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The Kanoria Sugar And General Manufacturing Company Ltd. v. Cane Commissioner, U.P. & Others - WRIT - C No. 19444 of 2004 [2004] RD-AH 385 (28 July 2004)


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Civil Misc Writ Petition no 6687 of 2004

The Kanoria Sugar & General Manufacturing Co Ltd Captainganj, Distt Kushinagar

                                    ...  Petitioner


Cane Commissioner, UP Lucknow and others  

                                                    ... Respondents

Advocates for Petitioners

Sudhir Chandra

Manu Khare

Advocate for Respondent

Sudhir Kumar Agrawal

Subhas Rathi

PMN Singh

Amit Singh

SK Misra


Hon'ble Yatindra Singh, J

Hon'ble VS Bajpai, J

Date of Judgment : 28.7.2004


Connected with

Civil Misc. Writ Petition No 19444 of 2004

The Kanoria Sugar and General Manufacturing Company Ltd.  Vs. Cane Commissioner, UP and others.

(Delivered by Hon'ble Yatindra Singh, J)

1. The question involved in this writ petition is 'Whether in the circumstances of the case, the respondents be permitted to proceed with the recovery proceeding'


2. The Central Government issued a notification dated 12.12.2002 fixing statutory minimum  price for sugar cane (SMP) under the Sugar Cane Control Order 1966  for the crushing season 2002-03 at the rate of Rs. 64.50 (stated to be at Rs. 68.30 for the petitioner).  Subsequently by another notification dated 9.1.2003 it was increased by Rs. 5/- and  was fixed at Rs. 69.50 (stated to be at Rs. 73.60 for the petitioner). The UP Sugar Mills Association (an association of sugar mills in the State of UP) on behalf of its 39 members (that included the petitioner)  filed a writ petition no. 897 of 2003 before the Delhi High Court challenging the notification dated 9.1.2003. In this writ petition no interim order was granted however, an oral assurance was given before the court by the  Additional Solicitor General of India on behalf of the Union government. This   is so mentioned by the Attorney General of India in a letter sent to Senior Standing Counsel, High Court of Karnatka, Banglore in the month of February 2003. A copy of this letter was also sent to the counsel for  UP Sugar Mill Association before the Delhi High Court for information.  The letter of the Attorney General of India is as follows:

'The Delhi High Court in the sugar price fixation matter has not passed any interim order.  However, an oral assurance was given by Mr. Mukul Rohatagi, Additional Solicitor General of India that no coercive proceedings by way of recovery will be taken till the next date of the petition.

A similar assurance should also be given to the Karnataka High Court when the matter comes up tomorrow and is adjourned to enable the government to file counter affidavit.'

3. The writ petition filed before the Delhi High Court was transferred to the Supreme Court on 22.3.2004 in transfer petition (C) No. 174-178 /2003. We understand that the matter is still pending before the Supreme Court.  In the meantime, the recovery proceedings were started against the petitioner. It related to the dues for the crushing seasons of 1977-78, 2001-02 and 2002-03. The petitioner company filed writ petition no. 46171 of 2002 (the earlier writ petition) against recovery before this court. This writ petition was disposed of on 10.12.2003. At the time of decision,  the dispute was confined to the recovery regarding increase of Rs. 5/- in the  SMP for the crushing season 2002-03. The Cane Commissioner was directed to decide the case again after affording reasonable opportunity to the parties. The relevant part of the order is as follows:

'The learned counsel for the petitioner states that the grievance of the petitioner in this writ petition now stands confined to the question in regard to the recovery of the State Advised Price and the amount towards revised statutory minimum price as notified on 9.1.2003 by the Central Government. The State - respondent, it may be noticed, has raised a demand for the payment of Rs. 1127.59 Lac which is required to be distributed to the concerned Ganna Samitis.

The Additional Advocate General on the instruction received from the State Government - the respondent no. 12 - has submitted that no recovery of amount towards State Advised Price for the current year (2002-2003) is neither intended, nor will be made from the petitioner.

The learned Additional Advocate General further states that the demand now raised which is impugned in the writ petition, will not include any amount towards the State advised price & the unenforceable revised statutory minimum price. It is further stated by the learned Additional Advocate General that the demand in question will be scrutinised again and will be rectified/modified accordingly by the Cane Commissioner concerned after affording an opportunity of hearing  to the petitioner in case necessity so arises.

It is further stated that in case the Sugar Mill and the concerned cane growers associations have arrived at any price by mutual agreement in regard to the price of sugar case, in that event agreed price will prevail and the demand raised will not go beyond that.


Taking into consideration the facts and circumstances as brought on record as well as what has been noticed herein above, this writ petition is disposed of finally providing that the impugned demand shall not include any amount towards the State advised price as well as the unenforceable revised statutory minimum price. The demand already raised shall be scrutinised again expeditiously by the Cane Commissioner concerned after affording an opportunity of hearing to the petitioner and shall be rectified/modified accordingly within a period not later than a month from today.'

4. The Cane Commissioner after hearing the case passed an order on 7.2.2004 and attached 50,000 bags of sugar on 11.2.2004. The petitioner has filed writ petition no. 6687 of 2004 against these orders. During pendency of  the first writ petition the respondents by orders dated 5.5.2004, 6.5.2004 and 7.5.2004 further attached 1,66,214 bags of sugar, machinery, and the bank accounts of the petitioner; the Tehsildar has also been permitted to sell  the sugar bags. The petitioner has filed writ petition no. 19444 of 2004 against the same.

5. It is not disputed by the parties that the disputed recovery in these two writ petitions is because of the increase of five rupees in SMP of sugar cane for the crushing season of 2002-03 by notification dated 9.1.2003. The dispute regarding validity of this notification is pending before the Supreme Court. The question is whether in these circumstances, the respondents are justified in proceeding with the recovery.


6. We have heard, Sri Sudhir Chandra, Senior Advocate assisted by Sri Manu Khare, counsel for petitioner; Sri Sudhir Agrawal, Additional Advocate General, State of UP assisted by Ms. Subhash Rathi standing counsel for the State of UP; Sri PMN Singh, Senior Advocate assisted by Sri Amit Singh for the Cane Federation and cane societies; and Sri SK Misra counsel for the Union of India who had obtained instructions in these writ petitions at the request of the court.

7. The counsel for the petitioner submitted,

(i)There is oral assurance by the Union Government for not enforcing the increase in SMP of sugarcane and recovery can not be made.

(ii)The increase of five rupees in SMP  of sugarcane is unenforceable revised SMP, as envisaged in the order dated 10.12.2003 in the earlier writ petition.

(iii)Crushing season is due to start soon. The attachment should be lifted immediately so that salary etc may be paid to staff. It would be against the public interest if the factory is not able to crush sugar cane.

(iv)No interim order was passed by the Delhi High Court due to oral assurance by Additional Solicitor General of India. The writ petition before the Delhi High Court was  listed, but the court  never applied its mind and assurance is deemed to continue till any specific order is passed.

8. The counsels for the respondents neither disputed the letter sent by the Attorney General of India nor the oral assurance given by the Union government before the Delhi High Court as mentioned in the letter but submitted that,

(i)The Delhi High Court had neither jurisdiction to entertain the writ petition for grievances of  mills situate in UP nor there was any propriety in filing the writ petition before the Delhi High Court.

(ii)The sugar mills have been choosing different High Courts  to avoid just and legal payment to sugar cane growers.

(iii) The respondents are neither interested in selling the machinery nor the sugar bags, but their endeavour is that legal payment should be made to the sugar cane growers.

(iv)There is neither any interim order by the Delhi High Court (or the Supreme Court) nor any written undertaking by the  Central  government. The oral assurance is not part of any order.

(v)The assurance given on behalf of the Central government before the Delhi High Court was only till the next date to enable the Central government to file counter affidavit. The counter affidavit has been filed but assurance has not been extended. The case has been listed before Delhi High Court on many days but oral assurance was not extended.

(vi)It is in public interest to make payment to sugar cane growers who are poor farmers of the state of UP and in any case sufficient safeguards should be adopted so that payment is ensured to them.


9. It is correct that there is no interim order in the case; it is also correct that there is no written undertaking before the Court; it is also correct that the oral assurance given by the Central government was not specifically extended; there is some justification for objecting filing of writ petition before the Delhi High Court  in view of decision of Supreme Court in M/s Kusum Ingots & Alloys Ltd.  vs. Union of India and another : JT 2004 (Suppl.1) SC 475. Nevertheless there is some justification in the contention raised by the counsel for the petitioner:  the oral assurance was given by the Central government, and thereafter there  is neither any specific order nor the court applied its mind to this question.  The dispute of increase in SMP by notification dated 9.1.2003 is not subject matter of these two writ petitions. It is not pending before this court. It is pending before the Supreme Court. In these circumstances, we do not consider it proper to decide whether oral assurance will continue or not ( see below for cases cited by the parties).1 The propriety demands that the parties may approach Supreme Court in this regard.

10. It is not disputed that the crushing season is likely to start.  It is in public interest that sugar cane growers should be paid but also that sugar mills should crush the cane. In case mill is closed then this will entail loss in public revenue, and job reduction. Looking into the circumstances of the case and considering the fact that  no objection was raised at the time when the earlier writ petition was decided, we think it proper to dispose of these writ petitions with certain observations and directions balancing the equities of the parties


11. The writ petitions are disposed of with  observations and directions as mentioned in the next paragraph. In imposing these conditions we have been guided by;

The Supreme Court decision in Agauta Sugar and Chemicals vs. State of UP and others: 1997 (5) JT 415 );

The submission of the respondents that they are not interested in selling the machinery or sugar bags but are interested  in immediate payment of SMP to sugar cane growers; and

The fact that sugar can not be sold unless release order is issued by the Central Government.

12. The observations and directions are as follows:

(i) Respondents may permit the petitioner to carry on work  in anticipation of the crushing season 2004-05. They may not create hindrance in the same in their day to day work.

(ii) The sugar bags and the machinery only will continue to be attached and may be sold as indicated below.

(iii) The concerned District Collector may  assess the quantum of the attached sugar bags that would be sufficient to meet the payment of price of the sugar cane together with interest.  On so assessing, he will first permit the petitioner  to sell that quantum of stock of sugar, in case the sugar bags can be sold only after release order from the Central government, then on such release order being issued.  The entire sale proceeds would be credited towards payment of the impugned recovery. The Collector will depute a responsible officer of his collectorate to be present at the time of sale. The officer would ensure that the sale would be made only of the  permitted stock and that the sale proceeds are credited towards payment of recovery. On the amount being so deposited, it would immediately be paid to the cane growers.  The machinery will be sold only if the sale of sugar bags is unable to meet the recovery. The attachment would be cancelled as soon as entire recovery amount is recovered.  

(iv) The attachment of the bank account is removed so that the day to day functioning of the petitioner mill may work smoothly. However, in case the money from the sale of sugar bags is not credited towards the recovery then it would be open to the respondents to attach the bank account again.

(v) The aforesaid observations and directions are subject to any order by the Supreme Court. In case of any order it would be open to the petitioner to file application before the Cane Commissioner to modify, suspend or reduce the amount of recovery.

With these observations and directions, the writ petitions are disposed of.

Dated:  28.7.2004



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