Reserved Case :- WRIT - C No. - 2915 of 2018 Petitioner :- Modi Industries Limited Respondent :- State Of U.P. Through The Special Secretary And 4 Others Counsel for Petitioner :- Udit Chandra, Subodh Kumar Counsel for Respondent :- C.S.C., Ravindra Singh, Diptiman Singh Connected with Case :- WRIT - C No. - 4192 of 2018 Petitioner :- Bhagat Singh And 2 Others Respondent :- State Of U.P. And 4 Others Counsel for Petitioner :- Anoop Trivedia, Subodh Kumar Counsel for Respondent :- C.S.C., Ravindra Singh, Diptiman Singh, Rohan Gupta
Hon'ble Ram Surat Ram (Maurya),J.
1. Heard Sri Udit Chandra and Sri Anoop Trivedi, for the petitioners, Standing Counsel for State of U.P., Sri Ravindra Singh, for Co-operative Cane Development Society, Sri Navin Sinha, Senior Advocate, assisted by Sri Rohan Gupta and Sri Diptiman Singh, for Bajaj Hindustan Sugar Ltd.
2. Both the writ petitions have been filed against the order of Special Secretary, State of U.P. dated 26.12.2017, allowing Appeal No. 20 of 2017, filed by Co-operative Cane Development Society, under Section 15 (4) of U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 (hereinafter referred to as the Act), read with Rule-22 of U.P. Sugarcane (Regulation of Supply & Purchase) Rules, 1954 and Clause-6 of Sugarcane (Control) Order, 1966, allotting purchase centers Naglabarhi-1st, Pakharpur-1st and Pakharpur- 2nd to Bajaj Hindustan Sugar Ltd., taking it from the petitioner.
3. Sri Ravindra Singh, counsel for Co-operative Cane Development Society, Bhagpat raised a preliminary objection, relating to maintainability of WRIT - C No. - 4192 of 2018. He submitted that cane growers of village Pakharpur are members are Co-operative Cane Development Society, Bhagpat, which is supporting the judgment of Special Secretary, State of U.P. dated 26.12.2017, allowing Appeal No. 20 of 2017. An individual cannot be permitted to take a contrary stand so long as he is member of co- operative society. This writ petition has been filed by three individual members without resigning from membership of co-operative society.
4. This Court is not inclined to dismiss the writ petition on the preliminary objection relating to maintainability of the writ petition inasmuch as in Full Bench of this Court in Indian Sugar Mills Association through its President Shri Hari Raj Swarup vs. Secretary to Government, Uttar Pradesh Labour Department and others, AIR 1951 Alld. 1, it has been held that if a person is directly affected by a statute or an order he can seek for redressal of his grievance under Article 226 of the Constitution.
5. Modi Sugar Mills (the petitioner) is manufacturing crystal sugar through vacuum pan process, having capacity of 5000 TCD (Ton crushed daily). Cane Commissioner U.P., by an order, passed under Section 12 of the Act, estimated 78.18 lac quintal sugarcane, as requirement of petitioner for crushing season 2017-18. Cane Commissioner U.P., vide order dated 14.10.2017 allotted 144.19 lac quintal sugarcane (121.81 lac quintal from reserved area and 22.37 lac quintal from assigned area), to petitioner for crushing season 2017-18.
6. Co-operative Cane Development Society Ltd. (respondent-3), filed an appeal under Section 15 (4) of U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953, for allotment of purchase centers Naglabarhi-1st, Pakharpur-1st, Pakharpur-2nd, Pakharpur-3rd, Nirojpur Emma and Mubarikpur to Bajaj Hindustan Sugar Ltd. (respondent-4) as the petitioner was defaulter in payment of price of sugarcane to the cane growers in the previous crushing seasons. Cane growers of these villages have passed resolution dated 28.08.2017 to allot these centers to Bajaj Hindustan Sugar Ltd. It may be mentioned that this writ petition is in respect of purchase centers Naglabarhi- 1st, Pakharpur-1st and Pakharpur-2nd.
7. The petitioner contested the appeal and filed his objection and stated that distance of purchase centers Naglabarhi-1st is 39 K.M., Pakharpur-1st is 42 K.M. and Pakharpur-2nd is 43 K.M. from factory gate of the petitioner. These centers were assigned centers of the petitioner. He has made payment of price of sugarcane up to 2015-16 and was making arrangement for payment of dues of 2016-17. On the notice being issued Bajaj Hindustan Sugar Ltd. (respondent-4) appeared and shown its willingness to take these purchase centers. Special Secretary, State of U.P. vide order dated 08.12.2017, partly allowed the appeal of Co-operative Cane Development Society (respondent-3) and allotted purchase centers Naglabarhi-1st, Pakharpur-1st and Pakharpur-2nd to Bajaj Hindustan Sugar Ltd., (respondent-4). Hence these writ petitions have been filed. Bhagat singh and others have raised a ground that cane-growers of village Pakharpur had never passed any resolution for filing any appeal against the order of Cane Commissioner dated 14.10.2017. The appeal was allowed without any notice to cane-growers of village Pakharpur.
8. The counsel for the petitioners submitted that distance of purchase centers Naglabarhi-1st is 39 K.M., Pakharpur-1st is 42 K.M. and Pakharpur-2nd is 43 K.M. from factory gate of the petitioner. These centers were assigned to the petitioner. So far as payment of price to cane growers, is concerned, due to unavoidable circumstances, prices could not be paid earlier. He has made payment of price of sugarcane up to 2015-16 and is making arrangement for the payment of dues of 2016-17. The Act fully protects the interest of cane grower as penal interest is payable for delayed payment. He relied upon judgments of this Court in The Simbholi Sugar Mills Ltd. Vs. Appellate authority, 2000 (3) AWC 1867, in which it has been held that an area reserved to one sugar factory cannot be assigned to other sugar factory. Joint purchase centers are not provided under the law. Laxmi Sugar Mills Co. Ltd. Vs. State of Uttarakhand and others, 2011 (54) R.C.R. (Civil) 461, in which it has been held that reserved area has a kind of permanency. Writ-C No. 63244 of 2017 M/S D.S.M. Sugar Asmoli Vs. State of U.P. (decided on 23.02.2018), in which it has been held that 'reserved area' cannot be disturbed ordinarily. L.H. Sugar Factories Ltd. Vs. State of U.P., 2007 (6) ADJ 14 (DB), in which it has been held that statute does not give unrestricted free hand to the authorities to keep on revising its reservation order. Triveni Engineering and Industries Ltd. Vs. State of U.P., 2000 (2) AWC 1014 (DB), Govind Nagar Sugar Ltd. Vs. State of U.P., 2001 (1) AWC 65, Simbholi Sugar Ltd. Vs. State of U.P., 2011 (2) AWC 1744 and Engineering and Industries Ltd. Vs. State of U.P., 2015 (3) ADJ 619, in which it has been held that while making order relating to reservation/assignment, guidelines given in the Act and Rules have to be considered. Bhagat Singh and others submitted that cane-growers of village Pakharpur have never passed any resolution for filing any appeal against the order of Cane Commissioner dated 14.10.2017. The appeal was allowed without any notice to cane-growers of village Pakahrpur.
9. I have considered the arguments of the counsel for the parties and examined the record. U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 was enacted, in exercise of powers under Entry-14 of List II of Seventh Schedule of the Constitution. U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 was framed in exercise of powers under Section 23 of the Act. Sugar is an essential commodity as such exercising powers under Essential Commodities Act, 1955, Sugarcane Control Order 1966 was passed by Central Government. Cane Commissioner is exercising jurisdiction under the Act, the Rules and Sugarcane Control Order 1966. Clause 6-A of Sugarcane Control Order 1966 imposes a restriction that no new sugar factory shall be set up within the radius of 15 km of any existing sugar factory or another new sugar factory in a State or two or more States.
10. Constitution Bench of Supreme Court in U.P. Coop. Cane Unions Federations v. West U.P. Sugar Mills Assn., (2004) 5 SCC 430, held that provisions under the Act and Rules have been made for the benefit of the sugar factory so that it is assured of and gets a continuous supply of freshly harvested sugarcane in quantity according to its crushing capacity and for the whole duration of the crushing season. No doubt, the cane-grower also gets some advantage in the sense that purchase of his yield is assured but at the same time many limitations and restrictions are imposed upon him. In view of the aforesaid statutory provisions, the position of a cane-grower becomes entirely different from that of a farmer producing any other kind of agricultural crop where there are absolutely no restrictions upon him. He is at absolute liberty to harvest his crop at his convenience without being dictated by a third party, to sell it to anyone whomsoever he likes and whenever he wants. The preamble of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 is an Act to regulate the supply and purchase of sugarcane for use in sugar factories, gur-, rab- or khandsari sugar-manufacturing units. The various provisions of the Act show in unmistakable terms that it regulates the supply and purchase of sugarcane required for use in sugar factories. “Regulate”
means to control or to adjust by rule or to subject to governing principles. It is a word of broad impact having wide meaning comprehending all facets not only specifically enumerated in the Act, but also embraces within its fold the powers incidental to the regulation envisaged in good faith and its meaning has to be ascertained in the context in which it has been used and the purpose of the statute.
11. This object has to be achieved by ensuring a continuous supply of freshly harvested sugarcane in quantity according to its daily crushing capacity, for the whole crushing season. This determines the imperative necessity for continuous supply of sugarcane to sugar factories depending on their crushing capacity and crushing programme. Cane Commissioner decides and publishes the estimate of requirements of sugarcane of the factories, by specified date under Section 12 of the Act. For declaring reserved and assigned area of the sugar factories under Section 15, survey of the area has to be made to ascertain area and quantity of sugarcane likely to be produced in the year under Section 14 of the Act. Detail guidelines have been given under Rule-22 of the Rules, 1954 for determination of reserved and assigned area.
12. Section 15 of the Act and Rule-22 of the Rules are quoted below:— “Section 15. (1) Without prejudice to any order made under clause (d) of sub-section (2) of Section 16 the Cane Commissioner may, after consulting the Factory and Cane-growers Co-operative Society in the manner to be prescribed—
(a) reserve any area (hereinafter called the reserved area), and
(b) assign any area (hereinafter called an assigned area), for the purpose of the supply of cane to a factory in accordance with the provisions of Section 16 during a particular crushing season and may likewise at any time cancel such order or alter the boundaries of an area so reserved or assigned.
(2) Where any area has been declared as reserved area for a factory, the occupier of such factory shall, if so directed by the Cane Commissioner, purchase all the cane grown in that area, which is offered for sale to the factory.
(3) Where any area has been declared as assigned area for a factory, the occupier of such factory shall purchase such quantity of cane grown in that area and offered for sale to the factory, as may be determined by the Cane Commissioner.
(4) An appeal shall lie to the State Government against the order of the Cane Commissioner passed under sub-section (1)”.
Rule 22:- In reserving an area for or assigning an area to a factory or determining the quantity of cane to be purchased from an area by a factory under Section 15, the Cane Commissioner may take into consideration-
(a) the distance of the area from the factory,
(b) facilities for transport of cane from the area,
(c) the quality of cane supplied from the area to the factory in previous years,
(d) previous reservation and assignment orders,
(e) the quantity of cane to be crushed in the factory,
(f) the arrangements made by the factory in previous years for payment of cess, cane price and commission, and
(g) the views of the Cane-growers’ Co-operative Society of the area.
13. Section 15 castes a duty upon Cane Commissioner or State Government to regulate distribution of sugarcane among factories. The power has to be exercised according to guidelines given in Rule-22. If the guidelines of Rule- 22 are not followed then the power may be exercised arbitrarily in malfide manner to benefit some factory and to harm some factory. Installation of the factories are controlled by Cane Commissioner and State Government. In reserving/assigning area for a factory, the distance of the area from the factory and facilities for transport of cane from the area to the factory cannot be ignored. If distance is ignored then fresh sugarcane will not be supplied to the factory, which ultimately result in deterioration of sugar contents and loss of essential commodities. Cane growers may also face difficulty and in absence of quick transportation, their harvested sugar cane will remain at purchase centers and dry there. Equal distribution ratio has to be maintained among the factories situated in nearby locality and not between the factories situated at a long distance. Other factors as given under Rule-22 namely quality of cane supplied from the area to the factory in previous years, previous reservation and assignment orders, quantity of cane to be crushed in the factory, the arrangements made by the factory in previous years for payment of cess, cane price and commission, and views of the Cane-growers’ Co-operative Society of the area, are also required to the examined by Cane Commissioner/State.
14. Supreme Court in Purtabpore Co. Ltd. v. Cane Commr. of Bihar, (1969) 1 SCC 308, has held that the dispute between two sugar factories in respect of reserved and assigned area had to be decided on the basis of the objective criteria, prescribed by Clause 6 of the Sugarcane (Control) Order, 1966 i.e. (1) crushing capacity of the mills; (2) availability of the sugarcane in reserved area and (3) need for the production of sugar. Supreme Court in Shivashakti Sugars Ltd. v. Shree Renuka Sugar Ltd., (2017) 7 SCC 729, has held that even in those cases where economic interest competes with the rights of other persons, need is to strike a balance between the two competing interests and have a balanced approach.
15. Sugarcane needs to be harvested within a specific season to derive maximum sugar when crushed. In Uttar Pradesh, best season for harvesting sugarcane is November to March. Prior to November, crop is not ripen and after March, sugarcane began to dry, which results in loss of sugar contents. Cane growers are also interested to harvest the crop during this season so that they can grow other crop in the field. Wandering cattle also ruined the standing crops. For these reasons, in Uttar Pradesh sugar factories are usually closed up to 15th April, as supply of sugarcane is discontinued till then. Although “crushing season” is up to 15 July but practical aspect cannot be ignored.
16. It is not disputed that purchase centers Naglabarhi-1st situates at 39 K.M., Pakharpur-1st situates 42 K.M. and Pakharpur-2nd situates at 43 K.M. from factory gate of Modi Sugar Mills while distance of these purchase centers from factory gate of Bajaj Hindustan Sugar Ltd. is 30 K.M., 38, K.M. and 28 K.M. These purchase centers were reserved area of Kinauni Sugar Mill in previous years. The fact that the cane growers have passed resolution against the petitioner Modi Industries Ltd. due to non-payment of price timely, is disputed. There was no such resolution at the time of hearing before Cane Commissioner. Special Secretary has relied upon the alleged resolution of cane-growers, which is being disputed by the cane-growers by filing their writ petition. Although Co-operative Cane Development Society, Bagpat is appearing before this Court but has neither filed Counter Affidavit in the writ petition nor produced alleged resolution of cane-growers. The order of Special Secretary is thus based upon not-existed fact. So far as Bajaj Hindustan Sugar Ltd. is concerned, it has not challenged the order of Cane Commissioner dated 14.10.2017.
17. In the result, writ petitions succeed and are allowed. The order of Special Secretary dated 26.12.2017 passed in Appeal No. 20 of 2017 is set aside. However, it shall be open for Cane Commissioner to take a different view in next crushing season, if Modi Sugar Mill commits default in payment of cane price to cane-growers, taking views of cane-growers.
Order Date :- 26.4.2018 mt