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Kisan Sahakari Chini Mills Limited Thru' Its Occupier v. State Of U.P. Thru' Its Secretay And Tohers - WRIT - C No. 2163 of 2006  RD-AH 1981 (25 January 2006)
Reserved on 18.01.2006
Delivered on 25.01.2006
Civil Misc. Writ Petition No. 2163 of 2006
Kisan Shakari Chini Mills Limited
Sneh Road, Nazibaad District Bijnore through
State of U.P. and others
Hon'ble V.K. Shukla,J.
Petitioner sugar mill i.e. Kisan Sahakari Chini Mills Limited Sneh Road Nazibabad, District Bijnore is a State Co-operative sugar mill. The state Government is the maximum share holder of the Mill. The crushing capacity of the petitioner's sugar mill is 3000 T.C.D. (Tones crushing per day) and for the crushing season 2005-06 the Cane Commissioner, U.P. Lucknow, respondent no. 2 on 17.10.2005 passed reservation order in favour of the petitioner's sugar mill. In pursuance to the said reservation order Cane Commissioner U.P. has curtailed the cane area of the petitioner and in the curtailment he has allowed 30 Cane Centers 14197 hect. Cane area having yield of cane production of 91.19 lacs quintals by reserving the same in favour of the M/s Uttam Sugar Mill Ltd. Barkatpur, Nazibabad, District Bijnore. Qua M/s Uttam Sugar Mill Ltd. Barkatpur, Nazibabad, District Bijnore reservation order dated 18.10.2005 has been passed by Cane Commissioner, U.P Lucknow. Said sugar mill has started crushing on trial basis and its requirement has been assessed on 117 lac quintals for its crushing . Crushing capacity of said mills is 7000 TDC. Petitioner has contended that against the reduction of the cane area by the reservation order the petitioner has filed an appeal under Section 15(4) of the U.P. Sugarcane (Regulation of Supply and Purchase) Act 1953 before respondent no. 1 on 30.10.2005, claiming nine centres namely Nagal-A, Nevada-A, Nevada-B, Kiratpur Kheri, Budhpur, Mauzampur-A Mauzampur-B, Musseepur (Naya) for reserving in favour of the petitioner. The order passed in favour of the petitioner was also questioned by M/s Uttam Sugar Mill Ltd. Barkatpur, Nazibabad, District Bijnore by preferring Appeal under Section 15(4) of the Act, claiming 12 centres namely (1) Nagal-B (2) Jalpur (3) Mandauli (4) Mohanpur (5) Bhaguwala (6) Ramdaswali (7) Ismailpur (8) Fazalpur (9) Shahpur Shukkha (10) Jatinwala (11) Bhaneda and (12) Kashirampur. Petitioner in the said appeal appeared and filed objection and contended that there was poor drawl and geographical situation was altogether different, details of last year Crushing and distance was also furnished and thereafter said appeal has been decided on 06.01.2006 and four centres namely Nagal-B, Jalpur, Mandauli and Ismailpur has been assigned and offered to M/s Uttam Sugar Mill Ltd. Barkatpur, Nazibabad, District Bijnore. At this juncture present writ petition has been filed.
Counter affidavit has been filed on behalf of M/s Uttam Sugar Mill Ltd. Barkatpur, Nazibabad, District Bijnore , respondent no. 3 and it has been contended that respondent is newly established sugar unit which has started crushing cane from 15.09.2005 and its crushing capacity is 7000 TCD. It has been contended that as per Section 12 of the Act estimate of quantify of cane required by the answering respondent is 126 lacs quintals. It has further been contended that order which has been passed is based on valid consideration as distance and requirement of the answering respondent has been considered which is a newly established unit so that sufficient cane is supplied. Details regarding the applicability of factors of Rule 22 has been set out as follows in the said counter affidavit:
(a) The distance of the area from the factory- This factor is in favour of answering respondent unit as the centers in dispute are nearer to the answering respondents unit. The distance of the disputed four centers from the petitioner as well as answering respondent's unit are given below:
Distance from petitioner's unit
Distance from respondent's unit
(b) Facilities for transport of cane from the area: This factor is also in favour of the answering respondent as centers in dispute are nearer to its unit.
(c) The quantity of cane supplied from the area to the factory in previous year: This factor is not applicable for answering respondent unit where as in the last crushing season the petitioner could purchase just 5.08 lacs quintals of cane against the total availability of 15 lacs quintals which comes to a drawl of just 34.6% , so that this factor cannot said to be in favour of the petitioners.
(d) Previous reservation and assignment orders: This fact is not applicable for answering respondents unit and this factor cannot be said in favour of the petitioner when a new sugar mill unit is established. Re-arrangement/re-allocation takes place between the existing sugar factories just list in the present case.
(e) The quantity of cane to be crushed in factory: This factor is in favour of answering respondent's unit as the crushing capacity of answering respondent is 7000 TCD as compared to 3000 TCD of the petitioner which is 233% more crushing capacity than the petitioner which means answering respondents needs 233% more sugar cane than the petitioner.
(f) The arrangement made by the factory in previous years for payment of cess, cane price and commission: This factor is also not applicable for answering respondent's unit as the concerned society is being supplying cane to the petitioner's unit since last many years so they might be favoring them.
(g) The view of the cane growers co-operative society of the area: This factor is also not applicable for answering respondent's unit as the concerned society is being supplying cane to the petitioner's unit since last many years so they might be favoring them.
(h) Efforts made by the factory in developing the reserved or assigned area; This factor is also not applicable in case of answering respondent unit as there was no reserved or assigned area before this crushing seasons. But it is pertinent of mentioned here that when the answering respondent was in process of establishing its sugar unit the Cane Commissioner passed an order dated 10.3.2005 permitting the answering respondent to start its development activities in a certain area including the area covered by the disputed four centers and the answering respondent has spent an amount of Rs. 51 lacs over all and Rs. 10 lacs in disputed cane purchase centers it clearly shows that the answering respondent is serious to develop its reserved/assigned area.
In this background it has been contended that order which has been passed is just and proper and as such no interfere be made by this Court.
Counter affidavit has also been filed on behalf of Cane Co-operative Development, Union Ltd. and therein it has been contended that the order which has been passed is unjustifiable order and it is unreasonable to reserved these four centers in favour of M/s Uttam Sugar Mills. In pith and substance claim of petitioners have been supported.
Rejoinder affidavit has been filed to the counter affidavit filed on behalf of contesting respondent no. 3 and therein it has been contended that respondents are not serious about crushing and it is merely trial season for them and it has been reiterated that illegally 30 cane purchase centers by which 14197 hectare cane area having cane production of 91.19 lacs quintals sugar cane has been reserved in favour of the respondent no. 3 by the Cane Commissioner and besides the above 30 centers the four purchase centers under dispute has also been illegally reserved by the appellate authority by modifying the reservation order passed by the Cane Commissioner in favour of the petitioner sugar mill. These four centers were neither reserved nor assigned in favour of the respondent sugar mill and as such the appellate authority has committed a serious error by diverting the same. Much stress has also been laid on the fact that unnecessarily reliance has been placed on the report relating to Bajaj Hindustan Ltd. which has no relevance. Details have also been furnished that all the centers are far away from the petitioner sugar mill due to the geographical situation, hill area, forest and Malan river. The Cane Commissioner has divided the centers on the basis of half of the aerial distance. It has also been contended that while passing the reservation order Nagal -B purchase center which was though nearer to the respondent mill was kept reserved for the petitioner sugar mill as where Kiratpur purchase center which was nearer to the petitioner sugar mill was reserved for the respondent sugar mill. Jalpu, Ismail pur and Mandawali purchase centers are the reserved centers of the petitioner sugar mill from the inception and are nearer to the petitioner sugar mill than the respondent sugar mill. It has also been contended that facilities of the transport of cane from the area has been developed by the petitioner sugar mill. It has further been contended that there is shortage of sugar cane. In this background it has been contended that writ petition is liable to be allowed.
Sri Ashwani Kumar Misra, Advocate appeared on behalf of the petitioner. Learned Standing Counsel has entered appearance on behalf of respondent no. 1 and 2. Sri V.B. Upadhayay, Senior Advocate, assisted by Sri Ravi Pratap Advocate, has entered appearance on behalf of M/s Uttam Sugar Mills, respondent no. 3 and Sri Ravindra Singh, Advocate has entered appearance on behalf of respondent no. 4 Cane Cooperative Development Union Limited, Nazibabad, Bijnore. Each one of the respective counsel advanced arguments qua the respective claim of the parties represented by them.
Sri Ashwani Kumar Misra, Advocate contended with vehemence that M/s Uttam Sugar Mills, respondent no.3 is newly established Unit and adjustment has to be made for the aforesaid unit but such adjustment has to be made in equitable and judicious manner and here in the present case unnecessarily on totally unsustainable ground four cane purchase centers have been diverted to respondent no. 3, M/s Uttam Sugar Mills ignoring various factor enumerated under Rule 22 of the 1953 Rules, as such decision making process is faulty on the face of it, consequently interference be made and writ petition be allowed.
Sri V.B. Upadhayay, Senior Advocate, assisted by Sri Ravi Pratap Advocate countered the said submission by contending that in the present case answering respondent is newly established unit and adjustment has to be made from the area which has been reserved for the petitioner and in the present case each and every relevant factor has been taken into consideration while passing the order namely distance, capacity, and requirement and as such order in question is clearly sustainable and liable to stand, as such no interference be made by this Hon'ble Court.
Sri Ravindra Singh, Advocate has contended that cane growers opinion has been totally ignore which is one of important factor contained under Rule 22 of 1954, as such said order is vitiated.
Before considering the contentions raised by the rival parties, it will be convenient to peruse certain provisions of the Act and Rules which have a bearing on the issue. Under sub-Section (1) of Section 15 the Cane Commissioner may, after consulting the Factory and Cane Growers Co-operative Society in the manner to be prescribed, reserve and assign any area for the purposes of supply of cane to a factory in accordance with the provisions of Section 16 and may likewise at any time cancel such order or after the boundaries of an area so reserved or assigned. Section 16 confers powers upon the State Government to regulate the sale or purchase of Cane in any reserved or assigned area. It also confers power to regulate the manner in which cane grown in the reserved area or the assigned area shall be purchased by the factory for which the area has been so reserved or assigned. Section 17 provides that the occupier of a factory shall make such provisions for speedy payment of the price of cane purchased by him and upon the delivery of cane he shall be liable to pay immediately the price thereof. Section 5 of the Act lays down the manner in which Development Council will be constituted and Section 6 lays down the functions thereof basically for improving the quality and yield of sugarcane. In exercise of powers conferred by Section 28 of the Act, the State Government has farmed U.P. Sugarcane (Regulation of Supply and Purchase) Rules 1954 (hereinafter called as the Rules). Sub-rule (f) defines 'Purchase Center' and it means any place at which cane is purchased, supplied delivered, weighed or paid for and includes such portion of the premises of a factory as is used for any of these purposes. Rules 22 of the Rules reads as follows:
22. In reserving an area for or assigning an area to a factory or determining the quantity of cane to be purchased from an area by a factory, under Section 15, the Cane Commissioner may take into consideration-
(a) the distance of the area from the factory,
(b) facilities for transport of cane from the area,
(c ) the quantity of cane supplied from the area to factory in previous year
(d) previous reservation and assignment orders,
(e) the quantity of cane to be crushed in the factory
(f) the arrangement made by the factory in previous year for payment of cane price and commission,
(g) the views of the Cane Growers' Co-operative Society of the area
(h) efforts made by the factory in developing the reserved or assigned area.
Chapter IX of the Rules gives in details the procedure for payment of price of cane supplied to a Sugar Factory.
A perusal of Section 15 of the Act would show that the order assigning or reserving any area has to be made after consulting the Factory and Cane-growers Cooperative Society. The ownership of the Cane any vests with the procedure and normally he is entitled to sell the same to any one he likes. Naturally he would like to sell the Sugarcane to the person who offers him the best price without any delay. The Act, however imposes a restriction upon him and by virtue of an order issued under Sub-section (1) of Section 15 the Cane grower is compelled to sell his sugarcane to the factory to whom his area has been assigned or reserved. The Legislature has enacted Section 17 which makes provision for immediate payment of price to the seller of sugarcane. Therefore, promptness with which price is paid is a very important factory which has to be kept in mind at the time of passing of an order assigned or reserving any area in favour of a sugar factory. The Cane-growers Cooperative Society is expected to watch the interest of the produces and it is for this reason that it is obligatory upon the Cane Commissioner to consult the Society before passing any order of assignment or reservation. The heading of Section 15 is 'Declaration of reserved area and assigned area'. The right and forum of appeal against the order of the Cane Commissioner made under sub-Section (1) of Section 15 have been provided in sub-Section (4) of the same section. It, therefore, follows that the State Government has also to hear the concerned factory and Cane-growers Co-operative Society while deciding an appeal.
Rules 22 gives some guidelines as to how the power of assigning or reserving any area has to be exercised by the Cane Commissioner. It mentions several factors which have to be taken into consideration. Apart from the distance of the area from the factory, the facility of transport, previous reservation and assignment orders, quality of cane to be crushed in the factory views of the Cane-growers Co-operative Society, arrangements made by the factory for payment of price etc. in previous years and efforts made by the factory in developing the area have also to be taken into consideration. Sub-rule (b) lays emphasis upon facilities for transport which is also important inasmuch as in a given case an area may be at a shorter distance from one factory than another but on account of better facility of transport it may be more convenient for the Cane-growers to supply sugarcane to the factory which is at is greater distance. Similarly sub-rule (f), which makes the payment of price in earlier years relevant, is very important from the point of view of cane growers. If the factory has defaulted in payment of price and the dues of the Cane-growers are not paid for a long time, they would not be willing to supply their produce to such a factory. Prompt payment of price is of primary importance to the Cane-growers as it takes almost a year before sugarcane crop is ready for harvesting. The cane-growers who have nurtured their crop for about a year would not like to wait for further period, if they have made the supply to the sugar factory. Under sub-rule (h) effort made by the factory in developing the area for producing more and better quality of cane also becomes relevant. If a factory has invested heavy amount in developing an area as a result whereof the quality of sugarcane has improved, naturally it would like the said came to be supplied to its factory. The provisions of the Act and Rules show in unmistakable terms that the order for assignment or reservation of an area has to be passed after taking into consideration various factors and it cannot be based upon one solitary consideration.
Under the provisions of U.P. Sugarcane (regulation of Supply and Purchase) Act 1953 and the Rules framed thereunder, it is obligatory for the authorities to pass order balancing the interest of the sugar factories as well as cane growers. Underlining idea of the Act is to ensure maintenance of reasonable supply of sugarcane required by the sugar factories from the producers of sugarcane and in turn to ensure a fair return to the cane-growers. The competitive interest of the sugarcane growers and sugar manufacturers have to be protected at the same time. The main purpose of the act is to provide mechanism for reasonable, necessary, sufficient and continuous supply of sugarcane to the sugar factories in the crushing season keeping in mind the interest of the cane growers, the Cane Growers' Cooperative Societies, the sugar factories and also inter se interest of the sugar factories. The exercise undertaken by the authorities should not be guided for extending benefit to one of the parties, it should be fair exercise and on account of the exercise so undertaken none of the parties should be unduly benefited, rather a fair effort ought to be made so that interest of each one of the parties is protected.
At this juncture, as before this Court, these type of issues has been consistently raised and are virtually in the shape of annual events, this Court has taken note of the provisions of 1953 Act and the rules framed thereunder and has held that real purpose of the Act is to ensure the maintenance of reasonable supply of sugarcane to sugar producers in order to secure a reasonable return on their overall production. In the case of M/S Basti Sugar Mills Ltd. Vs. State of U.P., 1994 HVD (All) Vol II: 1994 All. L.J. 846, this Court has taken the view that purpose of Act is to regulate supply and purchase of cane for sugar factories, and while doing so interest of not only cane grovers and sugar producing factories but interest of sugar producing factories interse is also to be protected, and the way and manner in which such exercise is to be undertaken. Relevant paragraphs 15 to 24 are being quoted below:
"15. Under the provisions contained in the U.P. Sugarcane (Regulation of supply and purchase) Act, 1953, the words 'assigned area', 'cane', 'reserved area' and 'crushing season' stand detailed. The 'assigned area' according to Section 2 (a) of the Act means an area assigned to a factory under Section 15 of the Act, 'cane' according to Section 2 (c) means sugarcane intended for use in the factory or Gur or Rab, or Khandsari sugar factory unit, 'reserved area' according to Section 2 (n) shall mean the area reserved for a factory under an order of reservation of sugar cane area made under rule 125-B of the Defence of India Rules, 1962 and when no such order is in force, the area specified in an order made under Section 15 of the Act, the 'crushing season' according to Section 2 (1) of the Act means as period beginning on the 1st October in any year and ending on the 15th July next following.
16. The provisions contained in Section 12 of the Act stipulate that the Cane Commissioner may for purpose of section 15 by order require the occupier of a factory to furnish in the manner and by the date specified in the order to the Cane Commissioner an estimate of the quantity of cane which will be required by the factory during such crushing season or crushing seasons as may be specified in the order and it further stipulates publication thereof with or without modification which estimate can also be revised. The provisions contained in Section 14 of the Act stipulate that the State Government may for purpose of Section 15 by order provide for a survey to be made of the area proposed to be reserved or assigned for the supply of cane to a factory. The provisions contained in Section 15 of the Act stipulates that the Cane Commissioner may after consulting the factory and cane Growers Cooperative Societies reserve any area called reserved area and assign any area called assigned area for the purpose of supply of cane to a factory in accordance with Section 16 during one or more crushing season as may be specified and may likewise at any time cancel such order or alter the boundaries of an area so reserved of assigned. It also provides that when any area has been declared reserved for a factory, the occupier of such factory, if so directed by the Cane Commissioner purchased all the cane grown in that area which is offered for sale to the factory. It further stipulates that where any area has been declared as assigned area for a factory, the occupier of such factory shall purchase such quantity of cane grown in that area and offered for sale to the factory as may be determined by the Cane Commissioner. The provisions contained in section 16 of the Act stipulate that the State Government may for maintaining supplies by order require the distribution, sale or purchase of any cane in any reserved or assigned area and purchase of cane in any area other than a reserved or assigned area, and may prescribe the quantity of cane to be supplied by each cane grower or cane Growers Cooperative Society in such area to the factory for which the area has been reserved or assigned and the manner in which the cane grown in the reserved area or assigned area shall be purchased by the factory for which the area has been so reserved or assigned etc. the provisions contained in Section 17 of the Act stipulate imposition of various liabilities on the factories.
17. A perusal of the various provisions of the Act clearly indicate that while regulating the supply and purchase of the cane for the sugar factories the interests of not only the cane growers and the sugar producing factories but interests of the sugar producing factories interse also has to be protected and further healthy relations between occupiers and managers of factories Cane growers, Cane Growers Cooperative Societies, Cane Development Council has also to be secured. Those provisions have the effect of creating various rights and imposing various liabilities on the sugar factories and the cane growers.
18. On a consideration of the various provisions of the Act and the scheme underlying them as well as the Rules framed thereunder it seems to me that the real purpose is to ensure the maintenance of a reasonable supply of sugar cane to the sugar producers in order to secure a reasonable return on their over all production and investment provided the units are run economically securing on the other hand the interest of the cane growers. The provisions of the Act read together with the Sugar Cane Price Control Order make it abundantly clear that the cane price has to be fixed for determining the fair costs of the production of sugar in order to maintain regular supply of sugar it is necessary to have a regular supply of sugar cane. The supply of sugarcane depends upon the area actually brought under sugar cane cultivation. The agriculturist should have necessary incentive to grow sugarcane instead of other crops. It is in this view of the matter that the minimum price for the sugarcane which the producer of sugar should pay to the sugarcane grower on a future date has to be fixed.
19. The reservation or assignment of an area contemplated under the Act requires a detailed exercise involving the preparation of estimate of the availability of cane, its quantity extent of expected recovery of sugar effective duration of the crushing season, quantity of sugarcane crushable by sugar factories, the estimates of sugar production and likely working condition that will prevail in the particular season. In addition to the factors enumerated in Rule 22 of the Rules framed under the Act which stipulates that while reserving an area for or assigning an area to a factory or determining the quantity of cane to be purchased from an area by a factory under section 15 the Cane Commissioner may take into consideration the distance of the area from the factory, facilities for transport of the cane from the area, the quantity of cane supply for the area to factory in previous year, previous reservation and assignment orders the quantity of cane to be crushed in the factory, the arrangements made by the factory in previous year for payment of purchase tax cane price and commission and the views of the Cane Growers Cooperative Societies of the area and the buildings made by the factory in developing the reserved or assigned area.
20. The order of the Cane Commissioner dated 01.11.1993 was based on the estimates as indicated herein before and had been passed before the crushing season started. The facts and figures on the basis of which these estimates are prepared before the start of the crushing season may very during the progress of the season and the actualities and the developments which come to light with the progress of the crushing season and have a bearing on the estimates on the basis whereof the orders regarding reservation and assignment are passed before the beginning of the season cannot be ignored. In fact determination of the area to be reserved and assignment to be effected has to be continuous process depending upon the exigencies of the situation and the changing factors which come to the light with the progress of the crushing season. The factors on which the estimates are chalked out before the beginning of the crushing season may very during the progress of the crushing season and in order to adjust the equities such the developments which take place and now factors which come to light if brought to the notice of the concerned authorities may justify alterations and modifications in the boundaries of the reserved area or may warrant change. In the assignment orders at the beginning of the season. The scheme of the Act vests the authorities concerned with ample jurisdiction to very or alter the reserved or assigned area during the currency of the crushing season to meet the exigencies of the situation. This is obvious from what has been specifically provided for in sections 15 and 16 of the Act.
21. In the present case that is obvious is that on the basis of estimates the Cane Commissioner had before the start of crushing season reserved an area comprising of nine purchase centers including "Tlnlch" in favour of the petitioner but had assigned the purchase Centre Tlnlch to the respondent sugar company. The word "assign" is a word of widest significance in respect to the nature of the transfers to which it relates. It was so observed by a Full Bench of this Court in its decision in the case of Behari Lal and others Versus Mohammad Muttakl reported in 20 ILR 482. It can safely be held that to assign means transfer from "A" to "B" of one or more obligations that "A" owed to "B". It vests in the assignee the right and remedies in respect of the subject matter. In the context of the various provisions of the Act and in view of the scheme underlying, it the "assignment" contemplated under Section 15 or 16 of the Act has to be of a temporary face or nature to begin with which in the exigencies of the situation may be continued during the entire period of the crushing season or can be done away with all depending upon the development which take place during that period. The fact remains that once an area is reserved 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 order 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 he duty of the answering respondents while carrying out the public law function to hold the balance fairly between competing sections of the public that cane growers in the present case and the sugar manufacturers producers on the one hand and the sugar producers interse as well 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 jeopardized.
22. It has to be emphasized that the above aspect cannot be lost sight of as the law does not operate in a vacuum and the language of a statutory provision is not a static vehicle of ideas and concepts. It cannot be interpreted without taking into account the social economic and political setting in which it is intended to operate. The provisions of the statute must be invested with a meaning which will harmonize the law with the prevailing concepts and values and make it an effective instrument of delivering justice.
23. It may further be emphasized that where an Act imposes a duty it is always implied that unless the contrary intention appears the duty is to be performed from time to time as occasion arises. As an appellate authority being vested with the jurisdiction which is coextensive with that of the Cane Commissioner the respondent No. 1 ought to have taken into account all the factors indicated herein above in order to arrive at a correct conclusion and arrangement should have been secured based on objective criterion founded on relevant material.
24. I am further of the view that the factors mentioned in rule 22 of the Rules framed under the Act only provides guidelines which are not exhaustive but are only enumerative. Further any single factor mentioned therein cannot be taken to be conclusive but a cumulative effect of 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 reservation of an area or assignment of an area as indicated herein before."
Similarly, in the case of Govind Nagar Sugar Ltd. Vs. State of U.P. and others 2001 (1) AWC 65 (L.B.), this court has adverted to the scope of proceedings under Sections 12, 15 and 16 of the Act and the Rules in this respect, and the way and manner in which proceedings are to be undertaken. Paragraphs 32 to 47 of the judgment is being quoted below:
"32. Section 12 deals with the estimate of sugarcane which is likely to be consumed by a sugar factory in a particular crushing season whereas rule 21 requires the sugar factory to apply for an area which it wishes to get under reservation order or by assignment under Section 15 for the purpose of having the required supply of sugarcane as determined under Section 12 (1). Apparently the two provisions operate in two different fields and deal with two different aspect of the supply of sugarcane but in substance it is the quantity of sugarcane which is essentially required to be determined for continuous supply to the sugar factory.
33. The requirement of giving the details of actual quantity of the sugarcane crushed for the last three seasons coupled with the area reserved and the new areas proposed gives an opportunity to the Cane Commissioner to regulate the supply of sugarcane in a more effective manner so that it meets the object of the Act. The contention of the learned counsel for the petitioner that a joint reading of provisions of Section 12 and rule 21 does not make the estimate prepared under section 12 conclusive and final, does not take into account at all, that Section 12 qualifies the sugarcane required whereas rule 21 apparently requires the declaration of such area reserved or assigned which may be capable of supplying the estimated required sugarcane. The estimate thus prepared under section 12 and duly published by the Cane Commissioner which has not been challenged in revision before the State Government or if challenged, such estimate which has been ultimately finalized by the State Government shall be final only for the limited purpose for declaration of reserved or assigned area under Section 15 of the Act. The words 'for the purposes of section 15' occurring in section 12 speak about the intention of the Legislature. The words 'for the purpose of Section 15' are of some significance and importance. "Purpose' means the result, which is desired to obtain and which is kept in mind in performing an action. The corollary is that the provisions of Section 12 have been incorporated in the Act for achieving the desired result and determination of estimate so made has to be kept in mind by the Cane Commissioner in performing duties under Section 15. The same phraseology has been used in Rule 21 also. The distinction as pointed out earlier is that under Section 12 it is quantity of the sugarcane which is estimated and under Rule 21 it is the area which is required to be reserved or assigned for meeting the said requirement of sugarcane under Section 15.
34. The dictionary meaning of the word 'estimate' given in Webster Dictionary is a judgment of size, number, quantity, value, distance quality etc. esp. of something which needs calculation or assessment. An estimate can vary according to context, from a rough guess to close determination, a statement of cost or charge which would be involved in a given piece of work or a tender to carry it out for a certain sum.
35. The learned State Counsel on the strength of the meaning of the word 'estimate' submitted that since it is rough calculation, it may vary when a close determination is to be made, the estimate prepared under Section 12 may or may not be conclusive but the Cane Commissioner has got full authority to allot more sugarcane even at the time of passing of initial order of allotment of assigned and reserved area under Section 15 of the Act. He also placed reliance on Rule 21 in support of his above submission.
36. No doubt the term 'estimate' denotes a rough calculation or rough assessment which may vary when actually determined but in view of opportunity given to the sugar factory for providing estimate under Section 12 (1) and thereafter the exercise to be under taken by the Cane Commissioner who is to examine the requirement objectively before publishing the same in accordance with sub-clause (2) of Section 12 attaches an element of finality to the aforesaid determination. The finality is further reflected when an opportunity has been provided by means of statutory right of revision against the notification of the Cane Commissioner. The purpose, therefore, is that the Cane Commissioner may have an exact picture as far as possible with respect to entire cane available in the area and the requirement of every sugar factory, as in the absence of such an assessment, it may not be possible for the Cane Commissioner to make a just order of reservation under section 15 (1). In case every occupier of the sugar factory is permitted to ignore the estimate published under Section 12 at the time of passing of reservation order under Section 15, the whole scheme of the Act may not be effectively carried into. Thus, if the Cane Commissioner relies upon the estimate prepared under Section 12 for the purpose of declaration of reserved or assigned area under Section 15 (1) unless there is something very exceptional, it cannot be said that any illegality has been committed by him. This does not mean even if a sugar factory bona fide requires more sugarcane than the quantity estimated for such sugar factory, would not have any right to take any additional sugarcane or Cane Commissioner would not have any authority or power to allot more sugarcane by making further reservation of area or assignment in his favour. The supply of sugarcane by means of reservation and assignment of an area is a continuous process throughout the crushing season and as and when the shortage is felt, to the satisfaction of the Cane Commissioner by a sugar factory, it can be made good either by making reservation or assignment of further area. Thus, there are two stages under the Act for declaration of reserved area or assigned area, namely; (1) under Section 15 initially, i.e., at the start of crushing season when the reservation has to be made and (ii) secondly at all point of time during the entire crushing season when additional sugarcane is required by any sugar factory.
37. This proposition specifically flows from the provisions of Section 15(1) and Section 16. The statute authorizes the Cane Commissioner to cancel any area of reservation and assignment or alter the boundaries of an area so reserved or assigned during the crushing season. Section 16 provides for regulation of supply and purchase of sugarcane in a reserved or assigned area and it has been enacted with a view to maintain the supply and for that purpose the State Government has been empowered to regulate the distribution and supply of sugarcane in any reserved or assigned area and its purchase. The power of reservation and assignment includes also, the power of cancellation and alteration of such areas.
38. The Cane Commissioner is therefore, entitled to provide additional reserved area or assigned area to sugar factory which needs more sugarcane as against its estimate as prepared under Section 12 during the continuance of the crushing season. A harmonious construction of the provisions of the Act, namely, Sections 12, 15 and 16 and Rule 21 would necessarily mean that an estimate prepared under Section 12 of the Act is final for the purpose of initial declaration of reserved or assigned area, under Section 15(i) 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 sugarcane and requires more sugarcane for producing sugar during particular crushing season or seasons. Rule 21, sub-clause (2) provides that the Cane Commissioner may, for any special reason, entertain an application for reservation or assignment of an area, made after the commencement of a crushing season. The phrase for any special reason though qualifies but does not negate the powers of the Cane Commissioner to provide for reservation and assignment of an area to a sugar factory if area allotted to it is not found sufficient to cater the need of the factory. There may be occasions when one sugar factory to whom a certain quantity of sugarcane is available from its reserved or assigned area for various reasons is not in a position to crush the entire sugarcane available in that area and at the same time there may be a sugar factory which finds shortage of sugarcane in its reserved area during the crushing season and in such a situation the Cane Commissioner can very well assign any specified area out of reserved area of the later factory to the first factory. The cases may also arise where a particular sugar factory is lying closed or has decided not to undertake the crushing in a particular crushing season for some reason or the other and in such case the areas which form part of the reserved area of such sugar factory can be assigned to any other sugar factory in accordance with the provisions of the Act and the Rules.
39. The interest of the sugar factory is not jeopardized or adversely affected as they are at full liberty to make appropriate request to the Cane Commissioner for either further reservation of an area or assignment of an area with a view to have an additional sugarcane in case they bona fide establish that area allotted to them has not been adequate and they are feeling shortage of sugarcane in the continuing crushing season.
40. The aforesaid proposition and the provisions also keeps the sugar factory in bound as every sugar factory wishes to have the maximum reserved area or assigned area and some times their demand may be highly excessive, much more than the quantity of sugarcane actually required. Such contingency can also be checked by taking the estimate to be final for initial declaration of the reserved or assigned area and thereafter, after testing the veracity of the demand of any sugar factory for sugarcane further reservation or assignment can be made by the Cane Commissioner. Such action would neither be in conflict or contravention of the Act nor would be prejudicial to the interest of the sugar factories or cane growers or Cane Grower's Cooperative Societies.
41. The answer to the first question, therefore is that the estimate prepared under the order of Cane Commissioner himself under Section 12 of the Act has to be adhered to by the Cane Commissioner at the time of passing an order of allotment under Section 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 Section 15 (1) (not adversely affected 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 area if he is satisfied about the necessity of providing more sugarcane 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
Question No. 2 (ii) Whether there can be an order of joint purchase of sugarcane in favour of two or more sugar factories in respect of one reserved area?
42. So far the question of joint purchase by two or more than two sugar factories with respect to one reserved area is concerned, it is to be noticed that the Act has been promulgated for the purpose of smooth functioning of the sugar mills so as to give them an opportunity of having a reasonable quantity of sugarcane throughout the crushing season which supply should not be marred by any unhealthy competition and cause the exploitation ether by the cane growers or by the Cane Growers' Cooperative Societies or by the sugar factory in the vicinity or otherwise. The sugar factories are bound to take sugarcane from their own reserved area or assigned area and likewise cane growers/Cane Growers Cooperative Societies are equally bound to supply the sugarcane to such sugar factories. The question of joint purchase by two or more than two sugar factories form one reserved are cannot be in consonance with the scheme and object of the Act in other words, the Act and the Rules do not envisage reservation or assignment, one particular area in favour of two or more sugar factories
43 The learned counsel for the petitioner argued that in a situation where one reserved area is reserved for the benefit of two or more than two sugar factories, that would be a case of permission to the cane growers to sell their sugarcane to the sugar factory of their choice, namely the willing cane growers can sell their sugarcane to any one of the sugar factory. Much stress has been laid upon the provisions of Section 13 of the General Clauses Act to emphasize that phraseology used in Section 15 (1) shall hold good for number of factories on the strength that singular includes plural. It has also been argued that instances are no less in number in the last several years where such orders have been consistently passed by the Cane Commissioner permitting the willing cane growers to sell their sugarcane to sugar factories of their choice and therefore, it is to be presumed that such order of Joint Purchase can be passed by the Cane Commissioner.
44. Section 15 provides for declaration of reserved area or assigned area which reservation or assignment has to be done in relation to a particular factory. The words in sub-section (1) of Section 15 namely ...... after consulting the Factory and Cane Growers' Cooperative Society in the manner to be prescribed the Cane Commissioner shall reserve any area or assign any area for the purpose of supply of sugarcane to a sugar factory would not mean that wherever the word factory, cane growers and Cane Growers Cooperative Society has been used is to be read in plural. In sub-section (2) of Section 15 it has again been provided that where any area has been declared reserved area for a factory the occupier of such factory shall if so directed by the Cane Commissioner, purchase all the cane grown in that area which is offered for sale to a factory. Likewise in sub-section (3) of Section 15 it has been provided that where any area has been declared as assigned area for a factory the occupier of such factory shall purchase such quantity of cane grown in that area and offered for sale to a factory as may be determined by the Cane Commissioner. Sub-sections (2) and (3) of Section 15 deals with the quantity of the sugarcane available in the reserved area or assigned area as the case may be and cast a duty and obligation upon such sugar factory to whom the area has been reserved or assigned to purchase the sugarcane from the cane growers of that area which is offered for sale to the factory. In case the liberty is given to the cane growers to sell any quantity of sugarcane to any sugar factory in a case where the area has been reserved or assigned to two sugar factories or more than two sugar factories, the purpose and the meaning of sub-sections (2) and (3) of Section 15 would be defeated.
45. The power of Cane Commissioner to cancel the area of reservation or assignment of an area or alter the boundaries of reserved or assigned area also supports the view that in case of any necessity to allot existing, one reserved are or assigned area to two or more than two sugar factories the same can be done by altering boundaries. The alteration of boundaries would necessarily mean the exclusive privilege of a particular sugar factory of getting the supply from the area so demarcated and not to two more than sugar factories. Section 16 also supports the said premises.
46. Rules 22 also speaks for reservation and assignment of a reserved area to a factory and determination of the quantity of cane to be purchased by the factory under Section 15. Besides this under the provisions of U.P. Sugarcane (supply and purchase) Order 1954 and agreement has to be entered into. An agreement with respect to offer by a cane grower or Cane Growers Cooperative Societies from a reserved area has to be executed in Form-A to the Appendix attached to the Act for achieving the main object and purpose of continuous sugarcane supply to the sugar factory without there being any chance of exploitation and unhealthy competition between the cane growers and the Cane Growers Cooperative Societies or inter- se producers of sugar the reservation and assignment of an area has to be done in a manner which protects the interest of all the parties and gives a reasonable return of their investment to the sugar factories permitting the units to run economically and also securing the interest of the cane growers and their societies. The scheme, therefore postulates for reservation and assignment of an area to one factory at a time and if one particular area is permitting to be occupied by two or more factories for the purchase and sale of sugarcane by willing cane growers the same may lead to various complications and inequitable distribution of sugarcane.
47. It is not that in case during the crushing season, one sugar factory requires more sugarcane the same cannot be made available to it by the Cane Commissioner. As already said the Scheme of the Act gives ample power to the Cane Commissioner to change or alter the area during the season to meet the exigency of the situation. It is always obligatory upon the authorities to ascertain whether the circumstances rests for allowing more reserved area and making an assignment in favour of sugar factory or not, for meeting the requirement of the sugar factory. If some part of the reserved or assigned area of one sugar factory is to be alloted to another sugar factory is to be allotted to another sugar factory also, then the same can be done by the Cane Commissioner only by altering the boundaries i.e. by demarcating the exclusive area for each sugar factory."
This Court in the case of DCM Shriram Industries and another Vs. State of U.P. and other decided on 22.03.2005 while considering the case of newly established Sugar Factory concluded that the main purpose of the Act is to provide mechanism, for reasonable, necessary, sufficient and continuous supply of sugarcane to the sugar factories in the crushing season keeping in mind the interest of the cane growers, the Cane Grower Cooperative Societies, the Sugar Factories and also inter se interest of the sugar factories and when new factory is established then same sugarcane area, which is earlier reserved has necessarily to be parted with or taken away from them to cater the requirement of the newly established sugar factory and then in order to arrive at balance between conflicting claim of two sugar factory, who have lost their reserved/assigned areas to the newly established sugar factory, it was necessary for Cane Commissioner to have passed an order distributing the loss of cane areas amongst the competitive sugar factory in an equitable and fair manner. Idea is that no one should undue benefit. Relevant extract of the aforementioned judgment is being quoted below:
"From the facts, which have been noticed hereinabove, it is not in dispute that because of the establishment of a new sugar factory by M/s Bajaj Hindustan Ltd. at Kinoni, Meerut, the Cane Commissioner in exercise of powers under Section 12 and 15 of 1953 Act read with Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as Rules, 1954) has to ensure availability of sugarcane to the newly established Sugar Unit at Kinoni, Meerut. The underling idea of the Act is to ensure the maintenance of reasonable supply of sugarcane required by the sugar factories from the producers of sugarcane and in turn to ensure a fair return to the cane-growers. The competitive interest of the sugarcane growers and sugar manufacturers have to be protected at the same time. The main purpose of the Act is to provide mechanism for reasonable, necessary, sufficient and continuous supply of sugarcane to the sugar factories in the crushing season keeping in mind the interest of the cane growers, the Cane Growers' Cooperative Societies, the sugar factories and also interse interest of the sugar factories.
Since there may be sugar factories more than one in number, which may claim certain areas as the reserved area looking to their location or because of setting up of new sugar factory, the obligation extends upon the authorities to watch the inter-se interest of such sugar factories also. The purpose of the Act, the duty and obligation cast upon the Cane Commissioner as well as upon the State Government have already been considered in detailed by the Hon'ble Single Judge of this Court in the judgment reported in 2001(1) AWC 65; Govind Nagar Sugar Ltd. Vs. State of U.P. and others (Supra). Suffice is to refer to paragraph 9 of the said judgment as well as to the relevant portion of paragraph 16 of the Division Bench judgment in the case of Simbhaoli Sugar Mills Ltd. (Supra), which read as follows:
"9. The main purpose of the Act is, to provide mechanism for reasonable, necessary, sufficient and continuous supply of sugarcane to the sugar factories in the crushing season keeping in mind the interest of the cane growers, the Cane Growers' Cooperative Societies, the sugar factories and also inter-se interest of the sugar factories. The supply of sugarcane to the sugar factories in the quantity which may be reasonably required by them for production in a particular season or seasons is to be regulated by the provisions of this Act. While watching the interest of the sugarcane growers', it is implicit and obligatory upon the authorities to strike a balance in the interest of sugar factories and cane growers. Since there may be sugar factories more than one in number, which may claim certain areas as the reserved area looking to their location, the obligation extends upon the authorities to watch the inter-se interest of such sugar factories also.
16. ......It is gleaned from the various provisions of the Act, Rules and the above referred Order of 1954 that various factories submit an estimation of their requirements according to their crushing capacity on the basis of which the Cane Commissioner passes the order of reservation. The philosophy is to ensure the maintenance of reasonable supply of sugarcane to the sugar producers and securing, on the other hand, the interest of cane growers."
For achieving the said purpose of the act, supply and purchase of cane finds mention in Chapter-3 of the Act. The said Chapter provides for determination of estimated quantity of sugarcane, the manner and by whom. The reservation/assignment of areas including the manner and procedure to be adopted in doing so. Reference Section 12, Section 15 read with Rules 21 and 22. It has specifically been held in paragraph 41 of the judgment (in Govind Nagar Sugar Mills case) that the estimate prepared under the order of Cane Commissioner under Section 12 of the Act has to be adhered to by the Cane Commissioner at the time of passing an order of allotment under Section 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 Section 15(1) (not adversely affecting the rights and interest of other sugar factories etc.). 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 area if he is satisfied about the necessity of providing more sugarcane to any factory, during the crushing season, in accordance with the provisions of the Act and the Rules.
In the facts of the present case the estimate worked out under Section 12 in favour of the petitioner sugar factory as well as respondent no. 4 sugar factory is not a subject matter of consideration before this court. Moreover, it was never challenged before the Prescribed Authority under Section 12(3) of the Act.
Having estimated the quantity of sugarcane, which may be needed by the respective sugar factory in a particular crushing season, the said estimate becomes basis for providing reserved area or assigned area to a sugar factory and it is for this purpose the occupiers of sugar factories are required under rule 21 of the 1954 Rules to indicate to the Cane Commissioner in Form-1 Appendix-III their options for reservation or assignment of sugarcane areas to the sugar factories during the crushing season. The Cane Commissioner after receipt of all such proposals from the sugar factories, thereafter passes an order of reservation/assignment under Section 15 for the purposes of ensuring supply of required quantity of sugarcane as determined under Section 12(1) to the sugar factory concerned with specific reference to the guidelines as mentioned in rule 22. At this stage it would be worthwhile to refer to the observations made by the Division Bench of this Court in the judgment reported in 2000(3) A.W.C. 1867; Simbhaoli Sugar Mills Ltd. Vs. Appellate Authority and others, in paragraph 11, which reads as follows:
".......It goes without saying that when a new sugar factory is established in a sugarcane growing area, in which one or more such factories are operating from before, then sugarcane area has necessarily to be re-allotted/re-reserved balancing in a reasonable way the competitive claims of all the sugar factories operating in the area. Some sugarcane area which had earlier been allotted or reserved for the operating sugar factories has to be parted with or taken away from them to cater to the requirement of the newly established sugar factory in the area. There can be no escape from such as situation."
Thus, re-allocation/re-balancing of the cane areas in the facts of the case was necessarily required because of the establishment of a new sugar factory by M/s Bajaj Hindustan Ltd. namely Kinoni Sugar Factory, Meerut and the Cane Commissioner, in order to achieve the purpose of the Act, passed the reservation order dated 8th October, 2004, which has already been detailed as above, provided for (a) assignment of 62 cane purchase area, assigned/reserved in the previous years in favour of the petitioners sugar factory, to the other sugar factory including Kinoni Sugar Factory for the crushing season 2004-2005 (b) assignment of 72 sugarcane area to the petitioner sugar factory, which were traditionally reserved or assigned areas of other sugar factories. Similarly, in respect of the Respondent No. 4 sugar factory, under the order of reservation dated 8th October, 2004, as many as 71 new cane areas were assigned, which were originally reserved or assigned areas of other sugar factories.
In these 72 cane purchase areas assigned to the petitioners' sugar factory (in order to compassionate the loss to sugarcane because of 62 purchase areas having been taken away) were included (29+1) cane purchase areas, which were traditionally reserved/assigned areas of Respondent No. 4 sugar factory, which lead to the filing of Appeal No. 6/36 of 2004. The State Government in the order under challenge has assigned following reasons:
(a)As against 400.68 lac quintals of sugarcane allotted under the reservation order dated 8th October, 2004 to Respondent No. 4, the availability of the quantity has been reduced to 334.60 lac quintals because of amendment/revision of the reserved/assigned areas of Respondent No. 4 due to subsequent orders of the Cane Commissioner/State Government.
(b)Admittedly, there is a shortage of sugarcane qua the requirement of petitioner sugar factory as well as Respondent No. 4 sugar factory. However, since Respondent No. 4 is a bigger sugar factory, the difficulties faced by the said sugar factory is more.
(c)All 29+1 disputed cane purchase areas were assigned/reserved areas of Respondent No. 4 sugar factory for last so many years.
(d)None of the condition specified in rule 22 have been mentioned in the reservation order for assigning the aforesaid 29+1 disputed cane purchase areas of Respondent No. 4 sugar factory to the petitioner in the order of the Cane Commissioner.
(e)The petitioner had not asked for the aforesaid 30 cane purchase areas in their application under Rule 21 and therefore no assignment could have been made.
(f)The contention of the petitioner that he was not afforded opportunity of hearing before passing the order dated 8.10.2004 by the Cane Commissioner, is contradictory to his own stand that the Cane Commissioner is authorized to pass reservation/assignment order according to the needs of sugar factory and to amend the proposal as submitted by the sugar factories.
(g)No reasons have been assigned in the impugned order for the large-scale alteration in the reserved and assigned areas of the Respondent No. 4.
Therefore, the order assed by the Cane Commissioner dated 8.10.2004 has been set aside. In respect of 29 cane purchase areas inasmuch as in respect of one centre namely Idrishpur, appeal no. 61 was still pending.
In the opinion of the court the impugned order is legally not sustainable in the eyes of law. It is an undisputed fact that because of the establishment of new sugar factory namely M/s Bajaj Hindustan Ltd. at Kinoni, it was obligatory for the Cane Commissioner, in view of the provisions quoted hereinabove, to re-allocate/re-reserve by a balancing order, the reserved/assigned areas of various sugar factories of the previous years, so as to provide sugarcane to the new sugar factory and to balance in a reasonable way competitive claims of all sugar factories operating in the area. Some sugarcane areas, which earlier reserved, had to be parted with or taken away from them to cater the requirement of the newly established sugar factory. In order to arrive at balance between conflicting claim of two sugar factory, who have lost their reserved/assigned areas to the newly established sugar factory, it was necessary for Cane Commissioner to have passed an order distributing the loss of cane areas amongst the competitive sugar factory in an equitable and fair manner so that the loss caused to the sugar factories, because of sugarcane having provided to the newly established sugar factory is equally distributed and equally shared by all the sugar factory. In such circumstances, if the Cane Commissioner, having regard to the requirements of newly established sugar factory, has withdrawn reserved/assigned area from the Respondent No. 4 sugar factory and assigned the same to the petitioner sugar factory and simultaneously compassionate the Respondent No. 4 sugar factory by assignment of cane purchase areas of other sugar factories so as to strike at balance with regards to conflicting interest of the sugar factories, it cannot be said that any illegality or infirmity has been committed by the Cane Commissioner.
It is needless to point out that in the case where a new sugar factory is established in an area, where there are existing sugar factories it is but necessary that certain reserved/assigned areas of sugar factory already in existence must necessarily be withdrawn and reserved or assigned to new factory. Guidelines under the provisions of rule 22 must give way to the achievement of the purpose of the Act. More so, in such a fact situation a new sugar factory cannot answer the requirement of rule 22. As a logical consequence re-arrangement/re-allocation, which takes place between existing sugar factories, for compensating the loss of sugarcane as aforesaid also must be judged on the parameter of equal distribution of the loss caused without attaching much weightage to the guidelines under rule 22. The State Government/Cane Commissioner are under legal obligation to ensure that there is equal distribution of the sugarcane to all the sugar factories including the new sugar factory and loss caused to the existing sugar factory because of such distribution is equitably apportioned amongst all existing sugar factories. Setting aside of the order of the Cane Commissioner in such circumstances on the reason that the guidelines mentioned in rule 22 have not been taken care of while assigning 29 disputed cane areas to the petitioner sugar factory under the reservation order. cannot be justified.
Even otherwise it may be pointed out that equitable distribution of sugarcane among sugar factories is the basic object of the act. The requirement is estimated for each sugar factory under Section 12 for the purposes of reservation/assignment under Section 15. It is only then that Rule 21 and Rule 22 come into play. The guiding factors mentioned under Rule 22 are only a tool to achieve the basic objective of fair distribution of sugarcane. The provisions of Rule 22 have therefore to be read as a means to achieve the basic purpose of the Act and to not a provision to obstruct the achievement of the basic goal of equal distribution.
While by making an order of reservation/assignment, the Cane Commissioner has to apply his mind to various factors including the establishment of new sugar factory viz-a viz the guidelines provided for under rule 22 and has to strike a balance in respect of the conflicting claims of sugar factories for ensuring equity distribution of sugarcane on one hand and on the other hand the interest of the sugar factory, cane-growers and the cane growers' cooperative societies."
Now on the touch stone of the principles laid down in the aforementioned judgments, claim of parties is being adverted to. Here in the present case the ground for assigning four purchase centers in favour of the petitioner as disclosed in the order dated 06.01.2006 is that for current crushing season petitioner has been assigned117.80 lacs quintals sugar cane whereas in the last year for 161 working days on the average drawl of 29% petitioner had crushed 45.63 lacs quintals of sugar cane whereas they were reserved 153.80 lacs quintals. It has further been mentioned that two centers Nagal-B and Jalpur are at the mill gate as such it is not proper to assign said center to petitioner. Further it has been mentioned the Mandawli and Ismailpur are at the distance of 8 and 9 Km. respectively, as such it is inappropriate to give said two center to petitioner. Apart from this it has been mentioned that seeing the crushing capacity and its requirement it would be necessary. Apart from this no other reasons have been assigned. It is true that when new sugar mill is established then some sugarcane area which had earlier been alloted or reserved for operating sugar factories has to be parted with or taken away from them to cater to the requirement of newly started sugar factory in the area and there can not be escape from such a situation. The Cane Commissioner has to re-allocate/re-reserve by balancing order as to provide sugarcane to new factory and to balance in reasonable way competitive claims of all sugar factories operating in the area. Guidelines provided for under 1954 Rules has to be taken into consideration for balancing the interest of new factory and of the existing factory in the said area. Various guiding factors mentioned under Rule 22 are tool to achieve the basic objective of fair distribution of sugarcane. Guidelines under Rule 22 cannot answer to various requirement qua newly established sugar factories namely Clause (c) of Rule 22 which provides consideration of the quantity of cane supplied from the area to the factory in previous year; Clause (d) of Rule 22 which deals with Reservation and assignment orders, and Clause (e) of Rule 22 which deals with the arrangements made by the factory in previous year for payment of cess, cane price and commission. These factors qua new factories have to be ignored but other factors have to be kept in mind namely distance of area of factory, facilities of transportation from cane area, quantity of cane crushed in factory, the view of Cane Growers Cooperative Society of the area and the efforts made by factory in developing the for reserved and assigned area.
Here in the present case the State Government has made much emphasis on the distance but has not at all adverted to other relevant factor provided for i.e. facilities of transportation from the cane are quantity of cane to be crushed in the factory; view of cane growers society and efforts made in developing the reserved/assigned area State Government has mentioned in the impugned order that respondent would get required sugar cane. At no point of time any endeavor or attempt has been made by the appellate authority to see as to what more loss would be caused to the petitioner in case four more centers are taken away from them especially when 30 centers had already been taken away in the past.
As relevant consideration have been ignored as such order dated 06.01.2006 passed by respondent no. 1 is hereby quashed and set aside. Matter is remitted back to be decided afresh after taking into consideration, respective claim set up by the parties within next one month from the date of receipt of certified copy of the order
For the reasons stated above, present writ petition is allowed.
No order as to cost.
13th January 2006
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