JUDGMENT Arun Tandon, J.
1. Heard Sri S.P. Gupta Senior Advocate, assisted by Sri Vivek Chaudhary Advocate, on behalf of the petitioners, Sri Sudhir Chandra Senior Advocate, assisted by Bharti Sapru Advocate, on behalf of Respondent No. 4, Sri Atul Mehra Advocate on behalf of Respondent Nos. 5 and 6 as well as Learned Standing Counsel on behalf of Respondent Nos. 1, 2, 3, 7 and 8.
2. Petitioner DCM Shriram Industries Ltd. is a company incorporated under the Indian Companies Act, 1956. The said company has established a sugar factory known as Daurala Sugar Works, Daurala, district Meerut, which is engaged in manufacture of sugar through Vacuum Pan Process. Under orders of the Cane Commissioner, passed in exercise of powers under Section 15 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (hereinafter referred to as 1953 Act) dated 8th October, 2004, the disputed (29+1) cane purchase centres were assigned in favour of the petitioner sugar factory, Being aggrieved by the said assignment in respect of (29+l) disputed cane purchase centres Respondent No. 4 Triveni Engineering and Industries Ltd. Unit Khatauli, which is also a sugar factory manufacturing sugar through Vacuum Pan Process, preferred an appeal under Section 15(4) of the 1953 Act before the State Government. The appeal was numbered as Appeal No, 6/36 of 20O4. The Special Secretary Chini Udhyog, Anubhag-3 by means of the order dated 22.2.2005 has allowed the appeal so filed by Respondent No. 4 and has set aside the order of the Cane Commissioner dated 8.10.2004 in so far as it pertained to the assignment of (29+1) disputed cane purchase centres in favour of the petitioners. It is against this. order of the State Government dated 22.2.2005, the present writ petition has been filed.
3. On behalf of the petitioner it is contended that for the crushing season 2003-04 estimated quantity of sugarcane required by the petitioner factory was fixed Under Section 12 of the 1953 Act by the Cane Commissioner at 135 lac quintals, which was much less than the actual requirement of the petitioner as the petitioner required 144 lac quintals of sugarcane for working of his sugar factory for a period of 180 days. Similarly, the (determination made under Section 12(2) by the Cane Commissioner for the crushing season 2003-2004 in favour of the Respondent No. 4 sugar factory was 171.91 lac quintals. The said determination was not subjected to any challenge by way of revision before the State Government under Section 12(3) of the 1953 Act. On the basis of the estimate of sugarcane required by the petitioner sugar factory so worked out, the Cane Commissioner passed the order of reservation/assignment in favour of the petitioner sugar factory; whereby the total sugarcane made available to the petitioner, with drawl percentage of 53%, worked out to 127.27 lac quintals. Petitioner therefore submits that still there is a an admitted short-fall of 7.63 lac quintals.
4. A new sugar factory was established by M/s Bajaj Hindustan Ltd. (Unit Kinoni, Meerut) as a result whereof it was necessary for appropriate orders of reservation/assignment of sugarcane in their favour be also made. In order to provide for sugarcane to the said new Kinoni Sugar Factory, the Cane Commissioner assigned 62 sugarcane purchase centres, which were traditionally reserved/assigned areas of petitioner sugar factory, to the Kinoni Sugar factory. To compensate the loss of sugarcane so caused to the petitioner Sugar factory, the Cane Commissioner made assignment of 74 cane purchase centres, which were traditionally either reserved or assigned areas of certain other sugar factories. In the 74 newly assigned sugarcane areas, to the petitioner sugar factory, were included disputed 30 (29+1) sugarcane areas, which were traditionally reserved/assigned areas of M/s Triveni Engineering and Industries Ltd. Respondent No. 4. Therefore, the Respondent No. 4 preferred an appeal before the Cane Commissioner in respect of the aforesaid (29+1) disputed sugarcane purchase centres under Section 15(2) before the State Government being Appeal No. 6/36 of 2004. The Special Secretary, by means of the impugned order under challenge in the present writ petition, has declared the assignment of the aforesaid disputed (29+1) centres in favour of the petitioner sugar factory as illegal. Petitioner in support of his case has relied upon the law laid down by the Hon'ble High Court of Judicature at Allahabad in the judgment reported in 2000(3) AWC 1867; Simbhaoli Sugar Mills Ltd. v. Appellate Authority and Ors. as well as 2001(1) AWC 65; Govind Nagar Sugar Ltd. v. Stake of U.P. and Ors.
5. On behalf of the Respondent No. 4 it is contended that the disputed cane purchase areas (29+1) Were reserved/assigned areas of Respondent No. 4 sugar factory for last more than 5 decades and it is for the first time without disclosing any reasons the aforesaid reserved sugarcane areas have been assigned to the petitioner sugar factory under an illegal older passed by the Cane Commissioner. It is further submitted that the Respondent No. 4 sugar factory is a much bigger factory and the estimated requirement of sugarcane in respect of Respondent No. 4 sugar factory under Section 12(2) has been fixed as 198 lac quintals. The total reserved and assigned area provided for availability of only 177.34 lac quintals with drawl rate of 53%, as such the supply of sugarcane to the Respondent No. 4 sugar factory was admittedly short by 20.66 lac quintals. It is also submitted that the State Government has rightly taken note of the subsequent facts namely that during the pendency of the appeal, because of various orders passed in respect of different cane centres by the Cane Commissioner/State Government, the total sugarcane which remained available to the petitioner has reduced from 400.6 lac quintals to 334.60 lac quintals. It is submitted that the order passed by the State Government allowing the appeal, as such is based on appreciation of fact and this Court under Article 226 of the Constitution of India is not required to act as an Appellate Authority and sit in appeal over the order of the State. Government on facts, Even otherwise setting aside the order of the State Government will have the effect of restoring an illegal order passed by the Cane Commissioner. Counsel for the Respondent has placed reliance upon the following judgments in support of his contentions.
(i) AIR 1995 Allahabad page 309 D.B.
Basti Sugar Mills Co. Ltd. v. State and Ors.
(ii) 1994 HVD (Alld.) Vol. II Basti Sugar Mills Co. Ltd. v. State of U.P. and Ors.
(iii) 2000(2) AWC 1014 D.B. page 12 Triveni Engineering & Industries Ltd. v. State of U.P. and Ors.
6. I have heard counsel for the parties and have gone through the records of the writ petition.
7. From the facts, which have been noticed hereinabove, It is not in dispute that because of the establishment, of a new sugar factor by M/s Bajaj Hindustan Ltd. at Kinoni, Meerut, the Cane [Commissioner in exercise of powers under Section 12 and 15 of 1953 Act read with Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as Rules, 1954) has to ensure availability of sugarcane to the newly established Sugar Unit at Kinoni, Meerut. The underling idea of the Act is to ensure the maintenance of reasonable supply of sugarcane required by the sugar factories from the producers of sugarcane and in turn to ensure a fair return to the cane-growers. The competitive interest of the sugarcane growers and sugar manufacturers have to be protected at the same time. The main purpose of the Act is to provide mechanism for reasonable necessary, sufficient and continuous supply of sugarcane to the sugar factories in the crushing season keeping in mind the interest of the cane growers, the Cane Growers' Cooperative Societies, the sugar factories and also intense interest of the sugar factories.
8. Since there may be sugar factories more than one in number, which may claim certain areas as the reserved area looking to their location or because of setting up of new sugar factory, the obligation extends upon the authorities to watch the inter-se interest of such sugar factories also. The purpose, of the Act, the duty and obligation cast upon the Cane Commissioner as well as upon the State Government have already been considered in detailed by the Hon'ble Single Judge of this Court in the judgment reported in 2001(1) AWC 65; Govind Nagar Sugar Ltd. v. State of U.P. and Ors. (Supra) Suffice is to refer to paragraph 9 of the said judgment as well as to the relevant portion of paragraph 16 of the Division Bench judgment in the case of Simbhaoii Sugar Mills Ltd. (Supra), which read as fellows:
"9. The main purpose of the Act is, to provide mechanism for reasonable, necessary, sufficient and continuous supply of sugarcane to the sugar factories in the crushing season keeping in mind the Interest of the cane growers, the Cane Growers' Cooperative Societies, the sugar factories and also inter-se interest of the sugar factories. The supply of sugarcane to the sugar factories in the quantity which may be reasonably required by them for production in a particular season or seasons is to be regulated by the provisions of this Act. While watching the interest of the sugarcane growers', it is implicit and obligatory upon the authorities to strike a balance in the interest of sugar factories and cane growers. Since there may be sugar factories more than one in number, which may claim certain areas as the reserved area looking to their location, the obligation extends upon the authorities to watch the inter-se interest of such sugar factories also.
16. .....It is gleaned from the various provisions of the Act, Rules and the above referred Order of 1954 that various factories submit an estimation of their requirements according to their crushing capacity on the basis of which the Cane Commissioner passes the order of reservation. The philosophy is to ensure the maintenance of reasonable supply of sugarcane to the Sugar producers and securing, on the other hand, the interest of cane growers."
9. For achieving the said purpose of the act, supply and purchase of cane finds mention in Chapter-3 of the Act. The said Chapter provides for determination of estimated quantity of sugarcane, the manner and by whom. The reservation/assignment of areas including the manner and procedure to be adopted in doing so. Reference Section 12, Section 15 read with Rules 21 and 22. It has specifically been held in paragraph 41 of the judgment (in Govind Nagar Sugar Mills case) that the estimate prepared under the order of Cane Commissioner under Section 12 of the Act has to be adhered to by the Cane Commissioner at the time of passing an order of allotment under Section 15(1) of the Act, unless there are Exceptional reasons which might intervene or crop up between the period when the estimate has been published and the reservation order is made under Section 15(1) (not adversely affecting the rights and interest of other sugar factories etc.). The sugar factories cannot raise any grievance against the estimate so prepared at that stage, yet it is always open to the Cane Commissioner to allot more reserved area or assign further area if he is satisfied about the necessity of providing more sugarcane to any factory, during the crushing season, in accordance with the provisions of the Act and the Rules.
10. In the facts of the present case the estimate worked out under Section 12 in favour of the petitioner sugar factory as well as respondent No. 4 sugar factory is not a subject matter of consideration before this court. Moreover, it was never challenged before the Prescribed Authority under Section 12(2) of the Act.
11. Having estimated the quantity of sugarcane, which may be needed by the respective sugar factory in a particular crushing season, the said estimate becomes basis for providing reserved area or assigned area to a sugar factory and it is for this purpose the occupiers of sugar factories are required under Rule 21 of the 1954 Rules to indicate to the Cane Commissioner in Form-1 Appendix-III their options for reservation or assignment of sugarcane areas to the sugar factories; during the crushing season. The Cane Commissioner after receipt of all such proposals from the sugar factories, thereafter passes an order of reservation/assignment under Section 15 for the purposes of ensuring supply of required quantity of sugarcane as determined under; Section 12(1) to the sugar factory concerned with specific reference to the guidelines as mentioned in Rule 22. At this stage it would be worthwhile to refer to the observations made by the Division Bench of this Court in the judgment reported in 2000(3) A.W.C. 1867; Simbhaoli Sugar Mills Ltd. v. Appellate Authority and Ors., in paragraph 11, which reads as follows:
".......It goes without saying that when a new sugar factory is established in a sugarcane growing area in which one, or more such factories are operating from before, then sugarcane area has necessarily to be re-allotted/re-reserved balancing in a reasonable way the competitive claims of all the sugar factories operating in the area. Some sugarcane area which had earlier been allotted or reserved for the operating sugar factories has to be parted with or taken away from them to cater to the requirement of the newly established sugar factory in the area. There can be no escape from such as situation."
12. Thus, re-allocation/re-balancing of the cane areas in the facts of the case was necessarily required because of the establishment of a new sugar factory by M/s Bajaj Hindustan Ltd. namely Kinoni Sugar Factory, Meerut and the Cane Commissioner in order to achieve the purpose of the Act, passed the reservation order dated 8th October, 2004, which has already been detailed as above, provided for (a) assignment of 62 cane purchase! area, assigned/reserved in the previous years in! favour of the petitioners sugar factory, to the other sugar factory including Kinoni Sugar Factory for the crushing season 2004 2005! (b) assignment of 72 sugarcane area to the petitioner sugar factory, which were traditionally reserved or assigned areas of other sugar factories. Similarly in respect of the Respondent No. 4 sugar factory, under the order of reservation dated 8th October, 2004, as many as 71 new cane areas were assigned, which were originally reserved or assigned areas of oilier sugar factories.
13. In these 72 cane purchase areas assigned to the petitioners' sugar factory (in order to compassionate the loss to sugarcane because of 62 purchase areas having been taken away) were included (29+1) cane purchase areas, which were traditionally reserved/assigned areas of Respondent No. 4 sugar factory, which lead to the filing of Appeal No. 6/36 of 2004. The State Government in the order under challenge has assigned following reasons:
(a) As against 400.68 lac quintals of sugarcane allotted under the reservation order dated 8th October, 2004 to Respondent No. 4, the availability of the quantity has been reduced to 334.60 lac quintals because of amendment/revision of the reserved/assigned areas of Respondent No. 4 due to subsequent orders of the Cane Commissioner/State Government.
(b)Admittedly, there is a shortage of sugarcane qua the requirement of petitioner sugar factory as well as Respondent No. 4 sugar factory. However, since Respondent No. 4 is a bigger sugar factory, the difficulties faced by the said sugar factory is more.
(c) All 29+1 disputed cane 'purchase areas were assigned/reserved areas of Respondent No. 4 sugar factory for last so many years.
(d) None of the condition specified in Rule 22 have been mentioned in the reservation order for assigning the aforesaid 29+1 disputed cane purchase areas of Respondent No. 4 sugar factory to the petitioner in the order of the Cane Commissioner.
(e) The petitioner had not asked for the aforesaid 30 cane purchase areas in; their application under Rule 21 and therefore no assignment could have been made.
(f) The contention of the petitioner that he was not afforded opportunity of hearing before passing the order dated 8.10,2004 by the Cane Commissioner, is contradictory to his own stand that the Cane Commissioned is authorized to pass reservation/assignment order according to the needs of Sugar factory and to amend the proposal as submitted by the sugar factories.
(g) No reasons have been assigned in the impugned order for the large-scale alteration in the reserved and assigned areas of the Respondent No. 4.
14. Therefore, the order assed by the Cane Commissioner dated 8.10.2004 has been set aside. In respect of 29 cane purchase areas inasmuch as in respect of one centre namely Idrishpur, appeal no. 61 was still pending.
15. In the opinion of the court the impugned order is legally not sustainable in the eyes of law. It is an undisputed fact that because of the establishment of new sugar factory namely M/s Bajaj Hindustan Ltd. at Kinoni, it was obligatory for the Cane Commissioner, in view of the provisions quoted hereinabove, to re-allocate/re-reserve by a balancing order, the reserved/assigned areas of various sugar factories of the previous years, so as to provide sugarcane to the new sugar factory and to balance in a reasonable way competitive claims of all sugar factories operating in the area. Some sugarcane areas, which earlier reserved, had to be parted with or taken away from them to cater the requirement of the newly established sugar factory. In order to arrive at balance between conflicting claim of two sugar factory, who have lost their reserved/assigned areas to the newly; established sugar factory, it was necessary for Cane Commissioner to have passed an order distributing the loss of cane areas amongst the competitive sugar factory in an equitable and fair manner so that the loss caused to the sugar factories, because of sugarcane having provided to the newly established sugar factory is equally distributed and equally shared by all the sugar factory. In such circumstances, if the Cane Commissioner, having regard to the requirements of newly established sugar factory, has withdrawn reserved/assigned area from the. Respondent No. 4 sugar factory and assigned the same to the petitioner sugar factory and simultaneously compassionate the Respondent No. 4 sugar factory by assignment of cane purchase areas of other sugar factories so as to strike at balance with regards to conflicting interest of the sugar factories, it cannot be said that any illegality or infirmity, has been committed by the Cane Commissioner.
16. It is needless to point out that in the case where a new sugar factory is established in an area, where there are existing sugar factories it is but necessary that certain reserved/assigned areas of sugar factory already in existence must necessarily be withdrawn and reserved or assigned to new factory. Guidelines under the provisions of rule 22 must give way to the achievement of the purpose of the Act. More so, in such a fact situation a new sugar factory cannot answer the requirement of Rule 22. As a logical consequence re-arrangement/re-allocation, which takes place between existing sugar factories, for compensating the loss of sugarcane as aforesaid also must be judged on the parameter of equal distribution of the loss caused without attaching much weightage to the guidelines under Rule 22. The State Government/Cane Commissioner are under legal obligation: to ensure that there: is equal distribution of the sugarcane to all the sugar factories including the new sugar factory and loss caused to the existing sugar factory because of such distribution is equitably anportioned amongst all existing sugar factories. Setting aside of the order of the Cane Commissioner in such circumstances on the reason that the guidelines mentioned in Rule 22 have not been taken care of while assigning 29 disputed cane areas to the petitioner sugar factory under the reservation order cannot be justified.
17. Even otherwise it may be pointed; out that equitable distribution of sugarcane among sugar factories is the basic object of the act. The requirement is estimated for each sugar factory under Section 12 for the purposes of reservation/assignment under Section 15. It is only then that Rule 21 and Rule 22 come into play. The guiding factors mentioned under Rule 22 are only a tool to achieve the basic objective of fair distribution of sugarcane. The provisions of Rule 22 have therefore to be read as a means to achieve the basic purpose of the Act and to not a provision to obstruct the achievement of the basic goal of equal distribution.
18. While by making an order of reservation/assignment, the Cane Commissioner has to apply his mind to Various factors including the establishment of new sugar factory viz-a viz the guidelines provided for under Rule 22 and has to strike a balance in respect of the conflicting claims of sugar factories for ensuring equity distribution of sugarcane on! one hand and on the other hand the interest of the sugar factory, cane-growers and the cane growers' cooperative societies.
19. So far as the issue of reduction of the total sugarcane available to Respondent No. 4 sugar factory because of subsequent orders of modification/cancellation etc. having been passed by the Cane Commissioner or by the State, Government is concerned, suffice it to point out that it is always open to the said Respondent No. 4 to approach the Cane Commissioner for recouping the loss which has been so caused because of subsequent developments and it is in this background that this Court in the case of Govind Nagar Sugar Ltd. (Supra has held as follows in paragraph 36, 37, 38 and 39:
"The supply of sugarcane by means of reservation and assignment of an area is a continuous process throughout the crushing season and as and when the; shortage is felt, to the satisfaction of the Cane Commissioner by a sugar factory, it can be made good either by making reservation or assignment of further area. Thus, there are two stages under the Act for declaration of reserved area or assigned area, namely;- (1) under Section 15 initially, i.e., at the start of crushing season when the reservation has to be made and (ii) secondly at all point of time during the entire crushing season when additional sugarcane is required by any sugar factory.
This proposition specifically flows from the provisions of Section 15(1) and Section 16. The statute authorizes the Cane Commissioner to cancel any area] of reservation and assignment or alter the boundaries of an area so reserved or assigned during the crushing season. Section 16 provides for regulation of supply and purchase of sugarcane in a. reserved or assigned area and it has been enacted with a view to maintain the supply and for that purpose the State Government has been empowered to regulate We distribution and supply of sugarcane in any reserved or assigned area and its purchase. The power of reservation and assignment includes also, the power of cancellation and alteration of such areas.
The Cane Commissioner is therefore, 'entitled to provide additional area or assigned area to sugar factory which needs more sugarcane as against its estimate as prepared under Section 12 during the continuance of the crushing season. A. harmonious construction of the provisions of the Act, namely, Sections 12, 15 and 16 and Rule 21 would necessarily mean that an estimate prepared under Section 12 of the Act is final for the purpose of initial declaration of reserved or assigned area, sunder Section 15(i) and it would not be open for the sugar factory to raise any grievance regarding the same, yet it is always within the authority of the Cane Commissioner to provide additional sugar cane to the sugar factory which bona fide feels the shortage of sugarcane and requires more sugarcane for producing sugar during particular crushing season or seasons. Rule 21, sub-clause (2) provides that the Cane Commissioner may, for any special reason, entertain an application for reservation or assignment of an area, made after the commencement of a crushing season. The phrase negate of powers of the Cane Commissioner to provide for reservation and assignment of an area to a sugar factory if area allotted to it is not found sufficient to cater the need of the factory.
The interest of the sugar factory is not jeopardized or adversely affected as they are at full liberty to make appropriate request to the Cane Commissioner for either further reservation of an area or assignment of an area with a view to have an additional sugarcane in case they bona fide establish that area allotted to them has riot been adequate and they are feeling shortage of sugarcane in the continuing crushing season."
20. Thus, reduction of the sugarcane area of the Respondent No. 4 sugar factory because of subsequent orders passed by the Cane Commissioner or the State Government from 400 to 334.6 lac quintals at best could have been a cause for the petitioner to approach the Cane Commissioner/State Government for reserving/allotment of fresh areas.
21. Even otherwise the State Government has lost sight of the fact that if the 29+1 cane centres, are taken away, from the assigned areas of the petitioner sugar factory, they would be put to loss of sugarcane for which no arrangement, to compensate the loss, has been provided for. There cannot be two standard for judging the hardship of Respondent No. 4 sugar factory viz-a viz the hardship faced by the petitioner sugar factory because of the (29+l) sugarcane centres having been taken away.
22. In the opinion of the Court, orders are to be judged on the reasons and facts, which exist on the date of the orders. Any subsequent development in the facts could not have been the basis for up betting the order of the Cane Commissioner as has been done by the State Government by means of the impugned order. Even otherwise the powers of the State Government in appeal under Sections 15(3) viz-a viz the powers of the Cane Commissioner under Section 15(1)and 15(2) are co-extensive end therefore the State Government itself could have summoned the record for being satisfied as to whether in the facts of the case assignment of 2.9 disputed cane areas in favour of the petitioner was in consonance with the purpose of the Act and necessary for fair distribution of the sugarcane amongst the conflicting claims of the sugar factories.
23. It is settled law that this court while exercising its jurisdiction under Article 226 of the Constitution of India, is not required to scrutinize the findings, which have been recorded by the State Government. However this court shall interfere if the State Government has not applied its mind to the various relevant factors while considering the appeal and has1 not given thought to the various facts and circumstances, which could have ensured the achievement of the purpose of fair distribution of sugarcane amongst the conflicting claims of sugar factories. One individual factor as per Rule 22 in itself is not sufficient to form the basis for up setting the order passed by the Cane Commissioner. Reference- 2000(2) A.W.C. 1014; Triveni Engineering and Industries Ltd. v. State of U.P. and Ors.
24. The court is of the opinion that the State Government has failed to appreciate the necessity of assignment, of the disputed 29 cane areas under order of reservation dated 8th October, 2004 in favour of the petitioner because: of establishment of Kinoni Sugar Factory along with other guidelines as has been mentioned; in rule 22 while passing the impugned order. The State Government has also not applied its mind to the basic object of the Act while passing the impugned order and therefore the order dated 22.2.2005 is liable to be set aside. Even otherwise the State Government should have called for the relevant record from the office of the Cane Commissioner for judging itself as to whether in the facts of the case the reservation order dated 8th October, 2004 was justified and had the effect of fair distribution of the sugarcane amongst the conflicting claims of sugar factories/which is the primary object.
25. In view of the above, writ petition is allowed. The matter is remanded to the State Government to reconsider the appeal, as filed by the Respondent No. 4, in the light of the observations made above and to pass a reasoned speaking order within one month from the date a certified copy of this order is filed before the State Government.