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M/s Oudh Sugar Mills Ltd. v. Union of India & Anr.

Civil Appeal · 2020 INSC 142Decided 7 Feb 2020
Civil Appeal No. 3890 of 2010
Justice Mohan M. Shantanagoudar · Justice R. Subhash Reddy

Background

Oudh Sugar Mills, a sugar factory in Sitapur district, Uttar Pradesh, was placed in the "central zone" rather than the "eastern zone" for the purpose of fixing the government-controlled price of levy sugar during the 1984-85 and 1985-86 crushing seasons. The company argued this was discriminatory because two other sugar factories in the same district (Biswan and Mahmoodabad) were placed in the eastern zone, which had a more favourable price, even though all three operated under similar geographic and climatic conditions.

Decision Breakdown

The Supreme Court upheld the High Court's dismissal of the company's writ petition, holding that the zonal classification for levy sugar pricing was a policy decision made by the Central Government based on expert studies (including the Bureau of Industrial Cost & Prices), and that zones were not drawn along revenue-district lines. The Court found that the other two factories had been moved to the eastern zone based on their own individually-assessed merits, and that mere difference in price between zones, or being in the same district as factories placed in a different zone, did not by itself establish discrimination. Since the appellant failed to show arbitrariness or hostile discrimination in the Government's classification, the appeals were dismissed.

Lesson Learnt

Courts give significant deference to government pricing and zonal-classification policies made on the basis of expert technical studies, and a business cannot claim a constitutional right to be treated identically to a geographic neighbour merely because of proximity: it must show actual arbitrariness in the classification.

Official source (sci.gov.in)View Judgment (PDF)

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