The sugar industry has challenged the union government’s move to absolve itself of a Rs 14,000-crore payment to industry through an amendment to the Essential Commodities Act.
The Indian Sugar Mills Association (Isma), the apex industry body, has last month filed a writ petition at the Delhi High Court seeking declaration of Sections 2A and 3 of the Essential Commodities (Amendment and Validation) Act, 2009 as unconstitutional.
The court has issued notices to the Union food secretary and other officials in the Department of Food and Public Distribution. The court will hear the case on July 23.
The October 2009 amendment made the Supreme Court decision of March 31, 2008, on levy sugar price inoperative, with retrospective effect. It also barred courts from entertaining any cases relating to the prices of levy sugar.
“The jurisdiction of the constitutional courts to go into and pronouncement on the legality of the action of the government emanates from Article 226 and Article 32 of the Constitution. This cannot be excluded merely by a statute providing insulation from the constitutional jurisdiction of the courts,” Isma said in its writ petition.
A number of cases had been filed since the early 1980s seeking a state advised price (SAP)-based levy price for SAP-paying states. In its judgment in the Mahalaxmi Sugar and others versus Union of India (2008), the SC held that SAP fixed by the state governments also needed to be factored in while fixing levy sugar prices. A few earlier judgments have also held the same.
The sugar industry was expected to gain Rs 14,000 crore as a result of these rulings. However, the central government came up with this amendment to do away with all the obligations arising out of such cases. It also barred courts from entertaining cases on levy sugar.
Five states — Uttar Pradesh, Uttarakhand, Punjab, Haryana and Tamil Nadu — declare SAP, while others like Maharashtra, Karnataka, Andhra Pradesh and Bihar follow the statutory minimum price, now renamed as the fair and remunerative price.
Usually, SAP is substantially higher to the price fixed by the central government and is announced with political gains in mind.
Levy sugar has to be sold by the central government at a price fixed by it for sale under the public distribution system.
Mills can sell the remaining 80 per cent, known as free-sale sugar, in the open market. At present, the levy price is Rs 1,318-1,344 per quintal, while the open market price is Rs 2,700 a quintal.
