Who is Authorized to Exercise Legal Control Over Sugar Price Fixation in Pakistan?

There is no doubt that sugar pricing evokes more than mere emotions among Pakistani citizens and industry stakeholders annually. Every crushing season rekindles the debate generated decades ago as to who exactly controls the pricing of this essential commodity. The second largest agro-based industry is a victim of political capture, hoarding, rent seizing, structural defects, administrative inefficiencies and what not; a good deal of credit can be given to the stakes held by politicians motivated by self interest, multiple overlapping and conflicting federal and provincial laws, misreading of ‘rules of businesses’ and the everlasting confusing impact of the Eighteenth Amendment to the Constitution which has haphazardly scattered the responsibilities between different government departments and divisions, under the garb of which the sugar mafia and the sattay baaz benefit by monopolizing the price hike every year.

The Supreme Court in Regarding enormous increase in the price of flour: In the matter of Constitution Petition no. 52 of 2013 [2014 SCMR 329], a matter pertaining to the supply and fixation of the price of wheat, pursuant to its constitutional jurisdiction, instructed the federal government through the Ministry of National Food Security and Research Division and the provincial governments through their Chief Secretaries, to take necessary measures to ensure the availability of the wheat/flour and other foodstuffs to the public at a controlled rate. It was also highlighted in the said judgment that,

“…presently there is a loose check on the profiteers and hoarders and the same is only possible by adopting a mechanism by the respective Provincial Governments by taking stringent steps otherwise it would be beyond the capacity of an ordinary laborer to provide bread to his family including children and old persons.”

Although the case does not specifically mention sugar/sugarcane, sugar just like wheat flour is an essential commodity and falls within the category of ‘foodstuffs’, inferring that the courts of Pakistan will rely on this precedent to resolve the issue of sugar pricing.

In a historical context, at the time of Partition there were only four sugar mills operating in Pakistan and The Punjab Sugar Factories Control Act 1950 had been enacted to encourage the agriculturalists to cultivate sugarcane in the country and have their interests safeguarded by law. The intention was to regulate the supply of sugarcane to be used in sugar factories and the price at which it may be purchased, among other incidental matters. The provincial regulation was strengthened further after the enactment of The Punjab Foodstuffs Control Act 1958 which empowered the provincial government to control the prices at which any foodstuffs (including sugar) may be bought or sold. Similarly The Punjab Essential Articles Control Act 1973 empowered the provincial government to control or fix the prices at which any essential article (including glucose) may be bought or sold. The only difference between the 1958 Act and the 1973 Act is the allocation of government departments – the former falls under the domain of the Food Department and the latter under the Agriculture Department and the Industries, Commerce and Investment Department pursuant to the Punjab Rules of Business 2011.

Perplexity generally arises when The Price Control and Prevention of Profiteering and Hoarding Act 1977, which is a federal law, is placed in juxtaposition with the existing provincial laws dealing with the said subject matter, as well as the Eighteenth Amendment to the Constitution. Subsequent to the Amendment, an entry was incorporated in the Federal Rules of Business 1973 creating a National Food Security and Research Division. A bare reading of the said entry may give a perception that the apparent price control of essential food items is the primary responsibility of the federal government and since the 1977 Act has never been adopted by the Provincial Assembly post the Eighteenth Amendment, the domain of price fixation remains with the federal government. One can safely say that such interpretation is defective and requires unambiguity.

Before the Eighteenth Amendment, astonishingly, the subject of price control fell within the domain of both federal and provincial governments. This is evidenced by the fact that the federal 1977 Act had been enacted while the provincial 1958 Act and the 1973 Act were still in the field without either of them being repealed. Although there is no specific mention of a function of “price control” in the Concurrent List (deleted as a result of the Eighteenth Amendment) of the Fourth Schedule of the Constitution of the Islamic Republic of Pakistan 1973, the federal government functionaries have still frequently relied on entry no.14 of the Concurrent List which mentions the “maintenance of supplies and services essential to the community” for undertaking legislation on the subject of price control. However, post the Eighteenth Amendment, the situation is as follows:

First, a Statutory Regulatory Order (SRO) No. 1(7) 2005 CA-Vol-III was issued by the Federal Ministry of Industries, Production and Special Initiative in the year 2006 under the 1977 Act authorizing certain officers of the provincial government to exercise the power of the Controller-General of Prices and Supplies. Therefore, since 2006, the Deputy Commissioners have been exercising their powers under the 1977 Act to fix and enforce prices of sugar. It is worth mentioning that the said notification was never challenged before a court of law.

Secondly, as clearly mentioned in Article 142(c) of the Constitution, the Provincial Assembly can legislate with respect to matters not enumerated in either the Federal Legislative List or the Concurrent Legislative List also known as the ‘residuary legislative clause’ in the parlance of constitutional jurisprudence (affirmed by the Honourable Supreme Court of Pakistan in Pakistan Flour Mills Association v/s Government of Sindh [2003 SCMR 162]). Furthermore, as per Article 270AA(6) of the Constitution, all laws, including any notifications at the time of the abolition of the Concurrent List, shall continue to remain in force unless altered, repealed or amended by a competent authority.

Thirdly, to say that fixing the price of sugar is apparently under the jurisdiction of the federal government is a misreading of entry 23 of the Federal Rules of Business 1973 which reads as follows:

“…by fixing procurement and issue prices including keeping a watch over the price of food grains and foodstuffs imported from abroad or required for export and those required for inter-provincial supplies…

This shows that the federal government is expected to keep watch, from a national angle, over general price trends and supply position of essential commodities, price and distribution control over items to be distributed by statutory orders between the provinces under the jurisdiction of the Industries and Production Division. Nowhere can the fixation of prices of essential commodities be purposively interpreted by reading entry 23. Parliamentary intervention is required for clarity.

Sugar being an essential food item clearly falls under the purview of the price control mandate given to the Secretary Industries, Director General Industries and all Deputy Commissioners as Controller-General of Prices under the 1977 Act with the purpose of fixation of price as well as its enforcement. Retail price is generally fixed by Deputy Commissioners, taking into account the ex-mill rate of sugar, transportation cost, profit margin of dealers, wholesalers and retailers, etc. Hence, sugar price fixation falls under the domain of provincial governments.

The sheer lack of coordination and a vicious cycle of blame-game when the state machinery is held accountable exposes the said essential commodity to blatant exploitation by the sugar mafia. It is high time we move past the jurisdiction question and become better equipped in dealing with the practical difficulties suffered by the vulnerable agriculturalists on ground and the ultimate consumers left at the mercy of the artificial price hike motivated by different malicious agendas.

The views expressed in this article are those of the author and do not necessarily represent the views of CourtingTheLaw.com or any organization with which she might be associated.

Ramsha Shahid

Author: Ramsha Shahid

The writer is an Advocate of the High Court and faculty member at TMUC and Business & Law School Lahore. She can be reached at [email protected]