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SHAKUMBARI SUGAR & ALLIED INDUSTRIES LIMITED versus STATE OF U.P. & OTHERS

High Court of Judicature at Allahabad

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Shakumbari Sugar & Allied Industries Limited v. State Of U.P. & Others - WRIT - C No. 77370 of 2005 [2005] RD-AH 7889 (20 December 2005)

 

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

Reserved on 20.12.2005

Delivered on 13.01.2006

Civil Misc. Writ Petition No. 77370 of 2005

Shakumbari Sugar and Allied Industries Limited

Todarpur, Saharanpur, through its Constituted Attorney

Versus

State of U.P. and others

Hon'ble V.K. Shukla,J.

Petitioner in the present writ petition is assailing the validity of the order dated 14.12.2005 passed by the Principal Secretary, Sugar Industry and Cane Development Lucknow by means of which the order of reservation made in favour of the petitioner on 04.10.2005 has been modified by assigning Cane centre Sharkhari Kumar in favour of M/s Daya Sugar Limited Gagelheri, District Saharanpur in exercise of its appellate power vested under Section 15(4) of U.P. Sugar Cane (Regulation of Supply and Purchase) Act 1953(herein after called the Act).

Petitioner is a company  registered under the Indian Companies Act 1956 with its registered office at Jagran Building, 2, Sarvodaya Nagar, Kanpur Nagar. Factory of the petitioner is situated at village, Todarpur, district Saharanpur where it is engaged in the manufacture of white crystal sugar through vacuum Pan Process system. The crushing capacity of the petitioner is 3500 TCD( Tones crushing per day). In  exercise of power vested under Section 15 of the Act 1953.  The Cane Commissioner, Lucknow on 04.10.2005 passed order of reservation and in the said reservation so made at serial no. 29, 30, 31 and 33  of Part I Sunderpur, Biharigarh, Sherpur and Sarkhari Kumar were shown reserved in favour of petitioner. M/s Daya Sugar Limited Gagelheri, district Saharanpur, aggrieved against the  order of reservation, as such preferred appeal dated 14.10.2005. On the said appeal being filed petitioner entered appearance and filed reply on 21.11.2005.

History of past litigation has also been mentioned in the writ petition by contending that in the past when the Cane Centers in dispute were reserved in favour of the petitioner on 08.10.2004 then in similar fashion  appeal has been preferred and appeal preferred on behalf of respondent no. 3 has been dismissed. It has also been contended that said appeal was dismissed on 11.03.2005 and against the same Civil Misc. Writ Petition No. 34553 of 2005 was filed which was ultimately disposed of on 03.05.2005. It has been contended that while disposing the said writ petition by this Hon'ble Court, observation was made to the effect that in case M/s Daya  Sugar Limited has been continuing crushing operation it may purchase sugarcane from the reserved area comprise in the cane centers in dispute  of the petitioner with a condition that the said purchase would not confer any right on  M/s Daya Sugar Limited Gagetheri, district Saharanpur in future years and same will not preclude petitioner from carrying on development work in that reserved sugarcane area. It has also been contended that cane center Sarkhari Kheri was originally reserved  in favour of the petitioner on 08.10.2004 and subsequently it is was assigned to  M/s Daya Sugar Limited Gagalheri, district Saharanpur on 07.12.2004. Against the same petitioner preferred appeal which was allowed on 25.01.2005 with the direction that said center would continue to remain part of the reserved area of the petitioner. It has been contended that against the said order Civil Misc. Writ Petition No. 33567 of 2005 was preferred and this Court in the judgment and order dated 06.05.2005 directed for similar arrangement  as was made on 03.05.2005. It has also been asserted that in spite of precise observation made qua M/s Daya Sugar Limited Gagalheri, district Saharanpur to purchase sugar cane from the sugar center in dispute, no purchase of sugarcane whatsoever has been made from the said center. It has also been contended that at the present moment Cane Cooperative Society, Todarpur does not have valid constituted Board or Committee and its affair are being run and managed through Administrator and the Administrator of the said society had also made recommendation in favour of the petitioner. It has been contended that ignoring the relevant material on record appeal preferred on behalf of M/s Daya Sugar Limited Gagalheri, district Saharanpur has been allowed in part and by means of the same Cane Center Sahkhari Kumar has been assigned in favour of M/s Daya Sugar Limited Gagelheri, district Saharanpur against which present writ petition has been filed.

To this writ petition counter affidavit has been filed on behalf M/s Daya Sugar Limited Gagalheri, District Saharanpur and it has been sought to be contended that up to crushing session 2002-03 there is existed cane  center Devala and village Sarkhari Kumar was included in that center. It has also been sought to be contended that center Devala was reserved for petitioner but petitioner had poor drawl of sugarcane from the said  center particularly from the village, Sarkhari Kumar.  In crushing session 2003-04 cane purchase center Devla had been reserved in favour of the petitioner. It has been contended that on repeated representation of the growers the Cane Commissioner vide order dated 11.12.2003 bifurcated the cane center Devla and thereby new center Sarkhari Kumar was created. However during the season it continued to be reserved with the petitioner. Petitioner was opposed to the bifurcation of the cane center Devla and matter traveled to this Court and this Court remitted the matter to the authorities concerned and by this period crushing season was over and said appeal was dismissed on 23.09.2004. It has been contended by respondent that cane growers were permitted to supply sugarcane to M/s Daya Sugar Limited Gagalheri, district Saharanpur at its mill gate during the season 2003-04.  Since the crushing season 2003-04 Sarkhari Kumar has been treated as a separate cane purchase center and said center is reserved in favour of petitioner by Cane Commissioner while passing the original cane reservation order however despite such reservation petitioner has not operated the cane purchase center at Sarkhari Kumar during seasons 2003-04,2004-05 and 2005-06. In this background it has been suggested that Cane Commissioner was forced to provide alternate arrangement for purchase of sugarcane available in that  area of respondent no. 3. Past history has been narrated mentioning therein, than in season 2003-04 petitioner refused to operate the cane center Sarkhari Kumar then in the said background an the instance of cane growers of Sarkhari Kumar the District Cane Officer, Saharanpur by order dated 19.01.2004 directed the cane grower of the said area to supply sugarcane to Daya Sugar at its mill gate. It has been contended that against such neglective attitude of petitioner, District Cane Officer made recommendation to Cane Commissioner on 17.11.2004 for assigning said cane center either to Deoband mill or to Daya Sugar. Recommendation to the same effect has been made by the District Magistrate also on 24.11.2004. Thereafter it is has been contended that order dated 07.12.2004 was passed assigning  center Sarkhari Kumar in favour of M/s Daya Sugar Limited Gagalheri, district Saharanpur. Against the said order petitioner preferred appeal before the Appellate Authority which was allowed on 25.01.2005. Civil Misc. Writ Petition No. 8754 of 2005 has been filed on behalf of respondent no. 3 wherein directives were issued for reconsideration and decide the issues and thereafter fresh order has been passed in favour of the petitioner on 15.03.2005. Against which Civil Misc. Writ Petition No. 33567 of 2005 was filed which was disposed of. Details have also been set out qua the purchase of sugarcane by the respondent visa-vis petitioner. It has been contended that for Session 2005-06 in the cane reservation proposal made by respondent no. 3 it had proposed to be assigned the case reservation center Sarkhari Kumar. Recommendation has also been given of the said proposal by the Cooperative Cane Development Society, Todarpur. It has been contended that order which has been passed by the appellate authority is just and proper in the facts and circumstances of the case. Apart from this comparative chart has been prepared to establish that cane reservation order dated 04.10.2005 was arbitrary and discriminatory by going particulars of  installed Capacity, Sugarcane Requirement, Sugarcane yield per hectare, Cane area reserved, Alloted cane production, Drawl percentage for 2004-05 and Advised drawl percentage for 2005-06. It has been contended in the said background that justice has been done and as such no interference be made.

Counter affidavit has also been filed on behalf of Cooperative Cane Development Union Ltd. Todarpur and it has been contended that full details have been furnished in written statement filed in respect of the purchase centers in dispute before the appellate authority. It has been reiterated that society has made proposal for allotment of purchase center in dispute in favour of Daya Sugar Limited and also details have been furnished for crushing session 2002-03, 2003-04 and qua sugarcane supply at the mill gate of M/s Daya Sugar Limited Gagalheri, district Saharanpur and further it has reiterated that opinion cane growers who supply the cane is one of the relevant consideration under Rule 22 of 1954 Rules, as such order which has been passed is justifiable order, and no interference be made.

Rejoinder affidavit has been filed to the counter affidavit filed on behalf of respondent no. 3 and therein it has been contended that division of Devla center was opposed by the petitioner as separate purchase center was not sustainable, inasmuch as as cane availability in the purposed purchase center did not justify or warranted opening of new cane center. It has also been contended that in crushing session 2004-05 Cane Cooperative Society has given  their offers in favour of the petitioner and petitioner had issued indents for purchase of 11,000 quintal from the center Sarkhari Kumar and till the making of the order dated 07.12.2004 petitioner had purchased a total of approximately 6,000 quintiles. Further it has been contended that dispute which has been sought to be raised has also already been set at rest by the order dated 11.03.2005. Details have been furnished  that from the cane center Devla for crushing session 1999-2000, 2000-2001, 2001-2002 petitioner had purchased one lac quintal and 1.37 lac quintals  from Devla cane center and for crushing session 2002-03 and 2003-04 again the petitioner had purchased one lac 20 thousand  quintal and one lac quintal from Devla cane center out of which 19 thousand  quintal and 4000 quintals  has been purchased from the cane center Sarkhari Kumar itself. Even in crushing season 2004-05 before order dated 07.12.2005 came to passed, petitioner has purchased 6,000 quintals from the cane center Sarkhari Kumar. Motives have been imputed to the Secretary of Society jeopardizing the operation of the petitioner on the center in question at the behest of Respondents. The purported resolution send by secretary has been termed to be of no consequence as does not exist any elected Board and thus, there is no  resolution either in favour of the petitioner or the respondents. Reference has also been given of the letter of Administrator dated 21.11.2005 mentioning therein that petitioner is making adequate purchase from the center in question. It was contended that various new facts are sought to be placed which was never pleaded before the appellate authority and further attempt was made to bring the evidence which was neither referred to nor led before the appellate authority. Contention that crushing capacity of petitioner's sugar mill is 2750 TCD has been termed to be incorrect. Much emphasis has been placed qua geographical disadvantageous situation of the petitioner's mills as result of which it was not possible for it to maintain drawl percentage equivalent to that of other mills. In this regard it has been contended that In the east of the mill of the petitioner at a distance of just 10 km, the Shiwalik range starts and the said area is barren and rocky and thus, unfit for cultivation. In the west  at a distance of just 8 km. is the river Yamuna which devides the boundaries of Uttar Pradesh and Haryana. In the southwest at a distance of just 12 km. The Sarasawa Chini Mill and its reserved and assigned area begin.  Qua the Respondent Sugar Mill it has been contended that no such geographical disadvantage is there and drawl percentage of all sugar mills near the respondent no. 3 varies from 58%-62 %. It has also been contended that  appellate authority clearly eared in law by ignoring all these important aspect of the matter and as such writ petition  is liable to be allowed.

Rejoinder affidavit has also been filed to the counter affidavit filed on behalf of respondent no. 4 and therein it has been contended that  cane cooperative society is not at all functional with an elected Board and there is Administrator. Further it has been contended that there was no occasion for further reduction of area which has increased the shortfall of sugarcane required by the petitioner.

After pleadings mentioned above have been exchanged present writ petition is being taken up for final hearing with the consent of the parties.

Sri Yashwant Verma, Advocate appeared on behalf of petitioner. Learned Standing Counsel has entered appearance on behalf of respondents no. 1 and 2. Sri S.D. Singh, Advocate has entered appearance on behalf of respondent no. 3. Sri Ravindra Singh, Advocate has entered appearance on behalf of respondent no. 4. Each one of the respective counsel have advanced arguments qua the respective claim of the parties represented by them.

Sri Yashwant Verma, learned counsel for the petitioner contented with vehemence that in the present case appellate authority has totally misdirected itself while allowing the appeal in part by assigning cane center reserved for petitioner to respondent no. 3 M/s Daya Sugar Mill on following scores : Firstly, appellate authority has not at all adverted to the fact that in the past similar plea has been raised and same had been repelled when appeal preferred on behalf of the petitioner had been allowed and the said facet has been conveniently ignored. Secondly the appellate authority has not at all adverted to the fact that the area which as allocated to petitioner was geographically inferior and had a lesser yield than obtaining in the District Saharanpur and non-suiting the claim of the petitioner by merely mentioning that petitioner has already reserved more than adequate area is perverse. Thirdly appellate authority his misdirected itself on the question of drawl percentage, inasmuch as, drawl percentage of the petitioner was fixed due to non-availability of sugarcane and on account of average yield of the allocated area itself being lower than that obtaining in the other part of the district and also on account of the fact that respondents drawl percentage had been fixed vis-a-vis similarly situated adjoining sugar mill and the same has unnecessarily been compared with the petitioner which was unequal. Fourthly  against the estimate requirement of 52.20 lacs quintal it had been offered by respondent no. 4 society only 48.50 lacs quintal and thus, there was still shortfall area in question was traditionally reserved area on which immense development work had been  carried out and expenditure incurred, and this aspect of the matter has been ignored and distance has been given much preference whereas it was merely one of the guideline factors. Lastly representation made on behalf of cane farmers in individual capacity has not at all been adverted to.  

Sri S.D. Singh, Advocate countering the said submission on the other hand contended that order which has been passed by the appellate authority has been rightly passed, inasmuch as respondent sugarcane factory has been meted with arbitrary and discriminatory treatment while  fixing the drawl percentage visa-vis petitioner and in the past petitioner has failed to lift the sugarcane and cane growers specially mentioned that they would not supply sugarcane to the petitioner factory, as such rightfull exercise has been undertaken and petitioners have much more sugarcane as such no interference be made by this Hon'ble Court.

Learned Standing Counsel as well as Sri Ravindra Singh, Advocate, appearing on behalf of State as well as respondent no. 4 Cane Cooperative Society adopted similar arguments which has been advanced by Sri S.D. Singh Advocate and also contended that no interference be made by this Hon'ble Court.

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.

After respective arguments have been advanced provisions mentioned above has been seen impugned order in question dated 14.12.2005 has also been perused. The ground on which appeal has been allowed as per impugned order is that in reservation order dated 04.10.2005 qua the petitioner's Company it has been mentioned that it requires 52.20 lac quintal of sugarcane  and on the basis of 40 percentage drawl its requirement is 130.50 lac quintal and qua the same petitioners have been reserved /assigned area for 132.40 lac quintal of sugarcane; whereas compared for respondents, Cane Commissioner in the current crushing season has fixed 62% drawl with requirement of 57 lac quintal sugarcane  and area which has been reserved/assigned qua the same is 91.93 lac quintal. Appellate authority has mentioned that in favour of the appellant from 38 reserved cane center 89.64 lac quintal sugarcane would be made available and from assigned area it would get 2.1 lac quintal of sugarcane whereas from these four center 132.40 lac quintal sugarcane has been allocated, as such  conclusion is that petitioner has been allocated much more sugarcane area in comparison to the respondents. Apart from this it has been mentioned that Cane Cooperative Society was not interested to give sugar cane to the petitioner's mill and this was situation last year also. Apart from this it has also been mentioned that drawl percentage has been arbitrarily fixed which is not practicable. Consequently keeping in view shortage of sugarcane resolution of Cooperative Society and fixation of drawl percentage as such Sarkhari Kumar Cane Center be given to respondent no. 3  M/s Daya Sugar Mill. Apart from this no other reason has been assigned.

Perusal of the order indicates that various submission which has been raised by the petitioner before the appellate authority has not at all been adverted to specially in respect of shortage of sugarcane qua the geographical situation of cane area which had lesser yield than obtaining in the District of Saharanpur. Letter of Secretary of Cooperative Society has been relied upon and the letter of Administrator has been conveniently ignored. Mention has been made qua the supply made in the last crushing season, but the earlier background has not at all been referred to which had relevancy in the facts of case. Much reliance was placed on drawl percentage vis-a-vis the petitioner and respondent, whereas it had been specifically contended that both cannot be compared as drawl percentage of petitioners, keeping in view its geographical condition had been fixed 40% and that of Sarswan Sugar Mill to be 42 % which was near to petitioners factory whereas qua Daya Sugar drawl percentage was fixed akin to drawl percentage of Deoband Sugar Works to be 62 % and 61% respectively, as  both of them were located in area where there was full of sugarcane. All these important aspect of the matter, which has been raised has not at all been adverted to, whereas answer to the said questions were material to arrive at rightful and justifiable conclusion specially when in the past there was verdict in favour of the petitioner. Thus decision making process is faulty on the face of it, as the issues have not at all been dealt with in its overall perspective.

Consequently order dated 14.12.2005 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

Dhruv

 


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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