Hon'ble Suresh Kumar Gupta, J.
(Per: Rajan Roy, J.) Heard Sri G.C. Verma, learned counsel for the petitioners, Sri H.P. Srivastava, learned Addl. Chief Standing Counsel for the State, Sri Satish Chandra Mishra, learned Senior Counsel along with Sri Paavan Awasthi, Sri Sanjeev Singh, Sri Sunil Kumar Chaudhary and Sri Kapil Mishra, learned counsel for opposite party no. 6, Sri Gaurav Mehrotra & Sri Parmanand Asthana, learned counsels appearing for respective Cane Growers' Co-operative Societies.
This is a bunch of writ petitions filed by cane growers seeking their sugarcane dues which have not been paid by the opposite party no.06 i.e. Bajaj Hindustan Sugar Limited (hereinafter referred to as ''the Company'). The Company runs 14 sugar mills in the State of U.P. and the petitioners are sugarcane growers who sold their sugar cane to five of these mills situated at Gola Gokaran Nath, Khambhar Khera, Palia Kalan, Barkhera, and Maqsoodapur. This matter relates to these five mills only.
Writ Petition No.11355 (M/B) of 2021 has been treated as the leading writ petition. Relief prayed in the writ petition is as under:-
"(i) Issue a writ, order or direction in the nature of mandamus commanding thereby the opposite parties to ensure that the payment of entire cane price is made immediately to the petitioners along with 15 % compound interest from the date on which it becomes. due and till it actually paid, in the light of the Departmental Laws i.e. Sections 17 & 22 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953, Rule 45 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Rules, 1954 & Order 3 (3, 3A, 8, & 9) of the Sugarcane (Control) Order, 1966 as mentioned in para 3 of the W.P. and also in the light of the an AFR judgment passed in the writ petition no. 13313 of 2020 (MB), as contained in Annexure ho. 4 to the W.P., in the interest of justice.
(ii) Issue a writ, order or direction in the nature of mandamus commanding thereby the opposite party no.2 to take action against the opposite party no.6 for ensuring that the payment of entire cane price is made immediately to the petitioners along with 15 %. compound interest from the date on which it becomes due and till it actually paid, in the light of the Departmental Rules i.e. Sections 17 & 22 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953, Rule 45 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Rules, 1954 & Order 3 (3, 3A, 8, & 9) of the Sugarcane (Control) Order 1966 as mentioned in para 3 of the W.P. and also in the light of the an AFR judgment passed in the writ petition no. 13313 of 2020 (MB), as contained in Annexure no. 4 to the W.P., in the interest of justice.
(iii) Issue a writ, order or direction in the nature of mandamus commanding thereby the opposite party no. 6 to make payment of entire cane price to the petitioner along with 15 %. compound interest from the date on which it becomes due and till it actually paid as the mill is bound to pay in the light of the Departmental Sections 17 & 22 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953, Rule 45 of the Uttar Pradesh Sugar Cane (Regulation of Supply and Purchase) Rules, 1954 & Order 3 (3, 3A, 8, & 9) of the Sugarcane (Control) Order, 1966 as mentioned in para 3 of the W.P. and also in the light of the an AFR judgment passed in the writ petition no. 13313 of 2020 (MB), as contained in Annexure no. 4 to the W.P., in the interest of justice.
(iv) Pass any other order or direction which this Hon'ble Court may deem fit, just and proper in the circumstances of the case, in favour of the petitioners.
(v) Allow the writ petition with cost."
This Court on 05.07.2021 passed a detailed interim order directing payment of sugarcane dues to the petitioners and other sugarcane growers on the principle of ''first supply, first payment' so that there is uniformity and fairness in payment of dues.
The provisions of law relevant in the case are the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (hereinafter referred to as ''the Act, 1953'); U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as ''the Rules, 1954'); the U.P. Sugarcane (Supply and Purchase) Order, 1954 (hereinafter referred to as ''the Order, 1954') made under Section 16 of the Act, 1953; the Essential Commodities Act, 1955 and the Sugarcane (Control) Order, 1966 (hereinafter referred to as ''the Order, 1966') issued by the Central Government under Section (3) of the said Act, 1955.
The contention of Sri G.C. Verma and other learned counsel appearing for the sugarcane growers-petitioners was that Section 17 (1), (2) and (3) of the Act, 1953 obligate upon the Company to pay sugarcane dues within fifteen days from the date of the sugarcane having been delivered in its factory / purchase centre, which has not been paid. It is also contended that on failure to pay the dues as aforesaid, interest @12 per cent per annum is payable by the company to the cane growers in view of the proviso to sub-Section (3) of Section 17 of the Act, 1953, whereas, as per the Order 1966, it is @ 15 per cent per annum, which has also not been paid. It is contended that for the past five years, no interest has been paid on the delayed payment of dues of sugarcane growers by the Company and in fact, in all the years, the dues have been paid belatedly. It has further been submitted that sugarcane growers have taken loan for growing their crop and on account of delayed payment, great prejudice has been caused to them in the matter of repayment of loan and even otherwise as their livelihood is at stake the said right is being violated by the Company. Reliance has been placed in this regard upon various decisions of this Court some of which are Writ-C No.29214 of 2019 'Jaypal Singh and Another vs. State of U.P. and others.' decided on 16.09.2019; P.I.L. No.67617 of 2014 'Rashtriya Kisan Mazdoor Sangathan (Regd) Thru. Convenor vs. State of U.P. & Anr.' and other connected writ petitions decided on 09.03.2017; Writ-C No.13313 of 2020 'Kanikram & 3 others. vs. State of U.P. and 4 Others' and other connected writ petitions decided on 21.09.2020; (2013) 11 ADJ 7 'State Bank of Patiala vs. Zila Adhikari and others'; AIR (SC) 3002 'Ahmedabad Municipal Corporation vs. Virendra Kumar Jayantibhai Patel'; JT 1994 (2) S.C. 94 'Narendra Kumar Chandla vs. State of Haryana & Ors.' and Writ-C No.28968 of 2018 'M/s Shakuntla Educational And Welfare Society vs. State of U.P. and 2 Others' and connected petitions decided on 28.05.2020.
Sri H.P. Srivastava, learned Addl. Chief Standing Counsel for the State has submitted that it is a fact that in the last five years the Company has failed to pay dues of sugarcane growers within time and that no interest has been paid on such delayed payment. He, however, submits that the financial condition of the Company is such that it is not possible to recover the dues even on taking of coercive measures rather a balancing approach has been adopted by the Sugarcane Commissioner so that on the one hand the interest of the sugarcane growers is protected and they are paid their dues and on the other hand, the factory run by the Company is also not shut-down as if this happens then ultimately it is the sugarcane growers of the area who will suffer and they will have to take their sugarcane to a far-off factory incurring additional expenditure and consequent losses in sale consideration. Therefore, the Sugar Commissioner has opened an Escrow account and 85% of the sale proceeds from sale of sugar made by the Company from the sugarcane supplied by the farmers as also certain percentage of sale proceeds from the sale of by-products, namely, Molasses, Ethanol, Bagasse, Electricity, Pressmud and Distillery is deposited in the said Escrow account, remaining 15% having been left for meeting expenditures of the sugar factory being run by the Company, and this amount deposited in the Escrow account is used for payment of sugarcane dues, apart from other sources of payment by the Company. The account is operated jointly by officers of the Company and the Government officials. He says that this arrangement takes care of the interest of the sugarcane growers as also the Company. Almost every day payment is being made to the sugarcane growers. He has relied upon various decisions in support of his contention rendered in Writ-C No.13313 of 2020 'Kanikram & 3 others. vs. State of U.P. and 4 Others'; P.I.L. No.67617 of 2014 'Rashtriya Kisan Mazdoor Sangathan (Regd) Thru. Convenor vs. State of U.P. & Anr.'; 2010 (3) ADJ 628 (LB) 'Simbholi Sugar Ltd. vs. State of U.P. and Others'; AIR 1956 SC 676 'CH. Tika Ramji and others etc vs. State of U.P. and others'; (2020) 9 SCC 548 ' West U.P. Sugar Mills Association and others vs. State of U.P. and others'; (2006) 12 SCC 583 'Ispat Industries Ltd. vs. Commissioner of Customs, Mumbai' and (2019) 18 SCC 126 'Delhi Transport Corporation vs. Balwan Singh and others'.
Sri S.C. Mishra, learned counsel appearing for the Company submitted that only 2.87% farmers have approached this Court in this bunch of petitions, meaning thereby, 97.13% of sugarcane growers are satisfied with the situation as they are assured of a higher return on sale of sugarcane to the Company even if they receive the proceeds belatedly. He submitted that the financial operations of the Company were being managed by a consortium of seventeen Banks. The financial condition of the Company was such that no financial institution was willing to extend any credit or loan or advance for payment of dues of sugarcane farmers inspite of its best efforts. This situation, according to him, has arisen on account of the Government having renegaded on its promise made in the sugarcane policy, 2004 for providing certain subsidies and incentives to the companies which establish fresh sugar units in the State based on which the units were set-up by the Company, that too, inspite of various decisions by the High Court and Hon'ble the Supreme Court in favour of the Company. He submitted that inspite of the the decisions, the State Government arbitrarily rejected the claim of the Company which has again been put to challenge and the matter is now pending before the High Court. He also submitted that electricity had been generated by the Company in its factory which was sold to U.P. Power Corporation Ltd. and there are dues of few crores in this regard which have not yet been paid by UPPCL to the petitioners. All this has made the financial condition of the Company fragile which in turn has resulted in delayed payment of dues to the sugarcane farmers. If the Government abides by the promise made by it to the Company under the sugarcane policy and the Power Corporation pays the proceeds from sale of electricity to it then this entire matter could be resolved at once. In fact, he submitted that the Government and the Power Corporation need not pay the dues of the Company to it, instead, they may directly pay it to the sugarcane growers which will clear all the dues and the dispute will end.
We have already made it clear in our earlier orders that we will not tag the payment of sugarcane dues of farmers with the claim of the Company of dues against the State and UPPCL and the Company can agitate it separately.
He, however, could not deny the fact that in the past five years, interest on the delayed payment has not been paid by the Company to the sugarcane growers. In this regard, he submitted firstly that nobody asked for it and secondly, he submitted that there is a provision in sub-Section (3) of Section 17 of the Act, 1953 for waiver of interest. However, on being asked as to whether any such application has been filed for the year 2020-21 or the earlier years, he could not give any satisfactory reply in this regard. The Court was, however, apprised of an order of the High Court directing the Sugarcane Commissioner to take a decision on the application for waiver of interest, if any, filed by the Company within three months but none of the counsels could inform the Court as to whether any such application had been moved and/ or any such decision had been taken thereon or not.
Sri Mishra, learned Senior Counsel further submitted that the dues upto the year 2019-20 have been cleared by March, 2021 as Hon'ble the Supreme Court had permitted the Company to clear the dues by the said date in S.L.P. (C) No.11948-11951 of 2020. Therefore, he says that the Company has best of intentions to pay the dues of the farmers but it is only on account of the compelling financial circumstances that it has not been able to pay the same, timely. He did not deny the liability of the Company in this regard, rather asserted its commitment to pay the dues.
However, in this regard, he submitted that the provisions of the Act, 1953 had themselves become outdated and were also self-contradictory. He submitted that in the year 1953, the production and sale of sugarcane was not much, certainly not what it is today, therefore, payment of sale proceeds for small quantities of sugarcane could be made by the companies to the sugarcane growers but as of now, the production has increased many fold and it was not possible for anyone including the State Government to make payment of dues within the short period of fifteen days prescribed in the statute as stated by learned counsel for the petitioners. The provisions of Section 17 of the Act, 1953 are impractical and in fact, they are impossible to be complied with, although, he also submitted that the company is committed to making the payments and also made a statement before this Court that the dues for the years 2020-21 would be cleared by February-March, 2022, a fact which has also been stated on affidavit. On being specifically asked as to whether interest would also be paid, he submitted that subject to any waiver by the Sugarcane Commissioner in this regard if anyone claims interest, the same would also be paid.
He, however, invited attention of the Court to Section 17 (1) of the Act, 1953 wherein the words ''speedy payment of price of cane' has been mentioned and in the succeeding sub-Section (2) of the aforesaid Section, the words ''to pay immediately the price of the cane so supplied' has been used, which, according to him, were incongruous, especially as, in sub-Section (3) of the Section 17 of the Act, 1953, it has been said that if the company defaults in making payment of the price for a period exceeding fifteen days from the date of delivery then interest would be payable. He says that sub-Section (1) of Section 17 of the Act, 1953 uses words ''speedy payment' then sub-Section (2) uses the words ''liable to pay immediately payment' and then sub-Section (3) says that it should be paid within fifteen days lest interest becomes payable, all this, according to him was contradictory. Moreover, he submitted that sub-Section (1) of Section 17 of the Act, 1953, while referring to speedy payment of price of sugarcane purchased by the occupier, refers to making of such provision in this regard as may be prescribed. He says that there is no such prescription anywhere in the Rules as to how this is to be done.
He also submitted that sub-Section (3) of Section 17 of the Act, 1953, in fact, is mainly concerned with payment of interest and does not define the time limit during which the sugarcane dues are to be paid. Based on this, he submitted that unbridled power had been vested in Section 17(4) to the Sugarcane Commissioner for issuance of Recovery Certificate.
In this regard, he also referred to the agreement referred in Form B and C mentioned in the Order, 1954 and the provisions contained in the said Order to submit that the company and the cane growers can arrive at an agreement fixing the time limit for payment of dues. Therefore, the time prescribed in sub-Section (3) of Section 17 of the Act, 1953 is not mandatory. However, on being pointed out that Form B and C do not deal with payment of sugarcane price, no satisfactory reply could be given.
He further submitted that sugar is a controlled commodity. The company can sell only so much as is permitted by the Central Government. Therefore, this is also a handicap as the company cannot sell as much as it wants. Sugar can't be sold in open market freely. Moreover, the sale price of sugar is also controlled. Minimum price is fixed by the Central Government and the state advisory price is fixed by the State Government which has to be adhered by the company. He went on to say that, in fact, the cost price of sugar is more than the selling price. All this makes the entire exercise unviable ultimately resulting in delayed payment.
He also submitted that the land on which sugarcane is being grown in the districts involved in these bunch of petitions has grown. In this regard, he referred to Gola Gokaran Nath where according to him, 80% of the agricultural land is being used for cultivation of sugarcane and as only 2.87% farmers have approached this Court, therefore, obviously, huge majority of the sugarcane growers from whom sugarcane is purchased by the Company accept the fact situation, as they will be getting higher sale proceeds from the sale of sugarcane even if belatedly, vis-a-vis the proceeds from sale of other agricultural produce. It is only a handful of farmers who are agitated.
He also submitted that the principle of ''first supply, first payment' is absolutely correct as it leaves no room for arbitrariness otherwise the writ courts are flooded with writ petitions and only those sugarcane growers are paid the dues who get an order from the High Court.
He submitted that paying capacity is not a parameter for reserving/ assigning an area under Rule-22 of the Rules, 1954. Various factors have been given and it is not permissible in law to base such decision on any sole factor. He also submitted that considering the financial condition of the company, the area reserved for the company has been reduced by the Sugarcane Commissioner in the recent years by about 30%. Therefore, the Sugarcane Commissioner, who is an expert in the field, is adopting correct approach in the matter by balancing the rights of the company, vis-a-vis the sugarcane growers.
He submitted that any drastic measures adopted by the opposite parties or any coercive action directed by the High Court would result in a situation where the factory may itself have to be shut down which would benefit neither the company nor the sugarcane growers and if the factory does not function then the dues will be put in jeopardy. No purpose would be served by putting the Directors in prison if sufficient money is not available as of now to straightaway pay the dues in one go. Gradual payment is being made from the Escrow account which is in the hands of authorities. He referred to various affidavits filed on behalf of the company in this regard in response to various orders of this Court.
He also submitted that the Company undertakes various measures under Rule 22 for development of the area and even advances loans etc to the sugarcane growers and no complaint has been received in this regard as regards the Company. Therefore, it is not only about payment of sale proceeds but the development of the entire area where the sugarcane is produced and the welfare measures taken by the company in this regard as such if the factory is closed, it enures to nobody's benefit.
He very fairly submitted that the Company does not deny its liability to pay dues to cane growers but considering the situation, the same will be paid in a phased manner but certainly by February-March, 2022.
He also referred to prevalence of Covid-19 pandemic which had also resulted in financial losses to the Company/ Occupier as one of the additional reasons for non-payment of dues within time. He submitted that these were circumstances beyond the control of the Company / Occupier. Therefore, they have to be taken into consideration not only with regard to the delayed payment but also with regard to levying of interest in the context of waiver of such interest.
Sri Mishra, learned Senior Counsel relied upon the decisions reported in (1956) SCR 393 'Ch. Tikaramji vs. State of U.P.'; 2001 ALL LJ 741 'Govind Nagar Sugar Ltd. vs. State of U.P.'; 2005 All LJ 2159 'DCM Shriram Industries Ltd. vs. State of U.P.'; W.P. C. No.1680 of 2017 'L.H. Sugar Factories Ltd. v. State of U.P.' decided on 14.02.2017 and (2020) 132 ALR 182 'Akram Khan and Anr. vs. State of U.P' in support of his submissions.
Sri Gaurav Mehrotra, learned counsel appearing for the Cane-growers' Co-operative Society supported the stand of the petitioners although in the same vein he also stated that the Sugarcane Commissioner had, in fact, adopted the correct approach by opening an Escrow account wherein substantial amount of the sale proceeds from the sale of sugarcane by the Company and some percentage of sale from the by-products are deposited and the same are being used for payment of cane dues of cane growers.
He submitted that, in fact, though sub-Section (3) of Section 17 of the Act, 1953 referred to a period of fifteen days for payment of sugarcane dues failing which interest @ 12 per cent per annum was payable, the Control Order, 1966 issued by the Central Government, specifically Clause 3(3) and 3(3-A), referred to payment to be made within fourteen days of the date of delivery failing which interest on the amount due @ 15 per cent per annum for the period of such delay beyond fourteen days becomes payable. He stated that thus there is contradiction in this regard as the Order, 1966 refers to 14 days as the period for paying the dues to the cane growers whereas sub-Section (3) of Section 17 of the Act, 1953 refers to a period of fifteen days. The difference is also in the percentage of interest payable.
Furthermore, he submitted that as regards Form-B and C of the Order, 1954 are concerned they do not deal with the question of payment of price of sugarcane to the sugarcane growers, therefore, the Company cannot rely on the same. He submitted that it is the Control Order, 1966 which will prevail over the Act, 1953 and/or the Control Order, 1954 made thereunder or for that matter, the Rules of 1954 made thereunder.
He submitted that prior to the area being reserved for a company it is required to submit an estimate of requirements of sugarcane under Section 12 of the Act, 1953. Therefore, it is very well aware as to how much cane it is going to purchase and what price it will have to pay. Therefore, the Company should have made provision for such payment in advance so as to protect the interest of the sugarcane growers. He submitted that every sugarcane factory/ company enjoys a monopoly in the area reserved for it subject to certain exceptions which on the one hand protects the interest of the company and makes the enterprise viable and on the other hand also protects the interest of the sugarcane growers. However, in view of this, the sugarcane growers cannot sell their sugarcane to any other factory/ company other than the one for whom the area has been reserved, unless the Cane Commissioner orders otherwise.
He laid great emphasis on clause (f) of the Rule 22 of the Rules, 1954 to submit that this clause permitted the assessment of financial condition of the company prior to reserving area for it as this would go a long way in protecting the interest of the sugarcane growers, meaning thereby, if the company already has financial capacity to pay the estimated dues before the area is reserved for it then there will be no question of delayed payment and the intent and scheme of the Act, 1953 and/ or the Control Order, 1966 would be achieved.
He submitted that Sugarcane Commissioner was well within his powers to open an Escrow account. The provisions of the Act and the Orders referred hereinabove are not to be interpreted to institutionalise delayed payment of dues by occupiers but to protect interest of cane growers. The dues of the sugarcane growers for the crushing season 2020-21 which started in October, 2020 and ending in July, 2021, have not been cleared as of now nor have the dues been deposited with the Cane growers' Co-operative Society.
He relied upon various decisions in support of his contention reported in (2011) 3 SCC 139 'Offshore Holdings Private Limited vs. Banglore Development Authorities and Ors.'; AIR 1956 SC 676 'CH. Tika Ramji and others etc vs. State of U.P. and others'; (2004) 5 SCC 430 'U.P. Cooperative Cane Union Federation vs. West U.P. Sugar Mills Association and others'; 1997 (9) SCC 207 'State of M.P. vs. Jaora Sugar Mills and Ors.'; (2015) 6 SCC 363 'Kalyani Maithivanan vs. K.V. Jeyaraj and others'; (2008) 4 SCC 720 'Government of Andhra Pradesh and others vs. P. Laxmi Devi'; AIR 1967 SC 1910 'Sant Ram Sharma vs. State of Rajasthan'; (2008) 4 SCC 171'Dhananjay Malik and ors. vs. State of Uttranchal and Ors; PIL No.67617 of 2014 'Rastriya Kisan Mazdoor Sangathan (Regd) Thru Convenor vs. State of U.P. & Another'; (1955) 1 SCR 799 'Saverbhai Amaidas vs. State of Bombay'; Writ Petition (s) (Civil) No.805 of 2021 'Raju Anna Shetti & Ors. vs. Union of India & Ors.'; (1989) 3 SCC 537 'Ratan Lal Adukia vs. Union of India' and (2020) SCC Online All 1039 'Kanikram and Ors vs. State of U.P. and Ors.' in support of his contention.
Sri Parmanand Asthana, learned advocate also appearing for the Cane-growers' Co-operative Societies in some of the petitions has submitted in his written submissions that it is the co-operative society which enters into agreement with the sugar factory in Form-'C' mentioned in the Control Order of 1954 for supply of sugarcane to its members and the sugar factory makes payment of the cane price of sugarcane supplied by the society directly to the cane growers in their account through RTGS/ NEFT. The petitioners, therefore, cannot independently file instant writ petition for payment of cane price of sugarcane supplied by them through Cane-growers' Co-operative Society. The petitions by cane growers are thus not maintainable. He has supported the payment of cane dues to the farmers on the principle of ''first supply, first payment' and submitted that out of turn payment should not be allowed nor should the que be broken as ultimate sufferers would be the small farmers. He has relied upon two Division Bench judgments rendered by this Court in the Writ Petition No.866(M/B) of 2019 'Ram Keval vs. State of U.P. and others' and Writ Petition No.30937 (M/B) of 2018 'Ram Singh vs. State of U.P. and others' in support of his contention that these writ petitions by cane growers are not maintainable.
In response, learned counsel for the petitioner submitted that the Company is flourishing and is insensitive to the financial needs of the sugarcane growers. He submitted that some of the farmers have committed suicide. However, he could not place before this Court any material in this regard. He submitted that the legal position has already been settled by this Court in the case of Kanikram (supra), Rastriya Kisan Mazdoor Sangathan (supra), Jaypal Singh (supra), therefore, nothing was required to be adjudicated so far as the legal position is concerned. The Cane-growers' Cooperative Society having failed to seek legal redress, the petitioners-cane growers are entitled to file this petition seeking their rightful dues. The provisions of Section 17 being mandatory, the Company had no option but to pay the entire amount of dues of the petitioners within the fifteen days mentioned in sub-Section (3) of Section 17 of the Act, 1953 and not having done so, the Sugarcane Commissioner is under an obligation to issue recovery certificate to the concerned Collectors who in turn are under an obligation to recover the entire amount from the Company as arrears of land revenue and pay the same to the cane growers, but this is not being done and interest of the sugarcane growers is not being protected and served by the official opposite parties nor by the Company. He further alleged violation of Article 14 and 21 of the Constitution of India. According to him, the Escrow account mechanism evolved by the Sugarcane Commissioner is in the teeth of the mandatory provisions contained in the Act, 1953. The Company earns hundreds of crores merely by delaying payment as it does not pay interest on the said delayed payment.
It needs to be mentioned that as per the records, crushing of sugar cane started in October/ November, 2020 and ended sometime in March, 2021 in respect of the five mills which are involved in these petitions.
We have heard learned counsel for the parties and perused the material available on record.
First and foremost, as regards contention of Sri Parmanand Ashthana, learned counsel appearing for Cane-growers' Co-operative Society in some of the writ petitions that the writ petitions by the sugarcane growers/ farmers for payment of dues directly before this Court was not maintainable, it is surprising that such an objection is coming from learned counsel for Cane-growers' Co-operative Society as in view of the admitted factual position that the cane dues have not been paid as also the Company's admission of its liability to pay such dues, it is a question to be pondered by the Cane-growers Co-operative Society as to why it has not itself come forward before the Court raising such a grievance and even if, for some reason, it has not done so, why should it oppose the petitions filed by the sugarcane growers who are claiming their rightful dues to which they are entitled for sale of sugarcane to the company? especially when, these sale proceeds are the source of their livelihood. This plea at the behest of Sri Asthana is not acceptable at least in the facts of the present case where the Company admits to its liability, and as the Co-operative Societies are also party in these proceedings.
Sri Gaurav Mehrotra, learned counsel appearing for Cane-growers' Co-operative Society in other petitions, has very fairly stated that he was not raising any such objection considering the interest of the farmers. Furthermore, we find that the decision of this Court in Ram Keval (supra) case relied by Sri Asthana, learned counsel, does not contain any reason for holding the petition to be not maintainable it only refers to a decision rendered in P.I.L. No.1081 of 2013 (Dharam Veer Singh and other vs. State of U.P. and others) which was not a matter pertaining to sugarcane dues of farmers but some farmers had challenged an order for reservation of cane area, therefore, the said decision does not apply in this case. The decision in 'Tejwal Gangwar vs. State of U.P.' Writ-C No.60912 of 2016 also did not deal with sugarcane dues but with establishing cane centres. In fact, this issue has been specifically considered by a Co-ordinate Bench of this Court in the case of Kanikram (supra) and it has been held that writ petition under Article 226 of the Constitution of India by sugarcane growers for payment of sugarcane dues is maintainable, cogent reasons have been given in support of this conclusion.
As regards the objection of Sri H.P. Srivastava, learned counsel for the State, even if half-hearted, that there was a remedy under Rule 108 of the Rules, 1954 of Arbitration, considering the scope of provision which covers any dispute touching the business of a cane grower's society etc which is not the case here, it is not attracted. Even otherwise, in view of the legal issues involved herein it is not at all an efficacious remedy in the facts of the case. The contention is rejected.
Now, we proceed to consider the relevant statutory provisions.
In the case of Ch. Tikaramji (supra), the Supreme Court of India has held that when Entry 33 of List III of the Seventh Schedule of the Constitution of India was amended by the Constitution Third Amendment Act, 1954 foodstuffs including edible oilseeds and oils were included therein and both Parliament and State legislatures acquired concurrent jurisdiction to legislate over sugar and sugarcane. Trade and commerce in, and production, supply and distribution of, sugar and sugarcane, could thus be dealt with by Parliament as well as by the State legislatures.
The Act, 1953 promulgated by the State Legislature is referable to Entry-33 of the Concurrent List (List III) contained in the Seventh Schedule of the Constitution of India. The Rules, 1954 have been made under the State Act, 1953 likewise the Order, 1954 has been made under Section 16 of the State Act, 1953.
The Essential Commodities Act, 1955 which is a Central Legislation and has been promulgated by the Parliament is also referable to the same Entry 33 of List III as has been held by Hon'ble the Supreme Court in the case of Ch. Tikaramji (supra) which has been considered in the subsequent decisions reported in (2004) 5 SCC 430 'U.P. Co-operative Cane Union Federations vs. West U.P. Sugar Mills Association'; (2009) 9 SCC 548 'West U.P. Sugar Mills Association and others vs. State of U.P. and others'. The Order, 1966 has been issued by the Central Government under Section 3 of the Central Act, 1955.
The Order, 1966 did not exist when the decision in Ch. Tikaramji (supra) was rendered by the Supreme Court of India in 1956 though another Order of 1955 did exist and was considered in the said case. The question of conflict of the Act, 1953 with the Central Order, 1955 also came up for consideration but in the facts of the said case, no conflict as alleged was found.
The State Act, 1953 has received the accent of the President on 05.10.1953 and has been published on 09.10.1953 i.e. prior to coming into force of the Central Act, 1955, as informed by Sri Mehrotra, therefore, Article 254 (2) does not come into picture as the presidential accent granted to it is of a date prior to the coming into force of the Central Act, 1955 and the Order of 1966 has also been issued under Section 3 of the said Central Act, 1955 subsequently. The law regarding application of Article 254 of the Constitution of India and its proviso has been considered and declared by Hon'ble the Supreme Court in the cases reported in (2002) 8 SCC 182 'Kaiser-i-Hind Pvt. Ltd. and Anr. vs. National Textile Corpn. (Maharastra North) and Ors.'; (2011) 8 SCC 708 'Rajiv Sarin and Anr. vs. State of Uttarakhand and Ors.' and (2021) 8 SCC 599 'Forum For People's Collective Efforts (FPCE) and Anr. vs. State of West Bengal and Anr.'.
The Act, 1953 as is evident from its long title is an Act to regulate the supply and purchase of sugarcane required for use in sugar factories and Gur, Rab or Khandsari Sugar Manufacturing Units. The competence of the Parliament to enact the Essential Commodities Act, 1955 and that it would cover sugarcane within its ambit as has already been considered by Hon'ble the Supreme Court in the case of Ch. Tikaramji (supra) as also the subsequent decision in U.P. Co-operative Cane Union Federations (supra) and this aspect of the matter is no longer res-integra.
It is no longer in doubt that both the Acts relate to the same Entry of the Concurrent List and, therefore, all that is required to be seen is whether there is any conflict between the two enactments or the Rules and Order made thereunder or not, if it is, then which will prevail.
As we are only concerned with the payment of sugarcane dues to the sugarcane farmers, we need not delve at length on other provisions but only those relating to this issue. In this context, Section 17 of the Act, 1953 is relevant and it reads as under:-
"17. Payment of cane price.--(1) The occupier of a factory shall make such provision for speedy payment of the price of cane purchased by him as may be prescribed.
(2) Upon the delivery of cane, the occupier of a factory shall be liable to pay immediately the price of the cane so supplied, together with all other sums connected therewith, (3) Where the person liable under sub-section (2) is in default in making the payment of the price for a period exceeding fifteen days from the date of delivering, he shall also pay interest at a rate of 7- 1/2 per cent per annum from the said date of delivering, but the Cane Commissioner may, in any case, direct, with the approval of the State Government, that no interest shall be paid such reduced rate as he may fix:
[Provided that in relation to default in payment of price of cane purchased after the commencement of this proviso, for the figure "7-1/2' the 'figure 12' shall be deemed substituted.] (4) The Cane Commissioner shall forward to the Collector a certificate under his signature specifying the amount of arrears on account of the price of cane plus interest, if any, due from the occupier and the Collector, in receipt of such certificate, shall proceed to recover from such occupier the amount specified therein. as if it were an arrear of land revenue.
(5)(a) Without prejudice to the provisions of the foregoing sub sections, where the owner or any other person having control over the affairs of the factory or any other person competent in that behalf enters into an agreement with a bank under which the bank agrees to give advance to him [on the security of sugar or ethanol (directly produced from the sugarcane juice or B-Heavy molasses)] produced or to be produced in the factory, the said owner or other person shall provide in such agreement that [a percentage determined by such authority and in such manner as may be prescribed] of the total amount of advance shall be set apart and be available only for re-payment to cane growers or their co-operative societies on account of the price of sugarcane purchased or to be purchased for the factory during the current crushing season from those cane growers or from or through those societies, and interest thereon and, such societies commission in respect thereof.
(b) Every such owner or other person as aforesaid shall send a copy of every such agreement to the Collector within a week from the date on which it is entered into."
On a reading of Section 17 (1) of the Act, 1953, the Court finds that the occupier of a factory is required to make such provision for speedy payment of price of cane purchased by him as may be prescribed. The term 'occupier' has been defined in Section 2(k) of the said Act and it includes the opposite party no.6-,the Company which is owner of the factory or mill. The term ''prescribed' has been defined under Section (2)(l) of the aforesaid Act to mean ''prescribed by rules'. The term ''rules' has been defined in Section (2)(o) to mean ''a rule made under this Act' i.e. the Act, 1953. The Court has perused the Rules, 1954 but it could not find any provision therein prescribing a provision for speedy payment of price of cane purchased by the occupier which could be followed by the latter nor could the counsel for the rival parties show any such provision. The Order, 1954 also does not contain any such provision referable to sub-Section (1) of Section 17 of the Act, 1953. Proviso to Rule 45 says that all arrears of cane price shell be remitted to the cane growers co-operative society concerned within fifteen days of the close of the factory. The factory closes on completion of crushing season which is defined in Section 2(i) to mean the period beginning on the 1st October in any year and ending on the 15th July next following.
Now, as already stated earlier, no such prescription as regards speedy payment of price of cane purchased by the occupier has been made in the rules of 1954 or the Order, 1954 made under the Act, 1953 as is envisaged under sub-Section (1) of Section 17 of the Act, 1953. Sub-Section (3) of Section 17 of the Act, 1953, however, says that where the person liable under sub-section (2) is in default in making the payment of the price for a period exceeding fifteen days from the date of delivering, he shall also pay interest at a rate of 12 per cent per annum from the said date of delivering.
We have no hesitation in holding that even though as per the word 'prescribed' used in Section 17(1) of the Act, 1953 which has been defined in Section 2(k) of the Act, 1953, according to which, such prescription has to be made in the rules made under the Act, 1954, in the absence of any such prescription under the Rules, from the scheme of Section 17 of the Act, 1953 itself it is clear that the time limit to pay the cane dues to the farmers is fifteen days from the date of delivering the sugarcane, failing which, not only interest becomes payable but the dues become arrears and the same are recoverable under sub-Section (4) of Section 17 plus interest thereon leviable under sub-Section (3) of the Act, 1953. There can be no other reasonable understanding of the scheme of the Act. This, however, may not be very relevant in view of the discussion made hereinafter.
However, in this context, when we peruse the Control Order, 1966 which has been made under Section 3 of the Central Act, 1955, we find a specific provision therein as is contained in Clause 3(3) and 3-A thereof. The entire Clause (3) reads as under:-
"3. Fair and remunerative price of sugarcane payable by producer of sugar.--(1) The Central Government may, after consultation with such authorities, bodies or associations as it may deem fit, by notification in the Official Gazette, from time to time, fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them having regard to--
(a) the cost of production of sugarcane;
(b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities;
(c) the availability of sugar to the consumer at a fair price;
(d) the price at which sugar produced from sugarcane is sold by producers of sugar; and
(e) the recovery of sugar from sugarcane:
(f) the realization made by sale of by-products viz molasses, bagasse, and press mud or their imputed value.
(g) reasonable margins for the growers of sugarcane on account of risk and profits.
[Provided that the Central Government or with the approval of the Central Government, the State Government, may, in such circumstances and subject to such conditions as specified in Clause 3-A, allow a suitable rebate in the price so fixed.] Explanation.--(1) Different prices may be fixed for different areas or different qualities or varieties of sugarcane.
Explanation-(2) When a sugar factory produces ethanol directly from sugar juice or B-Heavy molasses, the recovery rate in case of such sugar factory shall be determined by considering every 600 litres of ethanol so produced as equivalent to 1 tonne of production of sugar;
Explanation (3).-Production of ethanol directly from sugarcane juice shall be allowed in case of sugar factories only.
Explanation (4).-Imputed value of the by-products would include unsold value or the notional or transfer value of such by-products for further value addition in the sugar factory like, alcohol and ethanol production from molasses, use of press mud for making bio-fertilizer and/or distillery effluent treatment, generation of power from bagasse or any other product produced through value addition to the by-products mentioned above but should not include the bagasse used for running the boiler of the main sugar factory for the production of sugar alone.
Explanation (5). The realization made from the sale of by-products namely, molasses, bagasse and press mud or their imputed value means only transfer prices and not the value of or profit from co-generated power, alcohol or ethanol, bio-fertilizers or distillery effluent treatment or any other product produced through value addition to the by-products mentioned above.] (2) No person shall sell or agree to sell sugarcane to a producer of sugar or his agent, and no such producer or agent shall purchase or agree to purchase garcane, at a price lower than that fixed under sub-clause (1).
(3) Where a producer of sugar purchases any sugarcane from a grower of sugarcane or from a sugarcane growers' co-operative society, the producer shall, unless there is an agreement in writing to the contrary between the parties, pay within fourteen days from the date of delivery of the sugarcane to the seller or tender to him the price of the cane sold at the rate agreed to between the producer and the sugarcane grower or the sugarcane growers' co-operative society or that fixed under sub-clause (1), as the case may be, either at the gate of the factory or at the cane collection centre or transfer or deposit the necessary amount in the Bank account of the seller or the co-operative society, as the case may be.
(3-A) Where a producer of sugar or his agent fails to make payment for the sugarcane purchased within 14 days of the date of delivery, he shall pay interest on the amount due at the rate of 15 per cent per annum for the period of such delay beyond 14 days. Where payment of interest on delayed payment is made to a cane growers' society, the society shall pass on the interest to the cane growers concerned after deducting administrative charges, if any, permitted by the rules of the said society.
(4) Where sugarcane is purchased through an agent, the producer or the agent shall pay or tender payment of such price within the period and in the manner aforesaid and if neither of them has so paid or tendered payment, each of them shall be deemed to have contravened the provisions of this clause.
(5) At the time of payment at the gate of the factory or at the cane collection centre, receipts, if any, given by the purchaser, shall be surrendered by the cane grower or Co-operative society.
(6) Where payment has been made by transfer or deposit of the amount to the Bank account of the seller or the co-operative society, as the case may be, the receipt given by the purchaser, if any, to the grower or the co-operative society if not returned to the purchaser, shall become invalid.
(7) In case, the price of the sugarcane remains unpaid on the last day of the sugar year in which cane supply was made to the factory on account of the suppliers of cane not coming forward with their claims therefor , it shall be deposited by the producer of sugar with the Collector of the district in which the factory is situated, within three months of the close of the sugar year. The Collector shall pay, out of the amount so deposited, all claims considered payable by him and preferred before him within three years of the close of the sugar year in which the cane was supplied to the factory. The amount still remaining undisbursed with the Collector, after meeting the claims from the suppliers, shall be credited by him to the Consolidated Fund of the State, immediately after the expiry of the time limit of 3 years within which claims therefor could be preferred by the suppliers. The State Government shall, as far as possible utilise such amounts for development of sugarcane in the State.] (8) Where any producer of sugar or his agent has defaulted in furnishing information under Clause 9 of this Order or has defaulted in paying the whole or any part of the price of sugarcane to a grower of sugarcane or a sugarcane growers co-operative society within fourteen days from the date of delivery of sugarcane, or where there is an agreement in writing between the parties for payment of price within a specified time and any producer or his agent has defaulted in making payment within the agreed time specified therein, the Central Government or an officer authorised by the Central Government in this behalf or the State Government or an officer authorised by the State Government in this behalf may either on the basis of information made available by the producer of sugar or his agent or on the basis of claims, if any, made to it or him regarding non-payment of prices or arrears thereof by the concerned grower of sugarcane or the sugarcane growers co-operative society as the case may be, or on the basis of such enquiry that it or he deems fit, shall forward to the Collector of the district in which the factory is located, a certificate specifying the amount of price of sugarcane and interest due thereon from the producer of sugar or his agent for its recovery as arrears of the land revenue.
(9) The Collector on receipt of such certificate, shall proceed to recover from such producer of sugar or his agent the amount specified therein as if it were arrears of land revenue.
(10) After effecting the recovery, the Collector shall intimate to the concerned growers of the sugarcane or the concerned sugarcane growers co-operative societies through a public notice to submit their claims in such a manner as he considers appropriate within thirty days:
Provided that the Collector may, for the reasons to be recorded in writing allow the submission of claims after the period so specified if he is satisfied that there was sufficient cause for not submitting such claim earlier.
(11) If the amount recovered is less than the amount specified in the certificate under sub-clause (8), the Collector shall distribute the amount so recovered among the concerned growers of the sugarcane or the concerned sugarcane growers co-operatives in proportion to the ratio determined by the Collector on the basis of the sugarcane supplied by the concerned growers of sugarcane or the sugarcane growers' co-operative society as the case may be.
(12) If the amount recovered and distributed under sub-clause (11) is less than the amount specified in the certificate under sub-clause (8), the Collector shall proceed to recover the remaining amount, as if it were arrears of land revenue till the full amount is recovered and distributed to satisfy the remaining claims.
(13) If the amount is given to the concerned sugarcane growers co-operative societies, it shall distribute the amount through cheque/draft/or any other recognised banking instrument on any Scheduled Bank to the concerned sugarcane growers within ten days of the receipt of the amount from the Collector.
(14) If the concerned sugarcane grower or the concerned sugarcane growers co-operative society do not come forward to claim or collect the amount so recovered by the Collector within three years from the date of the public notice referred to in sub-clause (10), the unclaimed amount shall be deposited by the Collector in the Consolidated Fund of the State."
As per Clause 3(3) of the Order, 1966 where a producer of sugar purchases any sugarcane from a grower of sugarcane or from a sugarcane growers' co-operative society, the producer shall, unless there is an agreement in writing to the contrary between the parties, pay within fourteen days from the date of delivery of the sugarcane to the seller or tender to him the price of the cane sold at the rate agreed to between the producer and the sugarcane grower or the sugarcane growers' co-operative society or that fixed under sub-clause (1), as the case may be, either at the gate of the factory or at the cane collection centre or transfer or deposit the necessary amount in the Bank account of the seller or the co-operative society, as the case may be.
This provision categorically requires the purchaser of sugarcane to pay the price of such sugarcane within fourteen days from the date of delivery of the sugarcane to the seller etc. as referred therein etc unless there is an agreement in writing to the contrary between the parties.
None of the learned counsel for the rival parties could show any agreement between the parties laying down any time period for payment of such dues other than what is envisaged in the aforesaid provision.
Clause 3(3-A) of the Order, 1966 provides that where a producer of sugar or his agent fails to make payment for the sugarcane purchased within 14 days of the date of delivery, he shall pay interest on the amount due at the rate of 15 per cent per annum for the period of such delay beyond 14 days. Where payment of interest on delayed payment is made to a cane growers' society, the society shall pass on the interest to the cane growers concerned after deducting administrative charges, if any, permitted by the rules of the said society.
Thus, sub-Section (3) of Section 17 of the State Act, 1953 prescribes a period of fifteen days but the Central Order, 1966 made under the Central Enactment, 1955 prescribes the period of fourteen days for payment of sugarcane dues. Therefore, the State Act is in conflict with the Central Order and the former will have to give way to the latter. This is, as, the Order 1966, is a Central Order made under a central enactment of 1955, therefore, as it has backing and statutory force of a Central enactment, as such, it would prevail over any contrary provision contained in the State enactment, especially as, the State enactment of 1953 and the Central enactment of 1955 both are referable to Entry-33 of the Concurrent List as already discussed with reference to the decision of Supreme Court in Ch. Tikaramji (supra) and other decisions. In support of this one may refer to a decision reported in (2015) 6 SCC 363 'Kalyani Maithivanan vs. K.V. Jeyaraj and others' wherein, in the context of the U.G.C. Act and the State University Act, after considering the relevant constitutional provisions contained in Article 254 etc and the respective entries in the lists in the Seventh Schedule, it has been held that "to the extent the State legislation is in conflict with the Central legislation including the subordinate legislation made by the Central Legislation under Entry-25 of the Concurrent List, it shall be repugnant to the Central Legislation and would be in operative". The ratio of the decision applies in this case also.
In this view of the matter, considering the Central Order, 1966, as it contains a clear stipulation of the time period within which cane dues have to be paid i.e. fourteen days of the date of delivery, it will prevail over the Act, 1953. Therefore, we are of the considered opinion that the time period within which the company/ occupier as defined under the Act, 1953 is required to pay the cane dues to the cane farmers directly or to the Cane growers' Co-operative Society, is fourteen days from the date of delivery.
Now, under the proviso to sub-Section (3) of Section 17 of the Act, 1953 interest @ 12 per cent per annum becomes payable if the payment of the price is not made within the stipulated period but under Clause 3 and 3(3-A) of the Central Order, 1966, interest @ 15 per cent per annum becomes payable. In view of this conflict and for the reasons already given hereinabove, as, the Central Order, 1966 will prevail on this score also, therefore, not only the time period has to be fourteen days but the rate of interest also has to be 15 per cent per annum as is prescribed in the Central Order, 1966 and not 12 per cent per annum as is mentioned in the proviso to sub-Section (3) of Section 17 of the Act, 1953. This however is subject to the provisions contained in sub-Section (3) of Section 17 of the Act, 1953 which provides "but the Cane Commissioner may, in any case, direct, with the approval of the State Government, that no interest shall be paid or be paid at such reduced rate as he may fix". The Order, 1966 does not prohibit such waiver of interest or its reduction as has also been considered in the case of Rashtriya Kisan Mazdoor Sangathan (supra).
This discussion was necessary to clear the cloud on this issue.
In this very context, we may also refer to another Division Bench judgment of this Court in the case of 'Rashtriya Kisan Mazdoor Sangathan (supra) decided on 09.03.2017 wherein though there is not a detailed discussion as to whether the interest would be @ 15 per cent per annum or @ 12 per cent per annum, nevertheless, it has been provided that the same would be @15 per cent per annum and the said Division Bench has also provided that speedy payment is to be made within fourteen days of delivery. Therefore, obviously, it had the Central Order, 1966 in mind while so ordering.
Now, as per sub-Section (4) of Section 17 of the Act, 1953 the Cane Commissioner shall forward to the Collector a certificate under his signature specifying the amount of arrears on account of the price of cane plus interest, if any, due from the occupier and the Collector, in receipt of such certificate, shall proceed to recover from such occupier the amounts specified therein as if it were arrears of land revenue.
Correspondingly when we read the provisions of Central Order, 1966, we find that Clause 3(8) of the Central Order, 1966 provides that where any producer of sugar or his agent has defaulted in furnishing information under Clause 9 of this Order or has defaulted in paying the whole or any part of the price of sugarcane to a grower of sugarcane or a sugarcane growers co-operative society within fourteen days from the date of delivery of sugarcane, or where there is an agreement in writing between the parties for payment of price within a specified time and any producer or his agent has defaulted in making payment within the agreed time specified therein, the Central Government or an officer authorized by the Central Government in this behalf or the State Government or an officer authorized by the State Government in this behalf may either on the basis of information made available by the producer of sugar or his agent or on the basis of claims, if any, made to it or him regarding non-payment of prices or arrears thereof by the concerned grower of sugarcane or the sugarcane growers co-operative society, as the case may be, or on the basis of such enquiry that it or he deems fit, shall forward to the Collector of the district in which the factory is located, a certificate specifying the amount of price of sugarcane and interest due thereon from the producer of sugar or his agent for its recovery as arrears of the land revenue. This provision does not prevent the Sugarcane Commissioner from issuing a recovery certificate as is envisaged in Section 17(4) of the Act, 1953, rather it permits it, therefore, there is no conflict between the Act, 1953 and the Order, 1966 on this count. We may in this context refer to the opinion expressed by a Coordinate Bench of this Court in Rashtriya Kisan Mazdoor Sangathan (supra) as under:-
"It is true that under Sugarcane Control Order 1966, there is a higher rate of interest provided as compared to the interest provided for under Sugarcane Act, 1953 and State Government, in its turn as obedience to both the provisions is possible, has accepted in principle to award higher rate of interest as it is more beneficial to the farmers, therefore the submission made that once the field regarding interest stands occupied by Control Order, the power to waive interest in terms of Section 17(3) Sugarcane Act 1953 stands divested is also being adverted to by us.
The Apex Court in the case of State of M.P. vs. Jaora Sugar Mills and others 1997 (9) SCC 207 has clearly proceeded to mention that the respondents are liable to pay interest on the late payment under the Act read with order.
Apex Court in the case of Belsund Sugar Company Ltd. Vs. State of Bihar 1999 (9) SCC 620, while considering akin provisions vis.a.vis. Sugarcane (Control) Order, 1966 as well as Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981 took the view that both are harmoniously operating in same field and compliment each other. View to the similar effect has once again been taken in the case of Krishi Upaj Mandi Samiti Vs. Shiv Shankar Khandsari Udyog 2012 (9) SCC 368 wherein the provisions of M.P. Sugarcane (Regulation of Supply and Purchase) Act, 1958 alongwith the provisions of Sugarcane (Control) Order, 1966 was being dealt with and Apex Court has found and ruled that entire field of sale and purchase of sugarcane is covered by Sugarcane Act and Control Order, which are special provisions. In the case of U.P. Cooperative Cane Union Federation Vs. West U.P. Sugar Mill Association 2004 (5) SCC 430, Apex Court though in the matter of fixation of price took the view that there will be no inconsistency or repugnancy as it is possible for both the orders that is Sugarcane (Control) Order, 1966 and the provisions of U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 to operate simultaneously and to comply with both of them.
In the present case, what we find that there is no repugnancy arising for the simple reason that under the provision of Sugarcane (Control) Order, 1966, there is no provision that empowers the authorities to waive the interest, whereas under sub-section (3) of Section 17 the State Authorities are empowered to waive the interest on the recommendation of the Cane Commissioner.
Legislative Competence of U.P. State Legislature to enact law in regard to supply and purchase of sugarcane required or to be used in sugar factories has not at all been disputed before us, and once legislative competence is there to enact law with regard to sugarcane wherein authority has also been inhered to waive interest on delayed payment, hence there is no question of trenching upon the authority covered under Sugarcane Control Order 1966.
Apex Court in the case of Yogendra Kumar Jaiswal and others Vs. State of Bihar 2016(3) SCC 183 has clearly mentioned that repugnancy would arise when there is clear and direct inconsistency between Central Law and State Law and such inconsistency irreconcilable. Question of repugnancy can arise only with reference to legislation made by Parliament falling under the Concurrent list or an existing law with reference to one of the matter enumerated in Concurrent list. If a law made by the State Legislature covered by an entry in the State List incidentally touches any of the entries in the Concurrent List. Article 254 is not attracted but where a law covered by an entry in the State List (or an amendment to a law covered by an entry in the State List) made by the State Legislature contains a provision, which directly and substantially relates to a matter enumerated in the Concurrent List and is repugnant to any provision of an existing law with respect to that matter in the Concurrent List then such repugnant provision of the State law will be void. Such a provision of law made by the State Legislature touching upon a matter covered by the Concurrent List, will not be void if it can co-exist and operate without repugnancy with the provisions of the existing law. It needs no special emphasis to state that the issue of repugnancy would also arise where the law made by Parliament and the law made by the State Legislature occupy the same field.
On such parameters, the question of repugnancy would not at all arise and to the contrary both the provisions would co-exist for the simple reason that under the scheme of things provided for interest has been made admissible on delayed payment under both the statutory provisions and in addition to it under State Act, State has inhered in itself authority to waive the interest on the recommendation of Cane Commissioner. Accordingly to suggest that once the field regarding the interest has been completely occupied by the Control Order, the power to waive the interest in terms of Section 17(3) Sugarcane Act, 1953 no longer exists with the Commissioner cannot be accepted by us.
In view of this, the objection that has been raised by the petitioners association/sangathan that State Authorities has got no authority to waive the interest, cannot be accepted by us..."
Clause 3(9) of the Order, 1966 further provides that the Collector, on receipt of such certificate, shall proceed to recover from such producer of sugar or his agent, the amount specified therein as if it were arrears of land revenue.
As per Clause 3(10) of the Order, 1966 after effecting the recovery, the Collector shall intimate to the concerned growers of the sugarcane or the concerned sugarcane growers co-operative societies through a public notice to submit their claims in such a manner as he considers appropriate within thirty days provided that the Collector may, for the reasons to be recorded in writing allow the submission of claims after the period so specified if he is satisfied that there was sufficient cause for not submitting such claim earlier.
Clause 3(11) of the Order, 1966 provides that if the amount recovered is less than the amount specified in the certificate under sub-clause (8), the Collector shall distribute the amount so recovered among the concerned growers of the sugarcane or the concerned sugarcane growers co-operatives in proportion to the ratio determined by the Collector on the basis of the sugarcane supplied by the concerned growers of sugarcane or the sugarcane growers' co-operative society as the case may be.
Clause 3(12) provides that if the amount recovered and distributed under sub-clause (11) is less than the amount specified in the certificate under sub-clause (8), the Collector shall proceed to recover the remaining amount, as if it were arrears of land revenue till the full amount is recovered and distributed to satisfy the remaining claims. The procedure for recovery of arrears of land revenue is prescribed in the U.P. Revenue Code, 2006 and the U.P. Revenue Code Rules, 2016 which will be followed in such circumstances.
Clause 3(13) provides that if the amount is given to the concerned sugarcane growers co-operative societies, it shall distribute the amount through cheque/draft/or any other recognized banking instrument on any Scheduled Bank to the concerned sugarcane growers within ten days of the receipt of the amount from the Collector.
Clause 3(14) provides that if the concerned sugarcane grower or the concerned sugarcane growers co-operative society do not come forward to claim or collect the amount so recovered by the Collector within three years from the date of the public notice referred to in sub-clause (10), the unclaimed amount shall be deposited by the Collector in the Consolidated Fund of the State.
Thus, entire mechanism for speedy payment of cane price to sugarcane growers or the Cane-grower's Co-operative Society is provided in Order 3 of the Central Order, 1966 including the recovery of arrears/ dues thereof as arrears of land revenue. Whereas, though, there is a provision for the same in Section 17 of the Act, 1953, in view of the fact that the Central Order, 1966 has been made under a Central enactment, for the reasons already given hereinabove, the latter will have to prevail to the extent the former is in conflict with the latter subject of course to the condition that the recovery proceedings including issuance of Recovery Certificate would have to be undertaken by the state officials which is also permissible under Clause 3 of the Central Order, 1966.
Clause 9 of the Order, 1966 which is referred in Clause 3(8), inter alia, empowers the concerned authority to maintain and furnish within seven days of close of each fortnight details of cane purchased, cane price due, cane price paid, cane price arrears for each fortnight as specified in the Third Schedule to the said Order. This facilitates the mechanism mentioned in Clause (3) of the Order referred earlier. Similar provisions are there under the State Rules, 1954.
Now, from the provisions of Clause 3 of the Central Order, 1966, it is evident that if the payment has not been made within fourteen days from the date of delivery then the procedure for recovery of the same as arrears of land revenue will be set in motion as per Clause 3(8) of the Order, 1966.
Clause 3(7) of the Order, 1966 deals with a situation where the the price of the sugarcane remains unpaid on the last day of the sugar year in which cane supply was made to the factory on account of the suppliers of cane not coming forward with their claims therefor or for any other reason, therefore, this will also come into play when the aforesaid eventuality is satisfied.
The contention of Sri S.C. Mishra that provisions of sub-Sections (3) and (4) of Section 17 of the Act, 1953 nowhere provides as to when the Cane Commissioner will issue recovery certificate to the Collector for recovery of the arrears of cane dues, therefore, the provisions of the Act, 1953 are arbitrary and give uncannalized power to the Sugarcane Commissioner, are not acceptable and have to be repelled as in such a scenario, the provisions of the Clause 3 of the Order, 1966 will come into play and on expiry of fourteen days period, the State Officials can issue the recovery certificate to the Collector for recovery of arrears of sugarcane.
As regards the contention of Sri Mishra, learned Senior Counsel that fourteen days' period is impractical as it is impossible to pay the price of sugarcane within such a short period considering the huge production and purchase of sugarcane, it is a separate matter which the concerned Government or the legislature can look into as to whether there is a requirement of amending the Act, 1953 or the rules and orders made thereunder or for that matter the Central Order, 1966, but in the absence of any challenge to the vires of relevant provisions of the Act, 1953 or the Order, 1966, the provisions of law stand as they are as of now and as have been discussed hereinabove.
This also takes care of the ambiguity alleged in the provisions contained in Section 17 as regards the time limit for payment of dues of the sugarcane in view of the words ''speedy payment' used in sub-Section (1) of Section 17 of the Act, 1953 and the word ''immediately' used in sub-Section (2) of Section 17 of the aforesaid Act, as also the words ''fifteen days' used in sub-Section (3) of Section 17 of the aforesaid Act, as, now, this aspect has to be governed by Clause 3(3) and 3(3-A) of the Central Order, 1966.
In this very context, we may consider the plea raised by Sri Mishra that interest payment under sub-Section (3) of Section 17 of the Act, 1953 is not mandatory and it is subject to any waiver by the Sugarcane Commissioner with the approval of the State Government. Firstly, the interest from the very language used in Section 17 and for that matter the provisions of Clause 3 of the Central Order, 1966 is mandatory. In both the provisions, not only the words ''shall' has been used but the very purpose of levying interest is to prevent financial loss to sugarcane growers and also to prevent the occupier/ company from gaining undue financial advantage by making delayed payment as, considering the huge amount of money which is required to be paid by the occupier, if levying of interest is held as not mandatory then this would result in undue enrichment of the company/ occupier and that too at the cost of poor farmers and sugarcane growers which is not the intent of the provisions of law discussed hereinabove.
As regards the other aspect of waiver or reduction of interest under Section 17(3) of the Act, 1953, we find that, firstly, there is nothing on record to show that in any of the earlier years, the Company/ Occupier had applied for waiver but as it is not the subject matter of these petition we leave it at that, nevertheless, as regards the year 2020-21, with which we are concerned, assuming that any such application has been made or could be made, this aspect of the matter relating to waiver of interest has already been dealt with by a Division Bench judgment in Rashtriya Kisan Mazdoor Sangathan (supra) and it is fruitful to refer to its observations / opinion in this regard which are as under:
"..and we also make it clear that the co-ordinate Bench of this Court of which one of us was member, has already taken view to the similar effect and therein a clear cut caution has been made that at the point of time when authority of waiver of interest is to be exercised by the authority, the said exercise is not to be undertaken in routine manner and the exercise of authority has to be fair and equitable and only in exceptional cases such an authority could be exercised. "
Waiver of interest by the Sugarcane Commissioner which has to be with the approval of the State Government can neither be mechanical nor in a routine manner but can only be for exceptional circumstances, in a fair and equitable manner. The parameters and factors referred by the Division Bench in Rashtriya Kisan Mazdoor Sangathan (supra) as quoted hereinabove have to be kept in mind and the Sugarcane Commissioner as also the State Government are bound by the same.
In fact, the Court pointedly asked Sri Mishra, learned Senior Counsel as to whether interest on the delayed payment has been given to the sugarcane growers in the last five years but he could not give any satisfactory reply. However, as far as the years prior to 2020-21 are concerned as the same are not the subject matter of these proceedings, therefore, we leave it open for the petitioners to claim interest thereon, unless there is some legal impediment in this regard, separately, or for that matter it is for the Sugarcane Commissioner and the concerned Cane growers co-operative society to take up this matter to protect the interest of farmers.
As regards opening of an Escrow account, in the facts of this case provision of Section 17(5) are not attracted as admittedly the Company has not entered into agreement with any Bank to get an Advance on the Security or ethanol produced in the factory as is evident from its counter affidavit. No cash credit facility has been utilized by the Company for this purpose as it has not been made available for the reason given in the affidavit filed on behalf of the Company-opposite party no.6, therefore, we are not in agreement with the contention of Sri Gaurav Mehrotra, learned counsel that the same is referable to sub-Section (5) of Section 17 read with Rule 48A of the Rules, 1954 nor that the Sugarcane Commissioner has incidental powers under Section 16 of the Act, 1953 to do so, as the language used therein does not lend itself to such interpretation.
On being asked as to why financial capacity of the Company to pay the estimated sugarcane dues was not assessed before reserving or assigning an area for it, the Sugarcane Commissioner submitted that it was not one of the parameters to be taken into consideration under Rule 22 of Rules, 1954, moreover, considering the factors mentioned in Rule 22 and law on the subject, it was inevitable to reserve or assign sugarcane area to the Company which had a factory in the area. He submitted that in the coming years there was going to be a shift to 'ethanol' and this would prevent such a situation, such as the one which has arisen in this case, from arising in future. We have perused Rule 22 of the Rules, 1954 which lays down the factors to be taken into consideration by the Cane Commissioner in reserving / assigning an area to a factory or determining the quantity of cane to be purchased from an area by a factory. We have also considered clause (f) thereof, according to which, the arrangements made by the factory in previous years for payment of cess, cane price and commission is one of the factors to be taken into consideration. We find substance in the submission of Sri Mehrotra, learned counsel that an assessment of paying capacity of the factory or company for payment of the estimated dues of the sugarcane growers, which can always be estimated in view of the provisions and mechanism especially contained under Section 15 of the Act, 1953 and the rules made thereunder and similar provision contained in the Order, 1954 and 1966, can be taken into consideration as one of the factors implicit in clause (f) of the Rule 22 of the Rules, 1954. If required, the Rules can be suitably amended to leave no room for ambiguity in this regard as it is necessary to protect the interests of the sugarcane growers that the Company should have adequate financial capacity to pay the dues of the farmers.
It is not in dispute that the Company/ Occupier is in default in payment of cane dues of farmers. The Company/ Occupier admits its liability to pay the dues. It has undertaken to pay it completely by March, 2022. Needless to say that dues along with interest @ 15 per cent per annum has to be paid for the year 2020-21 subject to any waiver in this regard by the Sugarcane Commissioner with the approval of the State Government. There is no provision for payment of compound interest as has been prayed.
During the course of hearing, the Court was informed that in respect to the five mills at Gola Gokaran Nath, Khambhar Khera, Palia Kalan, Barkhera and Maqsoodapur, total dues were Rs.510.1288 (crores), Rs.387.0157 (crores), Rs. 212.8306 (crores), Rs.295.9202 (crores), Rs.328.4919 (crores), against which an amount of Rs.183.1706 (crores), Rs.111.7938 (crores), Rs.125.9812 (crores), Rs.162.3050 (crores), Rs.130.4158 (crores) respectively had been paid by the first week of October. This was possible as the factory continued to run. It was submitted that the remaining dues will be cleared positively by 31st March, 2022.
Sri Mishra, learned counsel submitted in this context that all the assets of the Company were already encumbered, therefore, the best way out was to permit the Company to pay the dues by February-March, 2022 as had been done by Hon'ble the Supreme Court vide order dated 16.10.2020 in S.L.P. No.11948-11951 of 2020 arising out of judgment dated 21.09.2020 rendered in Kanikram's case (supra) with respect to the earlier year 2019-20.
Sri S.C. Mishra, learned Senior Counsel assisted by Sri Pawan Awasthi, learned counsel for opposite party no.6 informed the Court during the course of argument that out of total 6455 petitioners in all these writ petitions pertaining to five mills, more than 50% of the petitioners had been paid 50-70 % of the dues and the remaining amount would also be paid to all the petitioners by March, 2022.
The only question is should we direct recovery of arrears of dues as arrears of land revenue at this stage or we should allow the Company/ Occupier time in the light of its undertaking before this Court as also before the authorities, which is on record, purely in the facts and circumstances of the case.
The Sugarcane Commissioner had earlier informed the Court on a query being put to him as to why proceedings for recovery of dues were not initiated effectively especially against the Company, instead of merely against the factory, for which he submitted that the past experience is that nobody comes forward to purchase the factory and if it is shutdown it does not in any manner help the cause of farmers. However, he had no answer to the query of the Court as to why no proceedings are initiated against the parent Company - opposite party no.6 which is included in the definition of 'occupier' under Section 2(k) of the Act, 1953. In this regard, Sri Mishra submitted that its assets were already mortgaged with lenders.
We have perused the counter affidavit of opposite party no.3-Sugar Cane Commissioner and Opposite party no.6-Company. In paragraph nos.3 to 18 of the short counter affidavit filed along with an application dated 01.09.2021, the opposite party no.6-Company has given details of its immovable properties in response to the earlier order/ direction of this Court. It has stated that the total book value of the said immovable properties is Rs.3711.53 crores. However, in the earlier affidavit filed by it along with an application dated 09.08.2021, it has been stated that all the immovable properties and assets of the Company are mortgaged with the consortium of banks against the outstanding debt of the Company and the lenders have the first charge over the said immovable properties and assets of the Company. A chart has been annexed in this regard as SCA-2.
In the affidavit filed by the Company-opposite party no.6 along with an application dated 05.07.2021, it has been mentioned that the total value of the property, plant and equipment of the Bajaj Hindustan Sugar Mills Limited is at Rs.6985.26 crores as per the balance sheet of 2020-21. The Company has been in considerable financial stress for the past few years due to certain factors. The entire financial mechanism and operation of the Company is under direct monitoring and scrutiny of consortium of Banks headed by State Bank of India and the audit firm namely, M/s Deloitte Haskins & Sells, LLP. The Company's funds are directly controlled and monitored in real time by the consortium of Banks through Trust and Retention Account System (T.R.A.) since last five years and the direct control is always supervised by M/s Deloitte Haskins & Sells, LLP All the payments are rooted through the T.R.A. system and scrutinized and reviewed by the consortium of Banks. The Company has a sanctioned cash credit limit of Rs.926 crores from 11 Banks out of the consortium of Banks. The cash credit limit is sanctioned for the company as a whole and not sanctioned for a specific sugar plant. However, the Bank permits utilization of cash credit limit only against the available drawing power of the company. On account of huge outstanding dues of the Company, the drawing power of the Company has been negative in the previous three years and therefore, no amount was permitted/ available for utilization from the cash credit limit as such the only available option for payment of cane dues is from the proceeds of sale of sugar and other by-products which are being religiously followed and complied with under the tagging orders of the respective District Magistrates and office of Cane Commissioner by which the proceeds are to be deposited in the Escrow account and payment has to be made to the farmers therefrom. The Company could not taken advantage of soft loans under the schemes of the State and the Central Government meant for sugar mills due to the restructured loan accounts and stressed financial conditions. The cane area of the factories of the Company has been reduced substantially in the last few years.
These facts themselves highlight the importance of the need to assess the financial capacity/ paying capacity of the Company before reserving/ assigning a cane area for it as has been emphasized by us earlier.
In the affidavit filed along with application dated 19.09.2021 on behalf of the opposite party no.6, it has been stated that from 05.07.2021 to 31.08.2021, the Company has made a total payment of Rs.253.01 crores to the cane growers in respect to the five units in question namely, Gola Gokaran Nath, Khambhar Khera, Palia Kalan, Barkhera and Maqsoodapur. The details of payment made has also been given.
Reference has also been made in the said affidavit to the recommendations of the C. Rangarajan Committee constituted to look into all the issues related to regulation of sugar sector which according to Sri Mishra, learned counsel have not been implemented and the report itself shows that there is a wide gap between the ground reality and the statutory framework in place which is impractical.
Details of immovable properties of opposite party no.6-Company have been given in the short counter affidavit of opposite party no.6 dated 31.08.2021 but it is stated that the lenders have first charge over all these assets.
The details of balance sheet including its assets and liability including loans etc for the past five years including the year ending March, 2020 have been disclosed as part of Annexure no.6 to the short counter affidavit of opposite party no.6 dated 04.07.2021.
The Sugarcane Commissioner has also filed another short counter affidavit along with an application dated 03.07.2021 stating that resorting to opening of Escrow account mechanism has improved the situation of cane price payment in Uttar Pradesh tremendously. He has stated that allotment of sugarcane area to each sugar mill is according to its crushing capacity keeping in view the availability of the sugar cane in the area and the relevant factors as prescribed in Rule 22 of the Rules, 1954. This is done in such a way that the sugar cane supply tickets can be available proportionately to the sugarcane farmers and the sugar mills can do daily crushing work according to its crushing capacity. In paragraph no.32 of his affidavit, he has also delved into the issue of assigning/ reserving a cane area which is at present available with the Company to any other mill and the adverse effect it will have upon the viability and profitability of the mills as also the availability of supply tickets to farmers considering the crushing capacity of the mills which will be severely stressed.
It has also been stated in the affidavit of opposite party no.6 that on 02.07.2021, an undertaking has been given by the Company to the Cane Commissioner vide letter dated 02.07.2021 contained in SCA-7 to the said affidavit that the balance cane price payment for the season 2020-21 will be completed for some units in February, 2022 and the remaining units cane price payment will be finished by March, 2022.
The petitioners have not able to rebut the aforesaid facts regarding the financial condition of the Company as also the facts mentioned in the affidavit of the Sugarcane Commissioner, satisfactorily. The Company on its part admits the liability to clear the dues of the farmers and undertakes to do so by February-March, 2022. It has admitted that it has not paid interest on the delayed payment to the farmers in the counter affidavits filed by it. We have already said that it is bound to pay interest @ 15 per cent per annum as already discussed.
The Sugarcane Commissioner who had addressed the Court on the earlier occasions had also mentioned about the financial condition of the Company and hence the via-media adopted by him by opening an Escrow account and issuance of tagging orders by which substantial amount of the proceeds from sale of sugar and by-products are to be deposited in the said account which is jointly operated by the officials of the State and the Company and is used for payment of sugarcane dues.
It appears that the Sugarcane Commissioner has tried to resolve the dispute by ensuring due payment of cane dues of farmers by resorting to an Escrow Account to which the sale proceeds as already referred by the Company are deposited and are used for paying to the cane growers. This arrangement, according to him, on the one hand protects the interest of the farmers and also prevents the factory of the Company from shutting down. If the factory is shut down then this would not be in the interest of the sugarcane growers of the area.
Although we are of the opinion that the Escrow Account opened by the Sugarcane Commissioner in this case is not referable to Section 17(5) of the Act, 1953 read with Rule 48A of the Rules, 1954, we do not wish to interfere with this mechanism as doing so would be counter-productive to the interests of the farmers/ petitioners.
We are also of the considered view that while exercising powers under Article 226 of the Constitution of India, we have to take a practical and reasonable view of the matter as regards the relief prayed keeping in mind the facts of the case, especially in the circumstances of the present case where, from the facts averred in the counter affidavits filed by the Sugarcane Commissioner and the Company/ Occupier, it is evident that the financial condition of the Company is not such that it could have paid the sugarcane dues within the stipulated period of fourteen days, and the same in fact are being paid on daily basis, in phases, from the Escrow Account opened by the order of the Sugarcane Commissioner in which 85% of the proceeds from sale of Sugarcane by the Company and certain percentage of proceeds from sale of it by products are deposited thereby leaving 15 % of the sale proceeds for the Company to meet its expenses and the remaining 85% are being utilized to pay the dues of sugarcane growers and as per records almost everyday such payments are being made. Such payments, as is evident from the affidavit of opposite party no.3, are being made partially from other sources of opposite party no.6 also. All the assets/ immovable properties of the Company are already encumbered and lenders have first charge on them. If the factory is attached and shut down, it does not help the payment of dues.
Considering the totality of facts and circumstances discussed hereinabove, especially the interest of farmers, so that on the one hand, the sugar mills may continue to run and on the other hand, the farmers of the area may be able to sell their crop to it and reap benefits thereof, we are of the opinion that any direction for coercive measures for recovery of the dues in the present scenario at this stage will not serve the interest of the petitioners. We, accordingly, provide and direct that the Company/ Occupier should clear all the dues of the farmers / petitioners herein along with interest @ 15 per cent per annum on delayed payment, subject to any waiver or reduction in this regard under Section 17(3) of the Act, 1953 as discussed, on the principle of 'first supply, first payment', positively, by 31.03.2022, failing which the Sugarcane Commissioner shall proceed to issue recovery certificate to the Collector for recovery of such dues whereupon the Collectors shall be under an obligation to recover the said dues by exercising all means permissible in law including coercive action against the concerned including the opposite party no.6-Company and its Directors.
The Sugarcane Commissioner would be under an obligation to seriously consider the continued default by the Company in this regard as also to assess its financial capacity to pay cane dues etc, and shall give due weightage to this aspect before reserving/ assigning cane area for the Company for the next crushing season along with other factors mentioned in Rule 22 of the Rules, 1954.
All the writ petitions are disposed of in the aforesaid terms.
Order Date :- 23.12.2021 Shanu/-