Reserved Case :- WRIT - C No. - 9891 of 2018 Petitioner :- Modi Sugar Mills, Modi Nagar Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Udit Chandra, Subodh Kumar Counsel for Respondent:-C.S.C.,Ravindra Singh,Diptiman Singh, Navin Sinha
Hon'ble Ram Surat Ram (Maurya),J.
1. Heard Sri Udit Chandra, for the petitioner, Standing Counsel for State of U.P., Sri Navin Sinha, Senior Advocate, assisted by Sri Diptiman Singh, for Bajaj Hindustan Sugar Ltd. (respondent-3) and Sri Ravindra Singh, for Co-operative Cane Development Society (respondent-4).
2. The writ petition has been filed against the order of Special Secretary, State of U.P. dated 11.01.2018, dismissing Appeal No. 22 of 2017, filed by the petitioner, against the order Cane Commissioner U.P. dated 14.10.2017, insofar as, it has assigned sugarcane purchase centers Patala-1st, Pastara, Bhanaida-2nd and Patala-2nd to Bajaj Hindustan Sugar Ltd. (respondent-3) 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.
3. 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 the 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. Drawl rate will be 54.20%.
4. Bajaj Hindustan Sugar Ltd. (respondent-3) is manufacturing crystal sugar through vacuum pan process, having capacity of 12000 TCD (ton crushed daily). Cane Commissioner U.P., by an order, passed under Section 12 of the Act, estimated 147.06 lac quintal sugarcane, as the requirement of respondent-3 for crushing season 2017-18. Cane Commissioner U.P., vide order dated 14.10.2017 allotted 247.05 lac quintal sugarcane (194.68 lac quintal from reserved area and 52.37 lac quintal from assigned area), to respondent-3 for crushing season 2017-18. Drawl rate will be 70%.
5. The petitioner filed an appeal under Section 15 (4) of U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953, for assigning purchase centers Patala-1st, Pastara, Bhanaida-2nd and Patala-2nd to it. The petitioner raised the plea that distances of these purchase centers from factory gate of the petitioner are between 9 to 18 K.M. while distances from factory gate of respondent-3 of these purchase centers are 48 to 68 K.M. respectively. Cane Commissioner has estimated 78.18 lac quintal sugarcane, as the requirement of petitioner for crushing season 2017-18, although it would be 104.00 lac quintal sugarcane. In reserved area of the petitioner 246 power crushers were running as such about 30 to 35 lac quintal sugarcane would diverted to these power crushers, from the reserved area of the petitioner. The petitioner was arranging for payment of previous dues of cane-growers.
6. Bajaj Hindustan Sugar Ltd. contested the appeal and filed its objection and stated that so far as distances of purchase centers from factory gate of the petitioner and respondent-3 are concerned, these purchase centers have better road connectivity from the factory of respondent-3. The cane growers are required to bring sugarcane up to purchase center. Thereafter, transportation was being done by respondent-3. These centers were assigned to respondent-3 from last three-four years. Respondent-3 has been drawing sugarcane from these centers without any difficulty to the cane-growers. Respondent-3 has also invested about Rs. 247.42 lac in development of cane growing area and supply of better quality seeds, organic manures etc. for current season. The petitioner has been a regular defaulter in payment of cane price to cane- growers as such cane-growers were also against the petitioner. Cane Commissioner has allotted sugarcane to the petitioner at drawl rate of 54.20% while drawl rate of respondent-3 is 70%. Respondent-3 would be required to draw at the rate of 85.13% for running its mill for crushing season.
7. Special Secretary, State of U.P. after hearing the parties, vide order dated 11.01.2018, held that requirement of the petitioner as assessed was 78.18 lac quintal, while he was allotted 144.19 lac quintal, at the drawl rate of 54.20%. Last year the petitioner crushed 130.92 lac quintal sugarcane. Requirement of respondent-3 was assessed as 173.06 lac quintal while it was allotted 247.05 lac quintal at the drawl rate of 70%. The petitioner was in dues of Rs. 58.15 crore of crushing season of 2016-17. Transportation facilities from the disputed purchase centres to factory gate of respondent-3 was better than the petitioner, which were with respondent-3 from 2014-15. On these findings, the appeal of the petitioner was dismissed. Hence this writ petition has been filed.
8. The counsel for the petitioner submitted that Special Secretary has illegally failed to ignore the fact that distances of the disputed purchase centers from factory gate of the petitioner are between 9 to 18 K.M. while distances from factory gate of respondent-3 of these purchase centers are 48 to 68 K.M. respectively. 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 and distance of purchase centres from factory gate cannot be ignored. 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.
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 centres 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 of U.P. in the impugned order has only considered the grievances of cane growers and ignored other circumstances, which were in favour of the petitioner.
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. In present case, there is no dispute in respect of 'reserved area' rather dispute is in respect of 'assigned area'. Respondent-1 found that requirement of the petitioner as assessed was 78.18 lac quintal, while he was allotted 144.19 lac quintal, at the drawl rate of 54.20%. Requirement of respondent-3 was assessed as 173.06 lac quintal while it was allotted 247.05 lac quintal at the drawl rate of 70%. Although, the petitioner has stated that actual requirement of the petitioner for crushing season was 2017-18 was 104 lac quintal but determination was made by Cane Commissioner under Section 12 of the Act and it was not challenged by the petitioner at the appropriate stage as such the petitioner cannot be permitted to raise this plea in this writ petition. Finding that drawl rate of the petitioner is 54.20% and respondent-3 is 70% is not being challenged by the petitioner. Allotment of the petitioner is at very low rate in comparison to respondent-3. Total quantity of sugar cane from disputed purchase centers is 4.53 lac quintal. If this quantity is taken from respondent-3 then its drawl rate will increase and there will be no similarity.
17. Respondent-3 also pleaded that it had invested about Rs. 247.42 lac in development of cane growing area and supply of better quality seeds, organic manures etc. to the cane growers, for current season, as these purchase centers were with respondent-3 from 2014-15. Appellate authority further found that the petitioner was in dues of Rs. 58.15 crore of crushing season of 2016-17. Transportation facilities from the disputed purchase centres, which were with respondent-3 from 2014-15, to factory gate of respondent-3 was better. Due to non-payment of price timely, the cane growers have passed resolution against the petitioner. The petitioner has stated that he had made payment up to 2015-
16 and is arranging for payment of 2016-17. Other circumstances as enumerated under Rule-22 are in favour of respondent-3. Guidelines as mentioned under Rule-22 have to be considered collectively. Substantial justice has been done between the parties as such no interference is required by this Court in exercise of writ jurisdiction.
18. In view of aforesaid discussions, writ petition has no merit and is dismissed.
Order Date :- 26.4.2018 mt