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M/S SHERVANI SUGAR SYNDICATE LTD. CO. & ANOTHER versus KISAN SAHKARI CHINI MILLS LTD. & ORS.

High Court of Judicature at Allahabad

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M/S Shervani Sugar Syndicate Ltd. Co. & Another v. Kisan Sahkari Chini Mills Ltd. & Ors. - WRIT - C No. 53548 of 2004 [2004] RD-AH 1796 (23 December 2004)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

Court No.21.

Civil Misc. Writ Petition No.  53548  of  2004.

M/s Shervani Sugar Syndicate

Limited Company & another ............ Petitioners

Versus

Kisan Shakari Chini Mills

Ltd. Shekhupur, Budaun & others ........... Respondents.

:::::::::::

Hon'ble Ashok Bhushan, J.

Heard Sri Navin Sinha, Senior Advocate, assisted by Sri Vipin Sinha, for the petitioner, Sri A.K. Mishra for respondent No.1, Sri Ravindra Singh for respondent No.4 and learned standing counsel.

By this writ petition, the petitioners have prayed for quashing the order dated 6th December, 2004 passed by appellate authority allowing the appeal filed by respondent No.1 under Section 15(4) of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (hereinafter referred to as the Act).

The petitioners' company is a limited company which has set-up a sugar manufacturing unit at Newoli, district Etah, namely, Newli Sugar Factory. Respondent No.1 is a sugar manufacturing unit established in the year 1977-78. Respondent No.1 is a cooperative sugar factory which has various cane cooperative societies as its members. The dispute raised in the writ petition is with regard to assignment of eight cane purchase centres to the petitioners' company for the year 2004-05 which centres had been in the reserved area of respondent No.1. The Cane Commissioner by an order dated 2nd November, 2004 assigned purchase centres, namely, Kadar Chowk-2, Silhari, Bankota, Kisruwa, Guldia, Amgaon-2, Lakhanpur-3, Kakoda and Jijaura to the petitioners' sugar factory which centres were in the reserved area of respondent No.1. Against the order dated 2nd November, 2004 passed by the Cane Commissioner, an appeal was filed by respondent No.1 under Section 15(4) of the Act praying that assignment of the aforesaid centres to the petitioners' sugar factory be set-aside and the appellant/respondent No.1 be allowed to purchase sugarcane from the above mentioned cane purchase centres. The appeal filed by respondent No.1 has been allowed by the impugned order dated 6th December, 2004. The petitioners aggrieved by the order dated 6th December, 2004, have filed this writ petition.

Sri Navin Sinha, learned senior counsel appearing for the petitioner, challenging the impugned order, submitted that the appellate authority without considering the question of requirement of sugarcane by the petitioners' sugar factory has committed error in setting aside the assignment order passed by the Cane Commissioner. The requirement of the petitioners' sugar factory as assessed by Cane Commissioner was 55 lacs quintals and looking to the crushing capacity of the petitioners' sugar factory which is 2500 T.C.D., the assignment of the aforesaid centres was rightly made by the Cane Commissioner. Respondent No.1 had been able to crush sugarcane in the last year to the extent of only 13.25 lacs quintals. The case of respondent No.1 that they could not crush the sugarcane due to lack of sugar cane is not supported by any material on the record. The appellate authority allowed the appeal relying only on the criteria of distance which is only one of the criteria under Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as the Rules) ignoring other factors which were in favour of the petitioners. The order has been passed by the appellate authority without proper consideration of Rule 22 of the Rules. It has been further submitted that the Cane Commissioner wrongly took the requirement of sugarcane of the respondent No.1 as 22.5 lacs quintals whereas respondent No.1 in its proposal has claimed requirement of only 18 lacs quintals for the crushing season 2004-05. District Etah having been declared to be a drought hit area for the year 2004-05, the yield of sugarcane was adversely affected which shall be much less than estimation as made on the surveys carried out prior to June, 2004.

Sri A.K. Mishra, learned counsel appearing for respondent No.1, refuting the submissions of petitioners' counsel contended that the order of Cane Commissioner assigning the aforesaid eight centres to the petitioners' sugar factory was wholly erroneous. He submitted that right from start of the sugar factory in the year 1977-78 all the aforesaid cane purchase centres were in the reserved area of respondent No.1 and respondent No.1 has developed the area during the said period. The District Cane Officer and the Cane Society had sent proposal in favour of respondent No.1. Respondent No.1 which is a cooperative sugar factory had been paying the cane growers at the rate of State advised price which was higher than the rate determined by the Central Government at which rate the private sectors were paying to the cane growers due to which there was huge financial liability on the cooperative sugar factories and their functioning was adversely affected on account of the additional financial liability. It has further been stated that in the year 2002-03, the State Government had taken a decision to lease out the sugar factories due to which decision also the functioning of sugar factory was affected. Referring to the judgment of apex Court in West U.P. Sugar Mill's case ( 2004(5) S.C.C. 430) whereby uniform rate of Sugar cane is now required to be paid both by cooperative sector factories as well as private factories, it was stated that respondent No.1 is now well equipped and prepared to crush sugar to its maximum capacity. Various factors which adversely affected the functioning of respondent No.1 during earlier cane crushing season are no longer present and there is no justification for assigning the cane centres in favour of the petitioners' sugar factory for the year 2004-05. Even in the year 2003-04, out of eight centres only three and half centres were operated by the petitioners' sugar factory and other four and half centres remained with respondent No.1. It has been submitted that appellate authority has duly considered criteria as provided under Rule 22 of the Rules and the order passed by the appellate authority is in accordance with Rule 22 of the Rules which do not warrant any interference by this Court under Article 226 of the Constitution.

Learned counsel appearing for respondent No.4 has also filed a counter affidavit and submitted that cane cooperative society has sent proposal in favour of respondent No.1 for giving these centres in favour of respondent No.1 for the crushing season 2004-05. respondent No.4 has also supported the appellate order.

I have considered the submissions raised by counsel for the parties and perused the record.

Section 12 of the Act provides for estimates of requirements by the Cane Commissioner. The said estimation is based on the facts furnished by occupier of the factory and other materials. Cane Commissioner for the crushing season 2004-05 has estimated the requirement of respondent No.1 as 22.50 lacs quintals sugarcane whereas with regard to petitioners the said requirement has been found to be 55 lacs quintals. The cane purchase centres in question were included in the reserved area of respondent No.1 which fact is not disputed. The case of the petitioners is that in the year 2003-04 these cane centres were assigned to the petitioners due to inability of respondent No.1 to crush the entire sugar available in the said area. Reliance has also been placed on the order dated 24th March, 2004 passed by Cane Commissioner by which centres, namely, Kakora, Kadar Chowk, Kisruwa (one part) were assigned to the petitioner. Similarly, Lakhanpur, Bankota and Silhari (second part) were assigned to the petitioners. It has further been brought on the record that the said order has been passed on the recommendation of the District Cane Officer on the basis of the letter dated 14th November, 2003 of respondent No.1 itself.

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

area,

(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 submission made by counsel for the petitioners is that appellate authority has not considered the requirement of petitioners' sugar factory and without entering into the said question has allowed the appeal filed by respondent No.1. The assignment of disputed cane purchase centres in favour of petitioners' sugar factory by the Cane Commissioner has been sought to be justified on the ground that petitioners' sugar factory required sugarcane according to its requirement, hence assignment was justified. The appellate authority, while noting the contentions of both the parties, has noted relevant figures with regard to requirement of petitioners' sugar factory as well as respondent No.1 as assessed by the Cane Commissioner which figures have also been mentioned in the order passed by the Cane Commissioner. The requirement of respondent No.1 for the crushing season 2004-05 has been assessed as 22.5 lacs quintals against 180 days whereas requirement of petitioners' sugar factory for the crushing season has been assessed as 55 lacs quintals. In view of the above submission, it is necessary to consider the requirement of both the sugar factories and the cane which has been made available to both the factories by the Cane Commissioner. From the order dated 25th October, 2004 passed by the Cane Commissioner it is clear that the total cane production which has been provided to the petitioners' sugar factory is 100.786 lacs quintals against requirement of 55 lacs quintals. The drawl of the petitioners' sugar factory of the previous year has been noted as 23 per cent. Assessing on the basis of the drawl of year year, the quantity of the cane made available to the petitioners' sugar factory is 41.81% of the requirement. With regard to respondent No.1 sugarcane made available is 43.59 lacs quintals against the requirement of 22.5 lacs quintals. The drawl of earlier year being 18 per cent and assessing the cane made available on the basis of earlier years' drawl, the cane made available to respondent No.1 is only 34.84 per cent of the required cane in the crushing season in question. It is the case of respondent No.1 that in the area of respondent No.1 there are four khandsari units and 284 power crushers due to which the drawl of sugar cane has considerably reduced. From the above facts, which are on the record, it cannot be said that respondent No.1 was made available greater quantity of sugarcane in comparison to the petitioners. The submission of the petitioners that respondent No.1 claimed only 18 lacs quintals in its proposal for crushing season 2004-05 and Cane Commissioner has wrongly assessed requirement as 22.5 lacs quintals also needs consideration. It has been stated in the counter affidavit that the assessment was submitted by respondent No.1 on the basis of working of 150 days looking to the earlier five years crushing days whereas the Cane Commissioner has fixed requirement taking 180 days, thus there is no error in fixing the quantity at 22.5 lacs quintals by the Cane Commissioner for respondent No.1. The counsel for the petitioner has further submitted that district Etah has been declared drought hit area, hence there will be reduced quantity of sugarcane. In the counter affidavit filed by respondent No.1, it has been specifically mentioned that district Buduan also has been declared to be a drought hit area for the crushing season 2004-05, thus the above submission does not improve the case of the petitioners any further.

Much emphasis has been laid by Sri Navin Sinha that respondent No.1 has not been able to crush entire sugarcane in the last season and he could crush only 13.26 lacs quintals, hence assignment of the centres in favour of the petitioners' sugar factory was justified. The appellate authority has noted the contentions raised by appellant (respondent No.1) in which the fact that respondent No.1 had crushed only 13.26 lacs quintals in 109 days in the year 2002-03  has also been noted. In the counter affidavit, respondent No.1 has given the detail facts pertaining to the circumstances in the earlier year due to which respondent No.1 could not crush the sugar to its capacity. It has been stated that on account of payment of the cane price according to State advised price by the sugar factory, the financial burden of sugar factory was more as compared to private sector and further in the year 2002-03, the State Government had announced its decision to lease out cooperative sugar factories which had adversely affected running of the factory. It has been stated that these factors are not in the current season and respondent No.1 is fully capable of crushing the sugarcane to its maximum capacity and there was no justification necessity for assignment of above centres to the petitioners.

The assignment of the six cane centres out of eight in favour of petitioners' sugar factory was made by the Cane Commissioner on 24th March, 2004 i.e., almost in the end of cane crushing season and that too on the own request made by respondent No.1 which has been noted in the letter of the District Cane Officer which has been annexed at Page 62 of the writ petition and also noted by the Cane Commissioner in his order dated 24th March, 2003. It is open to a sugar factory to request for assignment of a centre during currency of a  season to any other factory due to any special reason and mere fact that a request was made for assignment in a particular season cannot be a ground for assignment of the said centre to another factory in the next crushing season.

Elaborating his submission, counsel for the petitioners contended that distance cannot be only criteria for reservation/assignment of a centre. It is admitted to the petitioners that distance of the said centres from the factory of respondent No.1 as compared to the petitioners is much less. It is also on the record that the the cane has to pass from the factory gate of respondent No.1 when the sugarcane is taken from above assigned centres to the petitioners' sugar factory. The said fact heavily is in favour of respondent No.1. The submission of counsel for the petitioners that the order has been passed by appellate authority only on the basis of distance factor is not correct. The appellate authority has adverted to the factors as laid down in Rule 22 of the Rules and has found several factors present in favour of respondent No.1. Following factors have been taken into consideration by respondent No.1 in allowing the appeal:-

(A) Centres are at a less distance from the factory of respondent No.1.

(B) There is facility of transport.

(C) The respondent No.1 has fully paid off its cane dues.

(D) The District Cane Officer has recommended in favour of respondent No.1.

(E) Last year the centres were reserved for respondent No.1.

The appellate authority has also taken into consideration the assignment of six centres in favour of the petitioners' sugar factory in the last year and has rightly observed that the said assignment, which was done almost in the end of crushing season, i.e., on 24.3.2004, cannot be basis for assignment in favour of the petitioners in this year.

The cumulative effect of Rule 22 of the Rules with regard to various factors mentioned therein have to be taken by the authorities. The appellate authority has adverted to various factors as mentioned in Rule 22 and considering the case on the basis of Rule 22 has rightly set-aside the assignment order passed in favour of the petitioners.

The order of the appellate authority having taken into consideration the relevant rules and the relevant factors indicated therein while deciding the appeal, no infirmity can be said to have been committed by the appellate authority in allowing the appeal. This Court in exercise of writ jurisdiction will not sit in appeal over the order of the appellate authority. No error has been pointed out by counsel for the petitioners in the appellate order warranting interference by this Court under Article 226 of the Constitution of India. No grounds have been made out to interfere with the impugned order.

The writ petition lacks merit and is summarily rejected.

Dated 23.12.2004.

Rakesh


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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