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Diwan Sugars Ltd. Thru' Occupier v. Appellate Authority & Others - WRIT - C No. 52681 of 2004  RD-AH 1795 (23 December 2004)
Civil Misc. Writ Petition No. 52681 of 2004.
Diwan Sugars Ltd. ............ Petitioner.
Appellate Authority & others ........... Respondents.
Hon'ble Ashok Bhushan, J.
Heard Sri S.P. Gupta, Senior Advocate, assisted by Sri Vivek Chaudhary, for the petitioner, Sri Sudhir Chandra, Senior Advocate assisted by Sri Yashwant Verma and Sri V.B. Upadhyaya, Senior Advocate, assisted by Sri V.K. Upadhya, for respondent No.3, Sri Atul Mehra for respondent No.4 and learned standing counsel. Counter and rejoinder affidavits have been exchanged between the parties, with the consent of the parties, the writ petition is being finally disposed of.
By this writ petition, the petitioner has prayed for quashing the order dated 25th October, 2004 passed by Cane Commissioner and the order dated 21st November, 2004 passed by appellate authority under Section 15(4) of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (hereinafter referred to as the Act). A writ, order or direction of appropriate nature has further been prayed commanding the respondents not to interfere with the peaceful possession of the petitioner on five cane centres, namely, Matlabpur-I, Matlabpur-III, Chaglad-I, Chaglad-II and Chaglad-III.
Breif facts of the case, as emerge from pleadings of the parties, are; petitioner is a new sugar unit established at village Agwanpur, district Moradabad in the year 1999-2000. The dispute in the writ petition is with regard to five cane purhase centres, namely, Matlabpur-I, Matlabpur-III, Chaglad-I, Chaglad-II and Chaglad-III which cane purchase centres were within the reserved area of petitioner's unit since its very establishment. In the crushing season 2003-04, the aforesaid five centres were included in the reserved area of the petitioner vide order dated 7th November, 2003 of the Cane Commissioner. The Cane Commissioner vide subsequent order dated 11th December, 2003 assigned the aforesaid five cane centres to respondent No.3 which was challenged by the petitioner by means of Writ Petition No.6243(MB) of 2003 which writ petition was disposed of by the judgment dated 17th December, 2003 setting aside the order of the Cane Commissioner dated 11th December, 2003 and the matter was remanded to the Cane Commissioner to pass fresh order after hearing. The Cane Commissioner vide subsequent order dated 23rd December, 2003 passed an order permitting joint purchase to the petitioner as well as respondent No.3 from aforesaid five cane purchase centres. Against the order dated 23rd December, 2003, an appeal was filed by the petitioner which was rejected by the order dated 23rd January, 2004. A writ petition being Writ Petition No. 578(MB) of 2004 was filed by the petitioner challenging the order dated 23rd December, 2003 and 23rd January, 2004. This Court vide interim order dated 28th February, 2004 stayed both the orders passed by the Cane Commissioner. The said interim order is still continuing and the writ petition is pending. For the crushing season 2004-05, the Cane Commissioner vide his order dated 17th July, 2003 passed an order under Section 12(2) of the Act estimating quantity of 99 lacs quintals of sugarcane for the petitioner. The reservation order was passed by the Cane Commissioner with regard to petitioner on 25th October, 2004 by which availability of 73.56 lacs quinitals of sugarcane was estimated for to the petitioner for the crushing season 2004-05. By the same order, the five cane purchase centres mentioned above were assigned to respondent No.3. The order of the Cane Commissioner further noted that for the crushing season 2003-04 the requirement of the petitioner had been fixed 81 lacs quintals and in the said crushing season 46.46 lacs quintals was crushed and the average drawl of the petitioner was 41 per cent. The cane assigned to the petitioner in the crushing season was 112.9 lacs quintals. With regard to respondent No.3 order under Section 15 of the Act was passed by the Cane Commissioner on 25th October, 2004 estimating the requirement of sugarcane for the crushing season 2004-05 as 180 lacs quintals. The order further noted that for the crushing season 2003-04 the requirement of respondent No.3 was assessed as 198 lacs quintals. The total cane reserved/assigned in that year was 326.27 lacs quintals against which respondent No.3 had crushed 143.88 lacs quintals and its drawl was 44 percent. The petitioner filed an appeal under Section 15(4) of the Act challenging the order dated 25th October, 2004 impleading respondent No.3 as respondent. The petitioner challenged in the appeal the assignment of above mentioned five cane purchase centres to respondent No.3. The appellate authority vide its order dated 29th November, 2003 dismissed the appeal of the petitioner against which order the present writ petition has been filed.
Sri S.P. Gupta, Senior Advocate, appearing for the petitioner, challenging the impugned order, submitted that:-
The order of the Cane Commissioner does not give any reason for assigning above mentioned five cane purchase centres to respondent No.3 which was reserved area of the petitioner. The cane production in the remaining reserved area of the petitioner being only 73.56 lacs quintals was far to less than its determinated requirement under Section 12 i.e., 99 lacs quintals. The assignment on the face of it was arbitrary. Against the requirement of 99 lacs quintals of the petitioner, the petitioner was given reserved area of 73.56 lacks quintals. The drawl percentage of the petitioner being 41 it would get only about 30 lacks quintals against its required quantity which was clearly unreasonable and arbitrary. The petitioner in his appeal before the appellate authority has taken grounds challenging the assignment of aforesaid five cane purchase centres as ground Nos. 5, 6 and 7 that looking to the requirement of the petitioner as assessed under Section 12 of the Act, the reservation of only 73.56 lacs quintals was too less. It was also stated in the memo of appeal that as compared to the petitioner respondent No.3 has been provided an area in which 431.97 lacs quintals has been estimated against its assessed requirement of only 180 lacs quintals. Respondent No.3 having been provided large quantity of cane, there was no necessity of assigning the aforesaid five centres. One of the grounds, taken in the appeal was also that petitioner has increased its capacity from 2500 T.C.D. To 5000 T.C.D. The appellate authority did not advert to the aforesaid grounds taken by the petitioner in the memo of appeal challenging the reservation order and without adverting to the grounds which were relevant, the appeal of the petitioner has been dismissed.
Learned senior advocates appearing for respondent No.3, refuting the submissions of the petitioner, contended that there was no invalidity in the reservation order passed by the Cane Commissioner as well as in the appellate order. The appellate authority has adverted to the relevant factors and after considering the relevant criteria as laid down in Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as the Rules), has rightly dismissed the appeal. The petitioner's cane unit is in arrears of cane dues. The cane development society and the cane growers have prayed for assignment of the cane centres with respondent No.3. In the last crushing season in spite of there being order of joint purchase, the petitioner has not been able to run the aforesaid five cane purchase centres. The mere fact that distance of the aforesaid five cane centres is less with the petitioner's unit is not a decessive factor. The appellate authority has considered the relevant factors as provided in Rule 22 of the Rules and has rightly dismissed the appeal of the petitioner. It has been contended that the appellate authority exercises the same power which is being exercised by the Cane Commissioner and the appellate authority has given detailed reasons for dismissing the appeal. The Cane Union and the Sugarcane growers have requested for assignment of the centres with respondent No.3. The figure of availability of 431.97 lacs quintals does not mean that respondent No.3 will be getting the said quantity of sugarcane. Respondent No.3 can get the quantity only to the extent of bonding. All the facts pertaining to above mentioned five cane purchase centres were on the record before the Cane Commissioner and have been considered while passing the order of assignment. It cannot be said that order of the Cane Commissioner is a non speaking order. The crushing capacity of the petitioner is only 2500 T.C.D. and in the reservation proposal for the year 2004-05, the petitioner has incorrectly shown its instal capacity at 4200 T.C.D. and crushing capacity of 5000 T.C.D. The petitioner's unit in its requirement for crushing season 2004-05 has mentioned only 90 lacs quintals and even the requirement of the petitioner of 99 lacs quintals as determined by the Cane Commissioner is not correct.
I have considered the submissions of counsel for the parties and perused the record.
The power of the Cane Commissioner under Section 15 of the Act to reserve an area or assign an area has been conferred for purposes of regulating supply of cane to a factory. Rule 22 of the Rules lays down the criteria which is required to be followed for reserving an area or for assigning an area to a factory by the Cane Commissioner. Rule 22 of the Rules is extracted as below:-
"22. In reserving an areas 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
(c) the quantity of cane supplied from the area to the factory in previous year,
(d) previous reservation and assignment orders,
(e) the quantity of cane to be crushed in factory,
(f) the arrangements made by the factory in previous years for payment of cess, cane price and commission,
(g) the views of the Cane-growers' Cooperative Society of the area,
[(h) efforts made by the factory developing the reserved or assigned assigned area.]"
Admittedly when an area is reserved in favour of a factory certain duties are enjoined upon the factory for purposes of development of the area. The object of the reservation is to develop an area so as to benefit the factory in production of sugar. When an area which is reserved for a factory is assigned to another, the assignment has to be for valid reasons. Even if in a previous crushing season a cane purchase centre which was reserved for a factory had been assigned to another factory, while considering the reservation and assignment in the next year, it has to be considered as to whether there are any special reason for assignment in the present year or not. While considering the similar question, this Court in 1994 All.L.J. 846; M/s Basti Sugar Mills Co. Ltd., Unit Walterganj, District Basti Vs. The State of Uttar Pradesh and others, made following observations in paragraph 22:-
"22. ............................ The fact remains that once an area is reserve for a particular factory, in the absence of any special reasons justifying the adoption of this temporary measure of assignment of an area carved out of the reserved area in favour of a factory to a factory other than the one for whose benefit the area had been reserved there can be no justification for depriving the factory for whom the area had been reserved from the benefits accruing under the reservation made in its favour. It is incumbent upon the authorities concerned to ascertain from time to time and specially when called for by the aggrieved party to find out whether the special circumstances justifying the assignment still continue to exist so as to maintain the continuance of the assignment and continue depriving a factory of the benefits of the entire area reserved in its favour. It seems to me that it is the duty of the answering respondents while carrying out the public law function to hold the balance fairly between the competing sections of the public the cane growers in the present case and the sugar manufacturing producers on the one hand and the sugar producers inter se as well as on the other hand. A delicate, just and equitable balance has to be struck protecting the competing interests of the sugar producers and cane growers, and even sugar producers inter se and at the same time ensuring that public in general does not suffer on account of any fall in the production of sugar. While striking the aforesaid just and equitable balance it has to be kept in mind that the economic viability of the sugar factory/sugar producers is not unduly jeopardised."
In the same judgment, this Court laid down that cumulative effect of the factors as laid down in Rule 22 of the Rules has to be looked into while reserving or assigning any area. Following was laid down in paragraph 25:-
"25. I am further of the view that the factors mentioned in Rule 22 of the Rules framed under the Act only provide guidelines which are not exhaustive but are only enumerative. Further any single factor mentioned therein cannot be taken to be conclusive but cumulative effect to all the factors has to be taken into account along with the other relevant criteria and material including the developments which take place during the currency of the crushing season in order to arrive at a conclusion while striking a delicate, just and equitable balance between the competing interest in the matters relating to reservations of an area or assignment of an area as indicated hereinbefore."
The first submission of counsel for the petitioner is that order of the Cane Commissioner passed under Section 15 of the Act does not give any reason to assign above mentioned five cane purchase centres of the petitioner to respondent No.3. The reply of the submission given by counsel for respondent No.3 is that all the relevant facts were before the Cane Commissioner and the Cane Commissioner before passing the reservation order has taken into consideration earlier reservation orders and other relevant factors and the order cannot be said to be without any reason. As laid down in M/s Basti Sugar Mills' case ((supra)), for assignment of cane centres which fall in the reserved area of another sugar mill, there should be special reasons. Although the Cane Commissioner had given the figures with regard to earlier crushing season but no reasons were given in the order for assignment in favour of respondent No.3 of the aforesaid five cane purchase centres. Against the order of the Cane Commissioner, the petitioner had filed an appeal and taken various grounds in support of the appeal. The appellate authority has decided the appeal after hearing the petitioner which order is subject matter of scrutiny in this writ petition. In view of the fact that appeal has already been decided on merits which order is under challenge in this writ petition, the appellate order has also to be looked into as to whether all relevant factors have been considered or not even in appeal. In this view of the matter, it is not necessary to examine any further the above submissions of the petitioner.
The assignment of five cane purchase centres in favour of respondent No.3 has been challenged by the petitioner contenting it to be arbitrary. It has been contended that the requirement of the petitioner as assessed by the Cane Commissioner is 99 lacs quintals whereas the petitioner has been given an area of 73.56 lacs quintals only which is much less according to requirement as assessed by the Cane Commissioner himself whereas respondent No.3 has been given disproportionally large area. In the order of the Cane Commissioner dated 25th October, 2004 (Annexure-8 to the writ petition), the requirement assessed for respondent No.3 by the Cane Commissioner is 180 lacs quintals and the area given to respondent No.3 is 431.975 lacs quintals i.e., 240% of the estimated quantity. The counsel for the petitioner has referred to Ground Nos.5 and 6 in which the said grounds were specifically taken. According to Rule 22 of the Rules, the quantity of of cane to be crushed in a factory is one of the relevant factor and quantity of cane supplied from the area to the factory in the previous year is also one of the relevant factors to be considered while passing order under Section 15 of the Act. The Ground Nos.4 and 5 were specifically on the above subject which required consideration of the appellate authority. It is true that any one factor under Rule 22 of the Rules is not decessive and cumulative effect of all the factors has to be considered while taking a decision under Section 15 of the Act by the Cane Commissioner or while deciding an appeal under Section 15(4) of the Act. From a perusal of the appellate order, it is clear that the appellate authority in paragraph 12 of the judgment while considering the claim of the petitioner that petitioner's mill has not been provided adequate cane in the crushing year, has observed that in the previous crushing season, the petitioner has crushed only 46.47 lacs quintals and its average drawl was 41% and in the year 2002-03, the petitioner had crushed 54.80 lacs quintals. After stating the above facts, the appellate authority observed that requirement of the petitioner of 99 lacs quintals in this crushing year is not correct. Thus, the case of the petitioner that petitioner has not been provided adequate cane for this crushing year has been met by appellate authority by observing that the petitioner's requirement of 99 lacs quintals for this year is not correct. As noted above, the requirement of 99 lacs quintals of cane for crushing year 2004-05 has been determined by Cane Commissioner himself vide its letter dated 17th July, 2003 as specifically stated in paragraph 5 of the memo of appeal filed by the petitioner. In the order passed under Section 15 of the Act by the Cane Commissioner, the Cane Commissioner himself has stated that requirement of petitioner's unit for the crushing season 2004-05 has been assessed as 99 lacs quintals under Section 12(2) of the Act. It is relevant to note that no proceeding was undertaken by any one under Section 12(3) of the Act for revising the estimate under sub-section (2) of Section 12 of the Act. The appeal was filed by the petitioner challenging an order passed under Section 15 of the Act assigning five cane purchase centres to respondent No.3. It was not open for the appellate authority in deciding an appeal filed by the petitioner challenging an order under Section 15 of the Act to take a view that the estimate of requirement as given by the Cane Commissioner under Section 12(2) of the Act of the petitioner's requirement of 99 lacs quintals is not correct, moreso without giving any reason. This Court in 2001 All. L.J. 741; Govind Nagar Sugar Ltd. Walterganj, Basti and others Vs. State of U.P. and others, had occasion to consider the question as to whether the estimate of sugar cane as determined under Section 12 of the Act is conclusive and final for the purposes of reservation and assignment of the area. Following was laid down by this Court in paragraphs 42 and 45 of the said judgment:-
"42. The Cane Commissioner, is therefore, entitled to provide additional reserved area or assigned area to a sugar factory which needs more sugarcane as against its estimate as prepared under S. 12 during the continuance of the crushing season. A harmonious construction of the provisions of the Act namely sub-section. 12, 15 and 16 and Rule 21 would necessarily mean that an estimate prepared under S. 12 of the Act is final for the purpose of initial declaration of reserved or assigned area, under S. 15(1) and it would not be open for the sugar factory to raise any grievance regarding the same yet it is always within the authority of the Cane Commissioner to provide additional sugar cane to the sugar factory which bona fide feels the shortage of sugracane and requires more sugarcane for producing sugar during particular crushing season or seasons. ......................
45. The answer to the first question, therefore, is that the estimate prepared under the order of the Cane Commissioner himself under S. 12 of the Act has to be adhered to by the Cane Commissioner at the time of passing an order of allotment under S. 15(1) of the Act, unless there are exceptional reasons which might intervene or crop up between the period when the estimate has been published and the reservation order is made under S. 15(1) (not adversely affecting the rights and interest of other sugar factories, cane growers and cane Societies etc.) as well as by the sugar factories. The sugar factories cannot raise any grievance against the estimate so prepared at that stage, yet it is always open to the Cane Commissioner to allot more reserved area or assign further are if he is satisfied about the necessity of providing more sugracane to any factory, during the crushing season, in accordance with the observations made above, in accordance with the provisions of the Act and the Rules."
As laid down by this Court in above judgment, the estimate prepared under the order of the Cane Commissioner has to be adhered to by the Cane Commissioner at the time of passing an order of reservation/assignment under Section 15(1) of the Act, unless there are exceptional reasons which might have intervened or croped up between the period when the estimate has been published and the reservation order is made under Section 15(1). In the present case no such reason has either been pleaded or has been given challenging the estimate under Section 12(1). In deciding an appeal filed by the petitioner challenging the reservation order in so far as it assigns above five cane purchase centres to respondent No.3 it was not open to the appellate authority to observe that the estimate of requirement of 99 lacs quintals to the petitioner as determined under Section 12(2) of the Act is not correct. The appellate authority clearly erred in taking the above view. Thus there is no correct consideration by the appellate authority of the case of the petitioner that it has not been provided the adequate quantity of cane as required by the it. The said factor is one of the relevant factors to be considered under Rule 22 of the Rules with regard to which an erroneous decision has been taken by the appellate authority.
The petitioner has specifically in Ground No.6 has contended that requirement of respondent No.3 has been assessed as 180 lacs quintals whereas it has been provided cane of 431.97 lacs quintals which is much in excess whereas petitioner has been dealt in opposite manner by providing cane less to its requirement. The said ground which was specifically taken in Ground No.6 was relevant for consideration. The question of assignment of five cane purchase centres in the reserved area of the petitioner to respondent No.3 was a relevant issue. The appellate authority has not considered the plea taken in Ground No.6 in its order, hence the order suffers from non consideration of relevant ground. In Ground Nos.5 and 9 of the memo of appeal, it was specifically pleaded that petitioner has increased its capacity up to 5000 T.C.D. The appellate authority did not consider the said ground. The counsel for respondent No.3 has submitted that petitioner cannot validly claim increase of capacity from 2500 T.C.D. to 5000 T.C.D. However, it is not necessary to express any opinion on the said submission, it is only suffice to note that appellate authority has not adverted or considered the said ground. In paragraphs 29 and 30 of the petitioner, the petitioner has challenged the observation of the appellate authority pertaining to liability of the petitioner for payment of cane dues. It has been stated in paragraph 29 of the petitioner that in Writ Petition No.26291 of 2004 (West Sugar Mills Association Vs. State of U.P. and others), this Court passed judgment on 7th October, 2004 upholding the Government order dated 30th June, 2004 providing that petitioners may file their proposal of time shcedule for payment of arrears by 28th of October, 2004 before the
Cane Commissioner and the recovery shall be made according to schedule finalised by the Cane Commissioner. Petitioner's case is that schedule was submitted which has been accepted by the Cane Commissioner and the petitioner is regularly paying its cane dues as per the said schedule. The counsel for respondent No.3 has refuted the submission and submitted that petitioner has not made the payment of cane dues. Reference to the statement dated 11th December, 2004 prepared by the Secretary of Ganna Vikas Samiti filed as Annexure CA-2 to the counter affidavit of respondent No.4 has been made in which dues has been mentioned against the petitioner with regard to Cane Society, Kanth.
Much emphasis has been laid by counsel for respondent No.3 that cane societies as well as cane growers have given proposal for assignment of centres in favour of respondent No.3. It has been stated that in previous season the petitioner could not run the cane purchase centres inspite of there being order of joint purchase and District Magistrate had to intervene permitting respondent No.3 to purchase cane from the aforesaid centres. As observed above any one factor amongst the factors incorporated in Rule 22 of the Rules is not decessive and the cumulative effect has to be seen while taking a decision. As observed above, since the appellate authority has not correctly considered the factor of petitioner's requirement of sugarcane as per its estimated quantity and there has been non consideration of other pleas raised in the memo of appeal, it cannot be said that appellate authority has correctly considered the relevant factors as laid down in Rule 22 and has arrived at a correct decision. As rightly submitted by counsel for respondent No.3 that the appellate authority exercises coextensive power with the Cane Commissioner and relevant factors which were required to have been considered by the Cane Commissioner has also to be considered by the appellate authority.
It is also relevant to note that while considering the question as to whether the five cane centres were assigned to respondent No.3 in the previous cane crushing season or not, the appellate authority has not considered the said factor in correct perspective. As noted above, the order of the Cane Commissioner dated 23rd December, 2003 for joint purchase and the order of the appellate authority dated 23rd January, 2004 was stayed by this Court by interim order dated 28th February, 2004 in Writ Petition No. 578 (MB) of 2004. In view of the above interim order, it cannot be said that the said cane purchase centres were assigned to respondent No.3. The assignment order in favour of respondent No.3 which was earlier made was set-aside by this Court vide its judgment dated 17th December, 2003 passed in Writ Petition No. 6243 (MB) of 2003 and thereafter an order was passed by the Cane Commissioner for joint purchase. From above, this much is clear that above five cane purchase centres were not assigned in favour of respondent No.3 in previous crushing season and the said factor ought to have been considered in that manner. The appellate authority only observed that the interim order dated 28th February, 2004 is only an interim order and writ petition is pending and the dispute pertaining to earlier year is not relevant.
From above mentioned discussions, it is clear that order of the appellate authority suffers from non consideration of relevant factors as laid down in Rule 22 of the Rules and erroneous consideration with regard to some of the factors, as noted above, has made made. The petitioner has made out a case for fresh consideration of all the pleas raised by them in the appeal. The order of the appellate authority dated 29th November, 2004, thus, cannot be sustained and is hereby set-aside. The appellate authority is directed to register the appeal again and decide the same afresh in the light of the observations as made in this judgment after hearing all concerned parties. The parties may appear before the appellate authority on 4th January, 2005 along with certified copy of this judgment. The appellate authority shall dispose of the appeal within two weeks thereafter.
The writ petition is partly allowed to the extent as indicated above.
Parties shall bear their own costs.
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