SC backs sugar price fixed by LHC

Published October 3, 2009

ISLAMABAD, Oct 2 The Supreme Court ruled on Friday that sugar should be sold at Rs40 per kg as fixed by the Lahore High Court till a new price was determined by Competition Commission of Pakistan Chairman Khalid Mirza.

“We consider it appropriate to appoint a commission for the purpose of determining the price of sugar after taking into consideration the cost of production, undoubtedly a technical job to be performed by an organisation having sufficient infrastructure to deal with the issue,” observed a three-judge bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Jawwad S. Khawaja and Justice Ghulam Rabbani.

The court took up identical appeals filed by the Pakistan Sugar Mills Association and the federal and provincial governments against the LHC decision.

“This job should be performed by an organisation that has sufficient infrastructure to deal with the issue. Besides, the person heading the commission should possess necessary professional expertise,” the order dictated by the chief justice said.

Attorney General Sardar Latif Khosa said the government had no objection to the setting up of the commission, but expressed apprehension that the CCP chairman might not perform his statutory function in case of a row between the commission and mill owners because he had multiple duties within his own hierarchy.

The court order encompassing all aspects of the sugar business was issued after the petitioners consented to the appointment of the commission which would submit its report in two weeks.

The sugar crisis, the court deplored, cropped up because of non-adherence to relevant laws and concessions given by financial institutions to mill owners by extending the period of payment of outstanding dues.

The court also noted a lack of mechanism for the purpose of supply to consumers as certain elements like middlemen pocketed huge profits.

The order required the federal government to issue a notification under Section 6 of the Price Control and Prevention of Profiteering and Hoarding Act 1977 for the sale of sugar at Rs40 for the time being across the country.

“We are of the considered opinion that by issuing a notification, it would be possible to maintain uniform rates in all the provinces,” the order said.

PSMA chairman Iskander Khan highlighted difficulties in selling sugar at Rs40 per kg in view of high cost of production, but said he would convene a general body meeting of the association to inform the members about the court's decision.

The commission will ensure supply of sugar to consumers after hearing all stakeholders, including mill owners, representatives of consumers, sugarcane growers and others. The commission has been empowered to call any person, including the chairman of Federal Board of Revenue, for calculation of GST. The commission can approach the Supreme Court again for an appropriate order in case it faces any difficulty.

The court said it saw no significant difference in reports on fixing the sugar price and cost of production provided by mill owners, the federal government and an intervener Farooq Bajwa who himself is a grower. The cost of production submitted by all three varies a little due to recoveries.

Mr Bajwa's report which was also calculated on data provided by the mills suggested Rs37.93 per kg price because profits earned by selling several by-products like sugar mud, molasses, etc., were not reflected in the cost of production.

The court order required the federal and provincial governments to regularise the supply of sugar by appointing duly recognised dealers in the presence of available laws on the subject like the Sugar and Sugar Products Control Order 1948 which requires the producers not to dispose of the product to any unauthorised dealer.

“Under this dispensation, it seems, the sugar dealers are to be appointed by the federal government which in our opinion would not be possible. Therefore, the provincial governments should regularise distribution of sugar by adhering to the Wheat, Maize, Atta, Rice Distribution Order 1967, read with the Punjab Sugar Licensing Control Order 1972,” the court observed.

The court asked the federal as well as provincial governments to ensure that sugar was supplied only to recognised dealers, and if any province lacked such laws, dealers who were registered under the Sales Tax Act and had independent National Income Tax numbers should be appointed.The court ordered that the high court order should be considered as if passed by the Supreme Court and all government functionaries like chief secretaries, inspectors general of police, home secretaries and other law-enforcement agencies should implement the order in letter and spirit.

The court referred to the Securities and Exchange Commission of Pakistan the matter relating to submission of alleged fake document to the Supreme Court by association's vice-chairman Javed Kiani.

The case will be taken up on Oct 16.

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