being given to them of being heard, and, as such, principles of natural justice were violated, and that preferential treatment was given to some manufacturers and in their cases the ex-factory prices were fixed at Rs. 96/- which they were getting in 1966 and 1967, although their costs of production were comparatively lower than that of the said appellants.

The manner in which the ex-factory prices or retention prices came to be fixed has been explained in paragraph 10 to 16 of the counter affidavit of Shri G. Ramanathan, dated April 8, 1968. It appears that in 1961, the Tariff Commission, after an examination of the cost of production in the case of each individual producer, did not find it possible to arrive at a common price for a majority of the units because of the then existing wide disparity in the costs of different units. It, therefore, recommended ten different retention prices to be given to the producers. However, while accepting the recommendations of the Commission in principle, the Government prescribed a uniform ex-factory price of Rs. 69.50 per tonne for the industry including the units of the appellants in L.P.A No. 17 and 45 of 1970, and in the case of a few units which were having appreciably higher costs of production on account of special reasons, the Government allowed an extra price of Rs. 3/- per tonne to some units, Rs. 5.50 per tonne to some new units and Rs. 25.50 to only one of the units. Thus, three sets of ex-factory prices, viz. Rs. 69.50, Rs. 72.50 and Rs. 75/- (excluding one case of Rs. 95/-) came into existence on the basis of the Tariff Commission's recommendations. Consequent on escalation in prices on account of fuel and power, the ex-factory prices were increased subsequently from time to time viz. by Rs. 2.75 per tonne from June 1, 1963, by Rs. 1.25 per tonne from July 1, 1964, and by Rs. 4/- per tonne from June 1, 1965. A further general increase of Rs. 13/- per tonne was also allowed from January 1, 1968, and it was made up of Rs. 2.70 on account of average increase in cost, Rs. 2/- as bonus on ceiling of 20 per cent, Rs. 1.30 for interest on Industrial Development Bank Loans at 8 per cent, Rs. 3.50 for tax and the rest for expansion. According to the counter affidavit, the industry agreed at the time of the informal control in 1966 to continue the same three sets of ex-factory or retention prices. The same prices have now been notified in the schedule to the Control Order, 1967. It is averred that the higher ex-factory price of Rs. 96/- per tonne stated to have been received by the appellants in the two L.P.As Nos. 17 and 45 of 1970 during 1966-1967 was allowed by CACO without proper sanction of the Government and contrary to the agreement by the industry, that the Government in fact specifically refused, by letter, dated August 10, 1967 (Annexure R-10), to accept the proposal of CACO to pay a uniform retention or ex-factory price of Rs. 96/- per tonne to all cement producers, and that the said appellants had, therefore, no legitimate right, for the continued payment of the higher retention price of Rs. 96/- per tonne.

There is no valid reason for not accepting the facts stated in the above averments as correct. They do show the basis on which the ex-factory prices set out in the schedule were fixed. It cannot, therefore, be said that there was no basis for the fixation or that the fixation was arbitrary. It cannot be disputed that what exactly is to be the quantum of the price in the case of each individual producer is a matter for determination and decision by the Government and not for this Court in the exercise of its writ jurisdiction.

As regards the argument that the principles of natural justice were violated inasmuch as no notice or opportunity to be heard was given to the appellants in L.P.A Nos. 17 and 45 of 1970 before the ex-factory prices that were given to them by CACO were reduced to the prices set out in the schedule to the Control Order, Mr. Manchanda referred to the decisions in Union of India v. India Cements Ltd., 84 L.W 583 (4); Ridge v. Baldwin and others (1963) 2 All E.R 66 (5); Associated Cement Companies Ltd. v. P.N Sharma and another, A.I.R 1965 Supreme Court 1595 paragraph 8 & 14 (6); The Lord Krishna Sugar Mills and others v. Union of India and others, I.L.R 1973 (2) Delhi 570 (7); Lala Shri Bhagwan and another v. Ram Chand and another, A.I.R 1965 S.C 1767, para 5 (8); State of Orissa v. Dr. (Miss) Binapani Dei and others, A.I.R 1967 S.C 1269, paras 8, 9 and 12 (9); Union of India and another v. P.K Roy and others, A.I.R 1968 S.C 850, 858, paras 11 and 12 (10) Padfield and others v. Minister of Agriculture, Fisheries and Food and others, (1968) 1. All E.R 694 (11) B.S Vadera and others v. Union of India and others, A.I.R 1969 S.C 118 (12), A.K Kraipak and others v. Union of India and others, A.I.R 1970 S.C 150, paras 13, 14 and 20, (13) Wiseman and another v. Borneman and others, 75 I.T.R 652, (657) (14) Chandra Bhawan Boarding & Lodging, Banglore v. State of Mysore and another, A.I.R 1970 S.C 2042 paras 13, 14 (15). These decisions deal with the principles of natural justice in connection with administrative action. In the present case, the fixation of the ex-factory prices in the schedule to the Control Order is legislative action, and the aforesaid decisions are not, therefore, of any assistance. The learned counsel then argued that the Control Order is not “law” and the fixation of the ex-factory prices in the schedule was not legislative action. He urged that the Control Order made in exercise of the powers conferred by the Act is not “law” as it is made by the Executive limb of the Central Government although by notification. We are unable to agree. The Control Order, made in exercise of the powers conferred by provision in the Act has the force of law and is a legislative action in exercise of the delegated power as distinguished from administrative action. In this connection, reference may be made to the definition of “Indian Law” in Section 3 (29) of the General Clauses Act according to which an “order” made by the Central Government is Indian Law. The definition of “law” in Article 13 (3) of the Constitution shows that the Article applies to all laws including orders made by the Government, though it is true that the definition has been confined to the purposes of Article 13. If the making of the Control Order is legislative action, so is the preparation of the schedule, as the schedule is a part of the Control Order and is not separate from it. In the case of such legislative action, no question of principles of natural justice in the sense of giving a notice or opportunity of being heard to those who may be affected by the legislative action arises. Of course, it is open to the Government to give such opportunity with a view to make up its mind and finalise the legislative action. But, such giving of opportunity is a matter of policy and discretion on the part of the Government and not a legal obligation enforceable in a court of law. We are thus unable to accept the contention of the counsel based on principles of natural justice.

As regards the argument of discriminatory treatment and the violation of Article 14 of the Constitution, the question is whether it was in the case of the appellants only that the ex-factory price was reduced to Rs. 90.50 or whether it was reduced in the case of some other units also. All that was alleged in the writ petitions (vide paragraph 13 of the Writ Petition No. 220 of 1968) was that in the case of 8 units, the ex-factory price of Rs. 96/- that was obtaining during 1966 and 1967 was not reduced in the schedule to the Control Order. But, it was not alleged nor has it been demonstrated that the ex-factory price of Rs. 96/- obtaining in 1966 and 1967 was not reduced in the case of the remaining units. As stated earlier, it was averred in the counter affidavit that the ex-factory prices fixed in the schedule to the Control Order were the same prices which were obtaining prior to the informal Control in 1966 and 1967. There is nothing to show that the said averment was incorrect. It is not shown by the appellants-producers that the ex-factory price of Rs. 96/- was not obtaining in the cases of the aforesaid 8 units prior to the informal control. There is thus no substance in the argument based on alleged discriminatory treatment and violation of Article 14 of the Constitution.

The next clause for consideration is clause 8. It reads as under: —

“8. Price at which producer may sell. — No producer shall, himself or by any person on his behalf, sell —

(a) rapid hardening cement and low heat cement at a price exceeding Rs. 152.13 per metric tonne,

(b) any other variety of cement at a price exceeding Rs. 129.13 per metric tonne,

free on rail destination railway station plus the excise duty paid thereon:

Provided that in the case of packed cement, there shall be added to the price referred to in this clause such charges as may be fixed by the Central Government in respect of packing or the containers and the Central Government may fix different charges for different kinds of packing or containers, as the case may be:

Provided further that the Central Government may allow rebate, discount or commission in the price of cement sold to the Government through the Directorate General of Supplies and Disposals or intended for export out of India.

Explanation. — For the purpose of this Order, the expression “free on rail destination railway station” means the price (including the cost of transport by the cheapest mode except where any other mode of transport has been specified by the Central Government under clause (4) at the destination point.”

By this clause, the maximum price for which a producer may sell rapid hardening cement and low cement has been fixed at Rs. 152.13 per metric tonne, and the maximum price for which a producer may sell other varieties of cement has been fixed at Rs. 129.13 per metric tonne, the prices in both the cases being free on rail destination railway station plus the excise duty paid thereon. The object of this provision is to fix uniform prices throughout India. By the first proviso, packing charges are allowed to be added to the price in the case of packed cement. By the second proviso, it is provided that in the case of cement sold to the Government through the Directorate General of Supplies and Disposals or intended for export out of India, the Government may allow rebate, discount or commission. The explanation to the clause makes it clear that the expression “free on rail destination railway station” means the price at the destination point, and that it includes the cost of transport by the cheapest mode except where any other mode has been prescribed by the Government under clause 4.

Mr. Manchanda contended firstly that there is no provision in section 18g (2) for the fixation of a uniform f.o.r destination price throughout the country. We do not think so. Section 18 G (2) (a) states that the notified Control Order may provide “for controlling the prices at which any such article or class thereof may be bought or sold.” The need for uniformity of the f.o.r destination price throughout the country has been explained in paragraph A.04 of the counter affidavit of Shri G. Ramanathan, dated April 8, 1968. It is stated that the development of the cement industry has been such that cement had to move long distances before it reaches the consumer, that the same had resulted in the existence of large deficit areas, particularly areas where the area production is insufficient, that unless such movement is regulated the deficit areas, particularly areas where the area, production is insufficient, may suffer from a shortage and payment of a higher price than in the areas nearer to the producing units, that unless the f.o.r destination price is fixed the producers will sell only in areas adjacent to the factory and will not move it to distant places, and that a uniform f.o.r price had, therefore, to be fixed. Mr. Manchanda sought to meet the above explanation by pointing out that under clause 4 the Government has been given the power to require any producer to sell cement to such consumers at a ***textnotclear*** and also to transport cement to such distant places, and that there was, therefore, no need for fixation of a uniform f.o.r destination price. It is true that clause 4 gives such power to the Government. But, it would obviously be not only cumbersome but also impracticable to give directions separately in each individual case in the entire country. The same result could be achieved by making a general provision applicable to all producers and consumers, and that was done by prescribing a uniform f.o.r destination price by clause 8. Moreover, such fixation of uniform f.o.r price is in conformity with the very purpose of the Control Order mentioned in Section 18G (1) of the Act and the preamble to the Control Order, viz. securing equitable distribution and availability of cement at fair prices throughout the country. There is thus no force in the contention of the counsel.

Mr. Manchanda next sought to argue that fixation of uniform f.o.r destination price is an unreasonable restriction on the freedom of trade and violative of Article 19 (1) (f) and (g). The learned Solicitor-General submitted that although Article 19 is under suspension, he would not rely upon the same but would invite the Court to decide the contention on its merits. The argument of Mr. Manchanda was that consumers in surplus areas would have got cement much cheaper but for the fixation of the uniform f.o.r destination price, and purchasers in deficit areas pay a price which is less than what they would have to pay in the absence of such uniform f.o.r destination price, and that there was thus a violation of Article 19 (1) (f) and (g). The answer to the argument is, as pointed out by the learned single Judge, that the restriction on the right of the consumers in surplus areas to buy cement cheaper is placed in the interest of the general public within the meaning of clauses (5) and (6) of Article 19 of the Constitution. In Kavalappara Kottarathil Kochuni v. States of Madras and Kerala and others, A.I.R 1960 S.C 1080, (16) the Supreme Court approved the observation of Harries C.J in Ishwari Prosad and others v. N.R Sen and another, A.I.R 1952 Calcutta 273, (17) that the phrase “in the interests of the general public” includes the interests of the people of one part of India though the interests of the people of other parts of India may not be directly affected. In Jyoti Pershad v. Administrator for the Union Territory of Delhi and others, A.I.R 1961 S.C 1602, (18) the restriction on the right of the landlords for the benefit of the tenants of slum dwellings was upheld by the Supreme Court as being a reasonable restriction in the interests of the general public. In Union of India v. M/s. Bhanamal Gulzarimal Ltd., A.I.R 1960 S.C 475, (19) and Bhagwati Saran and another v. The State of Uttar Pradesh, (1961) 3 S.C.R 563, (20) the Supreme Court upheld the restrictions imposed by the Iron and Steel (Control of Production and Distribution) Order, 1941, which secured a uniform price of iron and steel throughout India by the provision in Section 11-B thereof. Again, in Maharashtra State Electricity Board v. Kalyan Borough Municipality, A.I.R 1968 S.C 991, (21) the Supreme Court upheld the uniform price charged by the Electricity Board for the supply of electricity to the residents of Bombay city and to the residents in the State but outside the city. There is thus no force in the contention of the learned counsel.

Mr. Manchanda next contented that the rebate per tonne in the f.o.r destination railway station given to the Directorate General of Supplies and Disposals under the second proviso is invalid as it could be done only by agreement and not by law. We are unable to see any force in this contention. The second proviso is only an enabling provision. It does not by itself fix or grant the rebate, but only enables the Government to allow rebate.

The next contention regarding clause 8 was that the provision in the explanation that the mode of transport should be the cheapest mode of transport without indicating the mode rendered the calculation of the f.o.r destination price uncertain and arbitrary. It has been explained in paragraph 23 (c) of the counter affidavit that the average freight element included in the f.o.r destination price was arrived at on the basis of transport charges incurred by the different units by various available means. Thus, the calculation of the f.o.r destination price was in no way arbitrary or uncertain.

We shall now consider the contention on behalf of the producers that the fixation of the retention prices under clause 7 was invalid. The argument was (a) that under section 18g (2) (a) and (3) of the Act, the Central Government was not empowered to fix different retention prices or ex-factory prices for different producers in the same region or area, but could only fix one ex-factory price for a particular region or area, and (b) that under section 18g (2) (a) the control order may provide for a price at which any article may be bought or sold, that when an f.o.r destination railway station price is fixed under clause 8, the said price would be the price at which the article may be bought or sold within the meaning of section 18g (2) (a) and (3), and that on such sale, the entire f.o.r destination price becomes the money of the producer, and, therefore, the fixation of a lesser amount as ex-factory price for retention by the producer would be beyond section 18g (2) (a) and (3) and hence invalid.

The answers to the above contentions have been given in the counter affidavit of Shri G. Ramanathan, dated April 8, 1968. In A paragraph A.03, it was pointed out that retention price existed even at the time of the decontrol and was not a new innovation made for the first time in the Control Order of 1967. As regards the contention that under section 18g (2) (a) and (3) the Government could fix only one ex-factory price for a particular region or area, and not different prices for different producers in the same region or area, we are unable to find any such restriction in section 18g (2) (a) and (3). As stated earlier, in dealing with the question of fixation of uniform f.o.r destination price, the Tariff Commission, after examination of the cost of individual producers, did not find it possible to arrive at a common price for a majority of the units because of the wide disparity in the costs of different units, and recommended ten different ex-factory prices. While accepting the recommendation of the Commission in principle, the Government prescribed a uniform ex-factory price of Rs. 69.50 per tonne, and then allowed extra prices to different units having appreciably higher costs on account of reasons which were special to each unit. There is thus no substance in the contention.

As regards the other contention (b) regarding the difference between the f.o.r destination price and the retention price or ex-factory price, reference has to be made to some of the averments in the counter affidavit. It was explained in paragraph 8.05 that f.o.r destination price really means the price which the purchaser has to pay to the producer including the ex-factory price, freight, excise duty, transport charges and other elements and the burden of payment of all the said charges is on the buyer. The producer thus gets into his hands the ex-factory prices and all the other charges like freight, excise duty, etc. which the buyer has to pay. In paragraph A.06, it was explained that the f.o.r destination price for the quarter, January to March, 1968, was Rs. 172.75 per tonne which included provision for the following elements, namely:

“ (i) Weighted average of retention price . . . Rs. 95.20 per tone (ii) Excise duty . . . Rs. 28.32 “ “ (iii) Selling Agency Commission . . . Rs. 1.25 “ “ (iv) Contingency . . . Rs. 0.35 “ “ (v) Remuneration for the Cement Corporation of India Ltd. . . . Rs. 0.25 “ “ (vi) Rebate for Rate Contract through D.G S & D . . . Rs. 3.00 “ “ (vii) Average Freight . . . Rs. 25.48 “ “ (viii) Packing Charges . . . Rs. 18.40 “ “ Rs. 172.25 per tone

As stated in paragraph A.08, every producer, in respect of each transaction by way of sale effected by him, can retain only the ex-factory price or retention price and some of the other amounts mentioned in clause 9 of the Control Order (which will be considered a little later), and pay the remaining amount of the f.o.r destination price to the Controller within one month of the close of the month in which the sale takes place. It was averred in paragraph A.09 that all the different elements included in the f.o.r destination price, excepting the average freight and the packing charges, are fixed. The packing charges are fixed by the Central Government and announced in advance of each quarter. Those producers who incur a freight less than the said provision of Rs. 25.48 per tonne for average freight are required to pay into the Cement Regulation Account mentioned in clause 9 of the Control Order the difference between the actual freight incurred by them and the element of Rs. 25.48 per tonne, whereas those producers who incur a freight more than the said provision will be reimbursed the difference between their actual freight expenditure and the average freight of Rs. 25.48 by the concerned authority.

Thus, the scheme of the Control Order is that the ex-factory price mentioned in clause 7 is the real price for which the article (cement) is to be treated as having been bought or sold within the meaning of section 18g (2) (a), and that is the amount the producer is entitled to. To that ex-factory price, certain elements are added and the f.o.r destination price is fixed under clause 8, and that is the amount which the consumer has to pay to the producer. Out of that f.o.r destination price, the producer is allowed to retain the retention price plus some of the elements included in the f.o.r destination price, and to pay the balance to the Controller. The producer is allowed to retain some of the elements included in the f.o.r price as they are amounts expended by him. He is required to pay the balance to the Controller as the said balance, though paid by the consumer, does not belong to the producer. The fallacy in the contention on behalf of the producers lies in the incorrect assumption that the f.o.r price is the price for which the cement is bought or sold, while according to the scheme of the Control Order, it is the ex-factory price that is the real price for which the cement is bought or sold within the meaning of section 18g (2) (a). There is thus no force in this contention also.

The next challenge was against clauses 9 and 11 which can be considered together. The said clauses read as under: —

“9. Payments to Cement Regulation Account — (1) Every producer shall, in respect of each transaction by way of sale of cement effected by him, pay within one month of the close of the month in which sales take place, to the Controller, an amount equivalent to the amount, if any, by which free on rail destination price of such cement realised by him exceeds the aggregate of the following amounts, namely —

(i) the ex-factory price of such cement calculated in accordance with the rates specified in the Schedule;

(ii) a selling agency commission calculated, at the rate of Rs. 1.25 per tonne;

(iii) the excise duty paid thereon; and

(iv) in the case of packed cement, the charges fixed by the Central Government in respect of the packing or the containers under the first provision to clause 8.

Provided that the expenditure incurred by the producer on freight by the cheapest mode of transport or where any other mode of transport has been specified by the Central Government under clause 4, by such mode of transport in respect of such transactions shall be reimbursed to the producer by the Controller from out of the Cement Regulation Account referred to in clause 11.

Provided further that nothing contained in this clause apply to the cement moved out of the factories prior to the 1st day of January 1968 but sold after that date.

11. Cement Regulation Account. — (1) The Controller shall maintain an account to be known as the Cement Regulation Account to which shall be credited the amounts paid by the producer under clause 9 and such other sums of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time.

(2) The amount credited under sub-clause (1) shall be spent only for the following purposes, namely —

(i) paying or equalising the expenditure incurred by the producer on freight in accordance with the provisions of this Order;

(ii) equalising concession if any, granted in the matter of price for supplies to Government or for purposes of export under the second proviso to clause 8;

(iii) expenses incurred by the Controller in discharging the functions under this Order subject to such limits, if any, as may be laid down by the Central Government in this behalf.

(3) The Controller shall cause accounts to be kept of all moneys received and expended by him from out of the Cement Regulation Account and he shall prepare and submit such report and return relating to the said Account as may be required by the Central Government from time to time.

(4) The balance, if any remaining unspent in the Cement Regulation Account shall be disbursed in accordance with such directions as may be given by the Central Government in this behalf.”

Under clause 9, every producer can, out of the f.o.r destination price, retain with him (i) the ex-factory price, (ii) selling agency commission at Rs. 1.25 per tonne, (iii) excise duty paid by him, and (iv) packing charges, in the case of packed cement, fixed under the first proviso to clause 8, and he has to pay the balance to the Controller within one month of the close of the month in which the sale takes place. Clause 11 provides that the amount so paid under clause 9 by producers shall be credited by the Controller to an account, to be known as the Cement Regulation Account. The first proviso to clause 9 provides for the reimbursement to the producer of expenditure incurred by him on freight from out of the Cement Regulation Account. Obviously, this has reference to what has already been referred to by us earlier, namely, that where producers incur a freight more than the average freight of Rs. 25.48 per tonne included in the f.o.r destination price, they have to be reimbursed the difference between the actual freight expenditure incurred by them and the aforesaid average freight. Clause 11 (2) declares that the amount credited to the Cement Regulation Account shall be spent only for three purposes, namely, (i) for paying or equalising the freight expenditure, (ii) for equalising the concession, if any, granted in the matter of price for supplies to Government or for purposes of export under the second proviso to clause 8 and (iii) for payment of expenses incurred by the Controller in the discharge of his functions under the Control Order. Clause 11 (3) requires the Controller to keep an account of the moneys received and expended by him from out of the Cement Regulation Account. Clause 11 (4) provides that the balance, if any, remaining unspent in the Cement Regulation Account shall be disbursed in accordance with such directions as may be given by the Central Government in that behalf.

The contention on behalf of the producers was that the requirement in clause 9 that every producer should pay to the Controller the balance that remains from out of the f.o.r destination price, and the provision in clause 11 (4) enabling the Government to disburse the unspent amount in the Cement Regulation Account in any manner it likes, amount to a colourable exercise of the taxing power of the State, and beyond the legislative competence of the executive under Section 18G of the Act, in-as-much as the out-right deprivation of the balance of the freight in the hands of producer and the power of the Government to disburse the same as it likes, amount to a direct and variable levy of tax without any authority of law under Art. 265 of the Constitution.

In dealing with this contention, it has to be borne in mind that Section 18G (1) under which the Control Order has been made as well as the preamble to the Control Order shows that the main object of making the Control Order was to secure equitable distribution of Cement and its availability at fair prices. As stated earlier, the development of the cement industry has been such that it has resulted in the existence of both surplus areas and deficit areas. It has thus become necessary that cement has to move long distances before it reaches the consumers in the deficit areas. Unless such movement is regulated, the consumers in distant deficit areas may suffer from a shortage of cement as well as payment of higher price than those who are nearer to the producing units. Again, unless a uniform f.o.r destination price is fixed, the producers may sell only in areas adjacent to their factories and not move it to distant places. That was why a uniform f.o.r destination price had to be fixed. One of the important elements in the f.o.r destination price is the freight (vide explanation to Section 8), and the Government fixed the same at Rs. 25.48 per tonne after taking into account the freight in different parts of the country payable from the producing centres to the places of consumption. It was stated in paragraph A. 07 of the counter affidavit, dated April 8, 1968, that those producers, who incur a freight less than the said average freight of Rs. 25.48 per tonne, are required to pay into the Cement Regulation Account the difference between the actual freight incurred by them and the average freight of Rs. 25.48 per tonne, while those producers, who incur a freight more than the said average freight, would be reimbursed the difference between their actual freight expenditure and the average freight. As explained in paragraph A. 10 of the counter affidavit, freight is a liability of the consumer, and the amount paid towards freight is outside the ex-factory or retention price to which the producer is entitled. The producer is, under the scheme of the Control Order, not entitled to the freight, and payment of the same into the Cement Regulation Account in no way causes loss to the producer. The payment only ensures that the producer does not make any profit of what is payable by the consumer towards freight. Where a producer pays an amount of freight higher than the average freight of Rs. 25.48 included in the f.o.r destination price, he gets back the excess amount by way of reimbursement from out of the Cement Regulation Account. Thus, the whole idea of the Cement Regulation Account was to rationalise the inequalities in the freight, and the freight pooling system provided by the Control Order, was intended to secure uniformity in the price for the benefit of the consumers and the deficit areas having no cement factories.

Coming now to the contention urged by the learned counsel, it was based on the assumption that the producer was deprived of the balance of the freight in his hands. It is clear from what has been stated above that the producer was not entitled to the said balance of the freight according to the scheme of the Control Order. Once it is held, as we did, that the fixation of the ex-factory or retention price is valid, it would follow that the balance of die f.o.r destination price that remains after deducting the said retention price and the other items allowed to be deducted by the producer under clause 9 of the Control Order, does not belong to the producer and, therefore, he cannot be said to be deprived of the same when he pays the same to the Controller under clause 9. In that view, the payment of the balance to the Controller cannot be described as levy of tax qua the producer. Nor can it be a tax qua the consumer, as the amount of freight is paid by the consumer as part of the f.o.r destination price.

In support of his argument, Mr. Manchanda referred to the definition of taxation in Article 366 (28) and the provision in Article 265 of the Constitution of India. Article 366 (28) provides that “taxation” includes the imposition of any tax or impost, whether general or local or special, and “tax” shall be construed accordingly. Article 265 provides that no tax shall be levied or collected except by authority of law. But, the question is whether the requirement in clause 9 of the Control Order that the producer should pay the Controller the balance that remains from out of the f.o.r destination price, read with clause 11 (4) which enables the Government to disburse the unspent amount in the Cement Regulation Account in accordance with such direction as may be given by it in that behalf, amounts to a levy of tax. We have pointed out above, that the said balance of the f.o.r destination price does not belong to the producer trader the scheme of the Control Order and cannot, therefore, be regarded as tax qua the producer. We have also pointed out that it cannot be regarded as tax qua the consumer as it is paid by the consumer as part of the f.o.r destination price fixed by it.

In this connection, the learned counsel referred to the decision of the privy Council in Lower mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Limited, 1933 A.C 168 (22). The relevant facts in that case as given in the headnote were the following. It was more profitable to dairy farmers in British Columbia to sell their milk in a fluid form than to sell products manufactured from it. So, the market for fluid milk became glutted. As a remedy, the provincial legislature passed the Dairy Products Sales Adjustment Act, 1929, authorising the appointment of an Adjustment Committee in any District in which the dairy farmer petitioned for one. Where a committee was appointed, the farmers had to make returns to it, and a farmer selling fluid milk had to pay to the Committee a levy assessed according to the quantity he had sold. The total of these levies which together made up the difference in value of the milk disposed of in the two forms, was to be apportioned by the Committee among the farmers who had sold milk products. The expenses of the Committee were to be met by a further levy on the farmer. Both the levies were recoverable as debts.

One of the questions raised was whether the said levies were taxes. As regards the first of the levies, the Privy Council held that the said levies were taxes. Their Lordships pointed out that the levies were compulsorily imposed by the statutory Committee, that they were enforceable by law, and that a certificate in writing under the hand of the Chairman of the Committee was to be prima facie evidence in all courts that such amount was due by the dairy farmers. That dairy farmer who fails to comply with every determination, order or regulation made by the Committee under the Act was to be guilty of an offence against the Act, and to be liable to a fine. Their Lordships observed that compulsion is an essential feature of taxation, and that the imposition of the levies in question was for public purposes, and that the said circumstances were sufficient to characterise the adjustment levies as taxes.

The said decision is clearly distinguishable from the facts of the present case. In the case before the privy Council, a farmer selling fluid milk had to pay to the Committee a levy assessed according to the quantity he had sold. The levy was distinct and separate from the price of the milk. The farmer sold the milk and got the entire price for the same. It was out of that price which became his money that he had to pay the levy. In the present case, as stated earlier, the producer is entitled under the scheme of the Control Order only to the retention price as his money, and the balance of the f.o.r destination price received by him from the consumer was never his money according to the scheme. In paying the balance to the Controller, the producer does not pay any money of his own. He merely collects the balance amount and pays the same to the Controller. As such, the payment of the balance by the producer cannot be regarded as levy of a tax qua the producer. So far as the consumer is concerned, the amount is paid by him as part of the f.o.r destination price for the cement purchased by him. It is not separate and distinct from the f.o.r destination price which is the price for the cement so far as the consumer is concerned. The amount so paid by the consumer cannot, therefore, be regarded as a tax qua the consumer also.

The learned single Judge considered this contention and rejected the same. The learned Judge pointed out that a tax proper differs from the payment of a price, that the element which completely distinguishes the payment of price from a tax in the present case is that the price is not collected for the purposes of “expenditure out of the treasury fund”, that the Cement Regulation Account is not a treasury fund in-as-much as it does not belong and does not go into the Consolidation Fund of India under Article 266 of the Constitution, that the parts of the prices paid for cement which go into the Cement Regulation Account do not belong to the Government, and that the payment of any part of the price into the Cement Regulation Account does not, therefore, amount to levy of any tax, with respect, we are in complete agreement with the view taken by the learned Judge.

Mr. Manchanda sought to contend that it would not be correct to say that the amounts paid into the Cement Regulation Account do not belong to the Government, as clause 11 (4) empowers the Government to disburse the unspent balance in the account in accordance with such directions as may be given by it in that behalf. We do not think so. Clause 11 (1) lays down that the amount credited into the Cement Regulation Account shall be spent only for the three purposes mentioned in clause 11 (2). Clause 11 (3) requires the Controller to keep accounts of all the moneys received and expended by him from out of the Cement Regulation Account, and submit the same to the Central Government. Therefore, when clause 11 (4) refers to the balance, if any, remaining unspent in the Cement Regulation Account and provides for its disbursement in accordance with such directions as may be given by the Central Government in that behalf, it seems to us that the directions have necessarily to be for the purposes mentioned in clause 11 (2) or at the most for similar purposes connected with the Cement Control Order. It may be mentioned here that the learned Solicitor-General stated before us that the directions contemplated by clause 11 (4) can only be for the purposes mentioned in clause 11 (2) or for other similar purposes connected with the Cement Control Order. The contention of the learned counsel that the amounts paid into the Cement Regulation Account belong to the Government cannot, therefore, be accepted.

Mr. Manchanda sought to urge that the freight pooling could be done only by agreement between the producer and the consumer and not by law. The explanation given above answers this contention also. According to the scheme of the Control Order and the freight pooling system provided therein, the freight is kept distinct from the retention price which is the real price for the transaction of sale between the producer and the consumer and is, therefore, not a matter for any agreement between the producer and the consumer. There is thus no force in the argument of the learned counsel.

The learned counsel put forward another argument that even if the producer is held to be not entitled to the freight, he can, at the most, be said to have illegally or wrongly collected the same from the consumer, and even on that basis the Government will not be entitled to require the producer to pay over the same to the Controller. In support of his argument, the learned counsel sought to rely upon the decision of the Supreme Court in R. Abdul Quader and Co. v. Sales-tax Officer, Hyderabad, 15 S.T.C 403, (23) in which it was held by the Supreme Court that sales tax illegally or wrongly collected by a dealer need not be paid over to the Government. The said decision cannot be of any assistance to the learned counsel, as the decision of the Supreme Court was with reference to sales tax which was not leviable at all and was not, therefore, due to the Government. In the present case, as already stated, the scheme of the Control Order, as provided in the various clauses referred to above, is that the freight amount does not form part of that portion of the f.o.r destination price which can be retained by the producer, and is to be collected by the producer and paid into the Cement Regulation Account.

Mr. Manchanda also referred to the decision in Vrajlal Manilal & Co. and others v. State of Madhya Pradesh and others, (1970) 1 S.C.R 400, 408, (24) and submitted that transport is not part of trade. With respect, we are unable to see the relevancy of the said proposition. As pointed out above, the arrangement regarding freight under the scheme of the Control Order keeps it distinct from the main transaction of sale between the producer and the consumer and the price which can be retained by the producer. As such, the proposition suggested by the learned counsel cannot, in our opinion, be of any assistance to him.

The learned counsel also referred to the decision in Union of India v. M/s. Bhanamal Gulzarimal, A.I.R 1960 S.C 475, 479 (para 6), (25) and submitted that he relies upon the said decision for the proposition that freight is a matter for agreement between the producer and the consumer and not a matter for imposition by law. The decision has no bearing on the said proposition, as clause 11 (b) in the Iron and Steel (Control of Production and Distribution) Order 1941, which was considered in the said decision, speaks of agreement regarding concession rates and not freight.

The learned counsel next referred to the decisions in Panipat Cooperative Sugar Mills, etc. v. Union of India, A.I.R 1973 S.C 537 (paras 29, 30) (26) and Anakanalle Co-op. Agricultural and Industrial Society Ltd. v. Union of India and others, A.I.R 1973 S.C 734 (para 17), (27) and submitted that unit-wise fixation of ex-factory price is not proper and legal. In the former case, the Supreme Court explained in paras 29 and 30 the concept and the basis of fair price and pointed out that a fair price has to be determined in respect of the entire produce, ensuring to the industry a reasonable return on the capital employed in the business of manufacturing sugar, but the same did not mean that Government can fix any arbitrary price, or a price fixed on extraneous considerations or such that it does not secure a reasonable return on the capital employed in the industry. In the latter case, it was observed that the fixation of prices unit-wise and on the basis of actual costs incurred by each unit, apart from the impracticability of fixing the prices for each unit in the whole country, would defeat the entire object and purpose of controlling prices. It was observed that fixation of prices on all India basis would be highly conducive to proper benefit being conferred on the consumers, and that in the particular case before them it was almost common ground that zoning was unavoidable in our country in the matter of fixing the price of sugar. In the present case, as already stated, the Government kept in view the object of providing a uniform price to the extent possible, and fixed the ex-factory prices and the f.o.r destination prices in a uniform manner making, however, some variations when the special circumstances of any particular unit necessitated such variation. The fixation of the prices under the Cement Control Order cannot, therefore, be said to be in any way contrary to the observations of the Supreme Court in the aforesaid decisions.

We shall now deal with two contentions urged by Shri D.V Patel, learned counsel for the consumers, appellants in L.P.A No. 18 of 1970. The contentions were (1) that the demand and collection of that portion of the f.o.r destination price other than the retention price and other elements allowed to be retained by the producers amount to a levy of tax qua the consumers, and (2) that uniform prices were fixed to favour the consumers in the scarcity or deficit areas like Assam, Nefa, Manipur, Jammu and Kashmir, at the expense of other consumers, and are, therefore, hit by Article 303 (1) of the Constitution of India.

As regards the first contention, Mr. Patel urged that the expressions “tax” and “taxation” have a wide import, and should not be given a limited meaning unless the context or the language of the statute requires. In this connection, he referred to the observations of Lord Thankerton in the case of Lower Mainland Dairy Products (supra) to the effect that, although they are not substantive, the elements of compulsion, and levy by a statutory body or authority, for public purposes, are sufficient to characterise a levy as a tax. He also referred to certain passages at pages 479, 490 and 495 of the book, “A Treatise on the Constitutional limitations” by Cooley, to the effect that taxes may assume the form of duties, imposts, excises, and even licence fees, and to certain passages at pages 168 and 169 in the book “Principles of Public Finance” by Hunter and Allen, to the effect that a “tax is a compulsory payment, it is levied by public authority according to some general rule, and it provides funds presumably to be expended for the public benefit rather than for the benefit of particular individuals”, though, “however, the funds may be diverted into other uses”.

Mr. Patel then submitted that knowing the wide definition given to the word “tax”, the British Parliament adopted that wide meaning in section 311 (2) of the Government of India Act, 1935, by defining “taxation” as including “the imposition of any tax or impost, whether general, local or special”, and that the same language has been adopted in Article 366 (28) of the Constitution of India. The learned counsel referred to the meaning of the word “impost” mentioned in Websters' International Dictionary as “something imposed or levied — tax, duty, or tribute”, and submitted that the word “impost” used in Article 366 (28) of the Constitution of India is also of large content. He referred to the decision in the Commissioner, Hindu Religious Endowment, Madras v. Shri Lakshmindra Thritha Swaminar of Shri Shrirur Mutt, A.I.R 1954 S.C 282, paras 39, 40, and 41, (1) and pointed out that the Supreme Court observed in para 41 that “It is not clear, however, whether the word “tax” used in Article 265 has not been used in the wide sense as including all other impositions like cesseses and fees, that at least seems to be the implication of CI 28 of Article 366 which defines taxation as including the imposition of any tax or impost, whether general, local or special”, though it also pointed out that “the Constitution has placed ‘fees’ under a separate category for the purposes of legislation”. The learned counsel referred to the observation in paragraph 29 of the judgment of the Supreme Court in Mumammadbhi Khubabux Chhipa and another etc. v. The State of Gujarat and another etc. A.I.R 1962 Supreme Court 1517, (29) that fees are also included within the taxing power of the legislature in broadest sense.

After thus pointing out that the word “tax” is of wide import, Mr. Patel submitted that the learned single judge erred in holding that the levy in question is not “tax” merely because the amount in question goes only into the cement Regulation Account and not into consolidated Fund of India under Article 266 of the Constitution. The learned counsel submitted that being put into the Consolidated Fund is not an essential feature of “tax” and referred to a passage at page 231 “Legislative, Executive and judicial powers in Australia” by wynes (3rd Edition) that —

“the important elements of tax may be said to be first, that it is a compulsory exaction; secondly, that it is payable to the State or to some public authority on its behalf, and thirdly, that it is an exaction for the purposes of expenditure out of a Treasury fund”,

and to an observation in the footnote on the same page that —

“Professor Sawer (Cases P. 346) considers that payment out of a Treasury fund is not a necessary condition.”

He also referred to the decision in Vivian Joseph v. The Municipal Corporation, 1973 (1) S.C.C 70, paras 15, 20, 21, 22 and 23, (30) for the propositions that merely because some persons receive more benefit, a levy by way of tax does not cease to be a tax, and that in order to be a tax, a levy must be for a public purpose. Referring to Article 266 of the Constitution, the learned counsel urged that revenue alone goes into the Consolidated Fund, and all other public money goes into public account and, therefore, merely because the levy does not go into the Consolidated Fund, it does not cease to be for public purpose. He cited the decision in Anand Kumar Bindal v. Employees State Insurance Corporation and others, A.I.R 1957 Allahabad 136, 139, para 16 (31) in which it was observed that to be a tax, the amount levied need not go into the general revenue of the State, and it is enough if it is levied by a statutory body for a public purpose, and enforceable by law, but not for services rendered. The learned Counsel also cited the decision in the Secretary, Government of Madras v. Zenith Lamp and Electrical Ltd.; 1973 (1) S.C.C 162, (32) in which it was pointed out at page 171 that in the Shrirur Mutt's case (supra) Mukerjea, J. observed at page 1044 of the report of that case that the fact that the collections in that case went to the Consolidation Fund might not in itself be conclusive, and held that though Court fee goes into the Consolidated Fund, it is still fee. Reference was also made to the decision in Mrs. K.K Wadhwani v. State of Rajasthan and another, A.I.R 1958 Rajasthan 138 (33) in which collection of toll for maintenance of a road or bridge was held to be a tax, and to the decision in Girijananda Chaudhary v. State of Assam and another, A.I.R 1956 Assam 33, paras 35 and 36, (34) in which land revenue was held to be a tax.

All the above arguments of Mr. Patel, in our opinion, ignore the real factual position in the present case. As pointed out by us earlier, the freight is paid by the consumer as part of the f. o. r. destination price, and is not a distinct and separate levy. Though the learned single judge observed that “the price is not collected for the purpose of expenditure out of a treasury fund to use the words of wynes”, he clearly pointed out that “a tax proper differs from the payment of a price”, and that the parts of the prices paid for cement which go into the Cement Regulation Account do not belong to the Government”, and “the payment of any part of the price into the Cement Regulation Account does not amount to levy of any tax”. In the view taken by us that the payment of the freight by the consumers is as part of the f.o.r destination price, the contention of the learned counsel that it is a levy of tax cannot be accepted as correct.

Mr. Patel next contended that “law” in Article 265 of the Constitution means statute law as held in M/s. Hindustan General Electrical Corporation Ltd. v. Superintendent of Central Excise, Ranchi and another, A.I.R 1966 Patna 248 (35); P.J Joseph, Proprietor, Foreign Liquors Ernakulam v. Asstt. Excise Commissioner, Ernakulam, and others, A.I.R 1953 Tranvancore-Cochin 146 (36); and State and another v. Beejal, A.I.R 1954 Rajasthan 283 (37); that even assuming that power to levy tax can be delegated to the executive, it cannot be done unless it is specifically authorised by the statute, and that Section 18G of the Industries (Development and Regulation) Act. 1951, does not contain any such provision. The learned counsel also contended that the words “controlling the prices” in section 18g (2) (a) do not include a levy of tax. In our opinion, these contentions do not arise in the view taken by us that the average freight included in the f. o. r. destination price is not tax.

Mr. Patel sought to contend that the other elements like rebate, etc. included in the f. o. r. destination price are all really exactions, and, therefore, amount to tax. The learned counsel argued that though labelled as sale price, the substance of the matter is that a part of the price amount is taken into the Cement Regulation Account, and is, therefore, virtually a levy of tax. This contention is similar to the contentions regarding the freight, and for the reasons already given by us, we are unable to accept this contention also.

Coming now to the second contention urged by Mr. Patel, the argument was that uniform price of cement has been fixed to favour consumers in the scarcity or deficit States of Assam, Nefa, Manipur and Jammu and Kashmir, at the expense of the consumers in the surplus States who would have been able to buy cement at a much cheaper price if they had not been made to pay for the extra freight incurred by the producers in transporting cement to the scarcity States, and that the same amounts to discrimination against consumers in the surplus States and preference in favour of the consumers in the scarcity States, and thus infringes Article 303 (1) of the Constitution. It was pointed out that under Article 303 (2) of the Constitution, such a discrimination could be practised by a law by which parliament has declared it to be necessary to deal with a situation arising from scarcity of goods in any part of the territory of India, and no such declaration having been made in the Industries (Development and Regulation) Act, 1951, the provisions in the Control Order ensuring uniformity of prices of cement throughout India are not saved from the mischief of Article 303 (1) of the Constitution.

The learned single Judge dealt with this contention which was addressed before him also, and held firstly that, as held by the Supreme Court in Maharashtra State Electricity Board v. Kalyan Borough Municipality (supra), when a uniform price is charged for cement for all persons in the country it can never be said that some of them are discriminated in favour of others, and secondly, that even if it is assumed that some consumers are being discriminated against for the benefit of other consumers, this discrimination or preference is enjoyed by the latter, not because they are situated within the political boundaries of any one State, but because they are situated at a distance from the source of supply of cement.

Mr. Patel submitted firstly, that the learned single Judge mistakenly thought that the discrimination between State and State mentioned in Article 303 means discrimination between the Government of one State and the Government of another State. That is not so. The learned Judge addressed himself to the alleged discrimination between the consumers of one State and the consumers of other States and rejected the contention on the two grounds mentioned above. In fact, it is now settled by the decision of the Supreme Court in State Of Madras v. N.K Nataraja Mudaliar. 1968 S.C.R 820, 841, (38) that the words “between one State and another” in Article 302 mean “between the residents in one State and the residents in another State,” and the same meaning is to be given to the said words in Article 303 also.

The learned counsel next argued that while the appellants-consumers who are local people and are nearer to the cement factories should normally have to pay less freight, they are asked to pay more freight, and on the other hand, the consumers who are distant from the factories in other States and who should, therefore, have to pay more freight, are charged a lower freight, and that there is thus a preference shown to the consumers who are at a distance. The learned counsel furnished a note setting out various data to show that 85.82 per cent of the consumers are made to suffer from freight pooling for the sake of only 14.18 per cent of the consumers who happen to be at a distance from the cement factories. If the argument is accepted as correct, it would mean that a uniform price cannot be fixed throughout the country. We have already discussed the necessity for the fixation of a uniform price in the earlier part of this judgment. The two reasons given by the learned single Judge are, in our opinion, clear answers to the contention of Mr. Patel. As held by the Supreme Court in Maharashtra State Electricity Board's case (supra), when a uniform price is charged for cement from all persons in the country, it cannot be said that some of them are discriminated against. Even if there is some discrimination or preference in favour of some consumers who are staying at a distance from the cement factories, the benefit of that discrimination or preference is enjoyed by those consumers, not because they are situated within the political boundaries of any one State, but because they are situated at a distance from the cement factories. In the circumstances, Article 303 (1) cannot be said to have been violated.

No separate argument challenging clauses 10, 12, 13 and 14 of the Control Order was addressed before us by the learned counsel for the producers or by the learned counsel for the consumers.

Our attention has been drawn to the decision in Jaipur Udhyog Ltd. v. Union of India, A.I.R 1969 Rajasthan 281; (39) Rohtas Industries Ltd. v. Union of India, A.I.R 1971 Patna 414 (40); Union of India v. India Cement Ltd., 84 L.W 583, (41) and Panyam Cements and Mineral Industries Ltd. v. Union of India (unreported decision of a Division Bench of the High Court of Andhra Pradesh in Civil Writ Petition Nos. 3114 and 3736 of 1969, pronounced on July 30, 1971 (42) in which vires of the Cement Control Order, 1967 was upheld. We do not consider it necessary to refer to them in detail as we have given our own reasons for not accepting the contentions put forward on behalf of the appellants-producers and consumers in the Letters Patent Appeals before us.

For the foregoing reasons, the Letters Patent Appeals Nos. 17, 45 and 18 of 1970 fail, and are dismissed, but in the circumstances of the cases without costs.

Appeals dismissed.