PREMIER AUTOMOBILES LTD. & ANR. ETC. versus UNION OF INDIA

PREMIER AUTOMOBILES LTD. & ANR. ETC. versus UNION OF INDIA

Fair price fixation under s. 18G of the Industries (Development and Regulation) Act, 1951 must consider achievable production capacity, exclude warranty and bonus from ex-works cost, calculate costs using current prices (not historical where inconsistent), include escalation clause, allow reasonable return (16% of capital employed), and depreciation should be based on actual cost, not replacement value.

Parties
Petitioner: Premier Automobiles Ltd.; Respondent: Union of India; Petitioner: Standard Motors Products of India Ltd.; Petitioner: Dealers (two unnamed)
Jurisdiction
India
Judgment Date
24 November 1971
Procedural Posture
Writ Petition Under Article 32 of the Constitution / Final Judgment
Outcome
Petition dismissed with partial modifications
Legal Topics
Price Fixation, Fair Pricing, Production Capacity, Depreciation, Taxation, Bonus, Warranty Charges, Return on Capital, Control Orders
Administrative Law Industrial Regulation Constitutional Law Price Fixation Fair Pricing Production Capacity Depreciation Taxation +4 more

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Parties

Premier Automobiles Ltd.

Petitioner

Union of India

Respondent

Standard Motors Products of India Ltd.

Petitioner

Dealers (two unnamed)

Petitioner

Procedural Posture

Writ Petition Under Article 32 of the Constitution / Final Judgment

Legal Issues

  1. 1 Determination of achievable production capacity for automobile manufacturers
  2. 2 Inclusion of warranty and bonus in ex-works cost
  3. 3 Correct method for calculation of ex-works cost (historical vs current prices)

Ratio Decidendi

Fair price fixation under s. 18G of the Industries (Development and Regulation) Act, 1951 must consider achievable production capacity, exclude warranty and bonus from ex-works cost, calculate costs using current prices (not historical where inconsistent), include escalation clause, allow reasonable return (16% of capital employed), and depreciation should be based on actual cost, not replacement value.

Court Disposition

Petition dismissed with partial modifications

Orders

  • Production capacity for Standard Motors fixed as found by technical team: 3400 cars and 1000 trucks per annum
  • Production capacity for Hindustan Motors fixed as per technical team: 30000 cars and 5000 trucks per annum