Madras High Court
Aruna Sugars Limited, Represented By ... vs The State Of Tamil Nadu, Rep. By The ... on 30 December, 2002
Author: Prabha Sridevan
Bench: R. Jayasimha Babu, Prabha Sridevan
ORDER Prabha Sridevan, J.
1. These writ petitions have been filed challenging the constitutionality of Section 6-A of the Tamil Nadu Prohibition Act("the TNP Act" in short) and the Tamil Nadu Molasses Control and Regulation Rules, 1958("State Rules" in short). In some writ petitions, the prayer sought for is for quashing of orders passed in exercise of the powers under the Act or the Rules and for forbearance from exercising such powers.
2. The petitioners in W.P. Nos.1921, 2097 and 5514 to 5516 of 1981, manufacture sugar. Under the Industrial (Development and Regulation) Act, 1951 ("the IDR Act" in short) it is declared that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. Sugar has been included in serial No. 25 and fermentation Industry in Serial No. 26 in the Schedule. In W.P.Nos.3568 and 6809 of 1988, the writ petitioner manufactures cattle feed. Molasses is a by-product in manufacture of sugar and used in the manufacture of cattle feed. So in both the cases the manufacture necessarily involves possession/ transport/ sale of molasses. The power to legislate in respect of the controlled industries vests with the Central Government traceable to Entry 52 of List I of the Seventh Schedule to the Constitution of India, and the Central Government has also framed the Molasses Control Order, 1961 ("Central Order" in short) under Section 18-G of the I.D.R Act. According to the petitioners, the State Rules encroach into the field occupied by the Central Legislature. Therefore, it is unconstitutional. Further, since Molasses is not an intoxicating liquor, State cannot assert its legislative competence under Entry 8 of List II of the Seventh Schedule. Finally, the State Rules confer unguided power to the licensing authority and therefore, they fail the test of reasonableness and are arbitrary.
3. According to the respondents, Entry 8 List II speaks of manufacture of liquor and therefore the State definitely has the power to regulate the possession, sale, use and transport of Molasses. Molasses is the most common and versatile source for manufacturing alcohol. Therefore, since the TNP Act and the Rules are clearly referable to Entry 8 List II, State's legislative competence would not be affected by Entry 52 of List I. The Molasses Control Rules deal only with the equitable distribution of Molasses and fair price. It is clear from the purpose for which the State Rules have been enacted that the intention of the State is to regulate the manufacture of intoxicating liquor. Therefore, even if there is any incidental encroachment into a field occupied by Entry 52 List I, the Constitutionality of the Section and the Rules remains unaffected since the principal object of the Rules is directly referable to Entry 8 of List II.
4. The learned Senior Counsel for the petitioner and the learned Additional Advocate General for the respondents filed their written submissions. The Act and the relevant Rules and Orders were referred to. Attention was driven to the expert opinion on characteristics of usage of molasses. Several decisions were relied on.
5. The TNP Act, 1937 is "an Act to introduce and extend the prohibition of the manufacture, sale and consumption of intoxicating liquor and drugs in the State of Tamil Nadu". The preamble reads thus:
"Whereas it is expedient as early as possible to bring about the prohibition, except for medicinal, scientific, industrial or such like purposes, of the production, manufacture possession, export, import, transport, purchase, sale and consumption of intoxicating liquor ..."
6. Section 6-A which was inserted by Section 7 of the TNP (Amendment Act), 1958 reads thus:
[6-A] Control and regulation of molasses -
(1) Except as otherwise provided in sub-section (2) and (3), no person shall import, export, transport, sell or have in his possession any quantity of molasses.
(2) The State Government may, by general or special order authorise any officer to grant licences for the import, export, sale or possession of molasses.
(3) The State Government may also authorise any officer to grant permits for the transport of molasses."
Molasses is defined under Section 3 (11-A) which was inserted by Section 2 of the TNP (Amendment) Act, 1979. In exercise of the powers conferred under Section 6-A and 54 of the TNP Act, 1937, the State Rules were made. The Rules define a consumer, a dealer and impose restrictions on the use of Molasses except for the following purposes:
"(i) distillation of spirit in a distillery established or licensed under the Act;
(ii) manufacture of power alcohol in a distillery established or licensed under the Act or any other Act for the time being in force;
(iii) any Government purpose including that of a local-body; and
(iv) any bonafide scientific, industrial, medicinal, agricultural (including use as cattle-feed), educational or such like purposes."
7. Under the State Rules, a dealer "includes a sugar factory producing Molasses". Licence in Form M.L-2 is required for possession and sale of Molasses and as per Rule 7(1)(b), "No licence in Form M.L-2 will be issued unless the Collector is satisfied that the grant of the licence is not detrimental to the enforcement of Prohibition in the area in which it has been applied for".
This Rule requires the authority to state the reasons for refusal. Any application for licence for possession and use of Molasses in Form M.L-4 is made in Form M.L-3. Rule 7(1)(c) provides that, "If, however, the licensing authority has reason to suspect the bonafides of the applicant or correctness of any of the particulars furnished by him, he may make such enquiries, as deemed necessary before deciding to grant the licence."
This Rule provides that the licensing authority shall record the reasons for refusing to grant licence. Rule 7(5)(c) deals with the power to refuse to renew a licence. Rule 9 deals with suspension or cancellation of licence.
8. Fermentation industries were brought under the control of the Central Government by virtue of the IDR Act, 1951 and included as Item 26. The heading reads thus:
"26. Fermentation Industries (1) Alcohol (2) Other products of fermentation industries."
The Central Government, in exercise of the powers conferred by Section 18-G of the IDR Act made the Central Order. This order provides that an owner of a sugar factory shall sell the entire quantity of molasses or such portion thereof produced by him or held in stock by him, to any person or persons as may be specified by the Molasses Controller and that no owner of a sugar factory shall remove any molasses whether sold or unsold, except with the written permission of Molasses Controller. It also provides for the manner in which Molasses have to be stored, graded, the maximum price at which Molasses have to be sold, maintenance of accounts, the powers of entry, search and seizure.
9. Molasses as seen from the materials before us, is obtained as a by-product in the manufacture of sugar, which contains the portion of sugar, left behind at the end of crystallization of sugar from cane juice. Apart from being a raw material for manufacture of alcohol, it is also used for other purposes like cattle-feed industry and oil extraction industry. But Molasses is the most preferred source of production of alcohol as well as the easiest and cheapest source material. From one tonne of Molasses, an average of 220 to 230 litres of alcohol can be obtained by distillation and from these 220 litres of alcohol, 1000 litres of illicit arrack can easily be produced. It is naturally obtained as a by-product in the manufacture of sugar. Therefore, the likelihood of use of Molasses for distillation of alcohol and the misuse for illicit distillation cannot be ruled out. Molasses is a dark coloured viscous syrup obtained both by the vacuum pan process and the Khandsari process of manufacture of cane sugar. Molasses is the mother liquor left over after sugar crystallization. In Tamil Nadu, there are 37 sugar mills functioning and the quantity of Molasses produced approximately in the last four years are as follows:
Year Production in Lakh Mts.
1997-1998 6.53
1998-1999 7.73
1999-2000 8.70
2000-2001
(Upto June) 7.37
About 14 distilleries receive supply of Molasses. In a publication issued by the Indian Standards Institution with regard to Specification for Cane Molasses prepared by the Sugar Industry Sectional Committee, it is found that the entire production of cane molasses is not being utilised at present in the country due to paucity of tank wagons, storage facilities at the port, and other economic factors, export of molasses is also not much. For these reasons, molasses is often stored in sugar factories for an appreciable length of time. The storage conditions available at many factories are not as good as they should be and therefore, there is a gradual reduction of the percentage of its sugar content. In this report, when the word "Molasses" is used what is meant is the mother liquor left over after the recovery of sugar.
10. In (cited supra), the Supreme Court held that after the amendment of 1956 to the IDR Act, the State has only certain powers to legislate in respect of alcohol. Two of them are:
(a) It may pass any legislation in the nature of prohibition of potable liquor referable to Entry 6 of List II and regulating powers.
(b) It may lay down regulations to ensure that non-potable alcohol is not diverted and misused as a substitute for potable alcohol.
It was also held that, "the State can, in exercise of power under Entry 8 of List II and by appropriate law regulate and that regulation could be to prevent conversion of alcoholic liquors for industrial use to one for human consumption and for purposes of regulation, regulatory fees only could be justified. In fact the regulation should be the main purpose, the fee or earning out of it has to be incidental."
Though in that case the Supreme Court did not accept the wide definition given to the word 'liquor' in 1951 in Balsara's case these paragraphs are relevant to show that the Supreme Court has always held that the State has the power to impose regulation when there is likelihood of manufacture of alcoholic beverage.
11. In Shri Bileshwar Khand Udyog Khedut Sahakari andali Ltd. Vs. State of Gujarat, , the Supreme Court again reiterated the views of, the Constitution Bench in (cited supra) while dealing with S.58-A of the Bombay Prohibition Act, 1949 and held, "... absence of any provision of the Industries (Development and Regulation) Act, 1951, touching upon regulation or ensuring that industrial alcohol was not diverted the State was competent to legislate on it under Entry 33 of List III of Seventh Schedule ...
...Trade and commerce and supply and distribution of goods are exclusive State subjects under Entries 26 and 27 of List II of Seventh Schedule. But both are subject to Entry 33 of list III. That is, what is covered in Entry 33 is excluded from List II. And the power to legislate in respect of what is covered by List III is enjoyed both by Central and State subject to Article 246 of the Constitution. Since Section 58-A can be traced to regulatory power of the State exercisable under Entry 33 the challenge to its validity is liable to fail. ... Section 58-A is extracted below:
"58-A. The State Government may by general or special order direct that the manufacture, import, export, transport, storage, sale, purchase, use, collection or cultivation of any intoxicant, denatured spirituous preparations, hemp, mhowra flowers, or molasses shall be under the supervision of such Prohibition and Excise or Police Staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Government by person manufacturing, importing, exporting, transporting, storing, selling, purchasing, using, collecting or cultivating the intoxicant, denatured spirituous preparation, hemp, Mhowra flowers or molasses;:
Provided that the State Government may exempt any class of persons or institutions from paying the whole or any part of the cost of such staff."
12. In Ch. Tika Ramji Vs. State of U.P. (1956 SCR 393), the Supreme Court observed:
"... that sugar-cane being goods which fell directly under Entry 27 of List II was within the exclusive jurisdiction of the State Legislature and it was competent to legislate with regard to it and as such the impugned Act was intra vires of the State Legislature. The power to legislate regarding production, supply and distribution of goods is subject to provisions Entry 33, List III which deals with products and industries notified by Parliament. Entry 33 being in the concurrent List, legislative power of the State regarding production, supply and distribution of goods cannot be denied."
13. In State of Uttar Pradesh and Others v. M/S. Synthetics and Chemicals and Others the above paragraph was extracted. At Paragraph 30, the Supreme Court held:
` "... for on the facts it is clear that the entire field relating to mines and minerals had been occupied and taken away from the legislature and as such, it was beyond the competence of the State to legislate on mines and minerals. In the case before us, the position is different because the power of the State Legislature to legislate in respect of the intoxicating liquor and its exclusive right regarding intoxicating liquor cannot be questioned."
14. Razakbhai Issakbhai Mansuri Vs. State of Gujarat (1993 Supp (2) SCC 659) dealt with prohibition against possession of rotten gur in excess of prescribed limit under the Bombay Prohibition Act and as to its constitutional validity. There it was argued that the field was occupied by the Gur (Regulation of Use) Order, 1968 r/w Essential Commodities Act under which the Centre had enacted rules referable to Entry 33 of List III and therefore, the State Legislature cannot encroach upon the same field. It was held that the law was in pith and substance a law relating to intoxicating liquor providing for regulatory measures, squarely falling under Entry 8 List II of Seventh Schedule and that, "... if the manufacture of liquor could be prohibited, certainly its manufacture with rotten gur could be regulated."
The Supreme Court also observed:
"We are, therefore, of the considered view that in pith and substance it is a law relating to intoxicating liquor providing for regulatory measure and squarely falls under Entry 8 List II of Seventh Schedule."
15. In Khoday Distilleries Ltd. Vs. State of Karnataka , the Supreme Court held, "The relevant entry in List I which has a bearing on the subject is Entry 52 which reads as follows:
52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest;
Under this entry, Parliament has enacted the Industries (Development and Regulation) Act, 1951 (for short I.D.R Act) and Item 26 of Schedule I of that Act reads as "Fermentation Industries-(1) Alcohol (2) Other products of fermentation and Distillery". Read with section 2 of the I.D.R Act, the said entry would mean that the alcohol industry dealing in potable and non-potable alcohol is a controlled industry within the meaning of the said Act. ... Hence the I.D.R Act ... does not in any way denude the power of the State Governments to make laws regulating and prohibiting the production, manufacture, possession, transport, purchase and sale of intoxicating liquors meant for human consumption (but not for medicinal or toilet preparations) and levying excise on them under Entries 8 and 51 of List II."
16. In State of A.P. Vs. Mcdowell & Co. it was held thus:
"In other words, we must first carve out the respective fields of Entry 24 and Entry 8 in List II. Entry 24 is a general Entry relating to industries whereas Entry 8 is a specific and special entry relating inter alia to industries engaged in production and manufacture of intoxicating liquors applying the well-known rule of interpretation applicable to such a situation (special excludes the general), we must hold that the industries engaged in production and manufacture of intoxicating liquors do not fall within Entry 24 but do fall within Entry 8. This was the position at the commencement of the Constitution and this is the position today as well. Once this is so, the making of a declaration by Parliament as contemplated by Entry 52 of List I does not have the effect of transferring or transplanting, as it may be called, the industries engaged in production and manufacture of intoxicating liquors from the State List to Union List. As a matter of fact, Parliament cannot take over the control of industries engaged in the production and manufacture of intoxicating liquors by making a declaration under Entry 52 of List I, since the said entry governs only Entry 24 in List II but not Entry 8 in List II."
17. In Vam Organic Chemicals Ltd., Vs. State of Uttar Pradesh (1997 II SCC 457), the Supreme Court held as follows:
"Denaturation of spirit meant for industrial use is meant to prevent misuse of non-potable alcohol for human consumption and as such specifically mentioned by the Court to be within the legislative competence of the State.
14. It is to be noticed that the States under Entries 8 and 51 of List II read with Entry 84 of List I have exclusive privilege to legislate on intoxicating liquor or alcoholic liquor for human consumption. Hence, so long as any alcoholic preparation can be diverted to human consumption, the States shall have the power to legislate as also to impose taxes etc. In this view, denaturation of spirit is not only an obligation on the States but also within the competence of the States to enforce."
18. Repeatedly the Supreme Court has held that the State has the power to prohibit and regulate the manufacture of alcoholic liquor used for human consumption. Entry 24 of List II relating to industries is subject to Entries 7 and 52 of List I. Entries 26 and 27 of list II are subject to Entry 33 of List III. But under Entry 8 in List II, the State has the exclusive privilege to legislate on intoxicating liquor or alcoholic liquor for human consumption. Therefore, when there is no controversy regarding the usage of molasses as the prime source of material for manufacture of alcohol and when molasses can be used to prepare alcohol for human consumption, the power of the State to regulate the manufacture of alcohol through molasses cannot be taken away since Entry 52 of List I governs only Entry 24 in List II and not Entry 8 in List II.
19. In 1993 Supp (2) SCC 659(cited supra), the petitioners argued that even a bonafide trader in Gur may land in the hands of unscrupulous officer who is armed with the vague definition of "rotten gur". Similar apprehension is voiced by the petitioners here on the ground that molasses is an industrial by-product of sugar manufacture and the authorities do not know technical details regarding automatic combustion etc. and therefore, the State Act will result in gagging the Sugar Industry. In the above case, the Supreme Court answered a similar question:
"9. While considering the argument, addressed on behalf of the petitioners, it should be kept in mind that the impugned provisions do not place absolute restriction or prohibition either against the possession of "rotten gur" or the manufacture, use or consumption thereof. The law requires only a permit to be taken in advance and admittedly there is no hurdle in obtaining such a permit, which is readily available on the payment of a nominal fee. The purpose of the permit is to make available information to the authorities concerned as to the persons dealing in "rotten gur" to facilitate vigilance against misuse of "rotten gur" for preparation of intoxicating liquors. There is absolutely no difficulty in obtaining such a permit in advance which will be a complete remedy for all the hardships highlighted on behalf of the petitioners. The grievance of the petitioner is that the requirement to obtain permit is violative of the freedom to carry on any trade and business of one's choice guaranteed by Article 19(1)(g). We do not find any substance in the argument that the restriction complained against can be considered to be such a hindrance as to infringe sub-clause (g). The freedom is not uncontrolled and clause (6) of Article 19 authorises legislation which imposes reasonable restrictions on this right in the interests of the general public. The question, therefore, is whether the restriction placed by the impugned amendment is in the interests of the general public and can be considered reasonable.
10. It has been repeatedly observed by this Court that the test of reasonableness should be applied to each individual statute impugned. No abstract standard or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent of the evil sought to be remedied thereby, the disproportion of the imposition, the relevant prevailing conditions, should all enter into the judicial verdict. The limitations in enjoyment of the right should not, however, be arbitrary or of an excessive nature. In other words it should not be more than what is essential in the interests of the public."
20. Recently, in I.T.C. Ltd. V. Agricultural Produce Market Committee , the competence of State legislature to legislate in any field occupied by the Tobacco Board Act came up for consideration and the Supreme Court held that, "The expression "industries" in Entry 52 of the Union List does not comprise in it all its aspects commencing from procurement of raw material and up to disposal of final product of that industry and not only the process of manufacture or production. Accepting any other interpretation would mean denuding the State Legislature the power to legislate in respect of fields covered under various entries under the State List which are not made subject to any other entry. The intention of the Constitution makers was not to make Entries 14, 27, 28 and 66 subject to Entry 52 of the Union List. The acceptance of other view-point will have that effect. True, the parliamentary legislation has supremacy as provided under Art. 246(1) and (2). This is of relevance when field of legislation is on concurrent list. While maintaining parliamentary supremacy, one cannot give go by to the federalism which has been held to be a basic feature of the Constitution."
Therefore, as stated in 1993 Supp (2) SCC 659(cited supra) the industries engaged in production and manufacture of intoxicating liquor fall within Entry 8 and the declaration made by the Parliament which brings an industry within the field of operation of Entry 52 of List I does not have the effect of cutting down the State's competence to legislate regarding matters covered by Entry 8.
21. In M/s Sitaram and Bros. Vs. State of Rajasthan , the Supreme Court held that the Amendment of the Rajasthan Excise Act(2 of 1950) relating to import, export, transport or possession of molasses would not enter into the occupied field of the Molasses Control Order nor are they inconsistent with the same. So the opinion that emerges from all the above decisions is that the State can exclusively make laws relating to intoxicating liquor and this power includes all incidental and ancillary powers and along with the power to prohibit manufacture of liquor, the State can regulate its manufacture and that would include manufacture with molasses.
22. In (cited supra), the manner in which molasses gets transformed into alcohol was described. When mixed with yeast, molasses ferment and alcohol is produced. Fermentation stops when the alcohol strength reaches 10 - 12% since at that percentage it is toxic to yeast. For higher strength, fermented alcohol is distilled and by distillation 96% strength of alcohol is produced. This is known as ethyl alcohol and it can be used both for consumable and industrial purposes. Therefore, to say that the Central Order would occupy the field in a manner that the State cannot exercise its area of legislation under Entry 8, which deals with intoxicating liquor cannot be accepted.
23. The field of operation of State's powers regarding industry is referable to Entry 24 of List II and this makes it subject to the provisions of Entries 7 & 52 of List II. We are not concerned with Entry 7. Reading Entry 52 in List I and Entry 24 in List II, it is clear that the Parliament has the exclusive jurisdiction to legislate regarding industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. But this should be read along with Entry 33(a) of List III which deals with trade and commerce in and the production, supply and distribution of the products of any industry that is described in Entry 52. Entry 33(b)(c)(d) and (e) are not relevant here. The Supreme Court has held that the word 'industries' in Entry 52 cannot be given so wide a scope as to deprive the scope of operation of Entry 33 of List III. Therefore in (cited supra) the Supreme Court held that the subject of trade and commerce in and the production, supply and distribution of the products of any industry which has been declared by Parliament in List I, Entry 52, is in the Concurrent List on which both Parliament and State can legislate.
24. One has also to bear in mind the fact that while Parliament and State have concurrent power to legislate in respect of industries falling within the field of operation of Entry 33 of List III; the exclusive power to legislate upon manufacture, distribution, sale and possession of intoxicating liquor is given to the State under Entry 8 List II. Therefore, "a fair scrutiny of the relevant entries makes it clear that the power to regulate the notified industries is not exclusively within the jurisdiction of Parliament as Entry 33 of List III in the concurrent list enables a law to be made regarding production, supply distribution of products of an notified industry." So the fact that the sugar industry or the fermentation industry has been included in Schedule I to the IDR Act is item Nos.25 and 26 respectively cannot take away the power which the State has concurrently with the Parliament under Entry 33 of List III. And when the exclusive power to enact laws relating to intoxicating liquors is given to the State, this power will also include the power to regulate the misuse of molasses to produce potable alcohol since the main object of the State Rules is to regulate the manufacture of spirit or alcohol by using molasses.
25. Rule 3 of the Tamil Nadu Rules makes it clear that the use of molasses is not totally restricted. Molasses can be used for distillation of spirit in a distillery established or licensed under the Act to manufacture pure alcohol in distillery established or licensed under the Act or any other Act for time being in force and also for Government purposes or any other purpose bona fide scientific, industrial etc. Therefore, the object of bringing these rules is to ensure that the molasses that is possessed, sold or transported by a person is in accordance with the TNP Act and the State Rules and not for any illicit purpose. When this is the main object of enacting the rules even if they incidentally encroach upon any other are that is occupied by any Entry in List I such transgression will not make the Rules invalid. The challenge to the validity of the provisions fails.
26. As regards the attack on the ground of arbitrariness and excessive delegation given to the authorities under the rules the extract of the rules given above show that the authority is bound to give reasons for his refusal or cancellation of license. The mandate of giving reasons is certainly a safeguard against arbitrariness. It is also implicit therein that the authority is bound to hear the affected party before cancelling the license. The learned Additional Advocate General also conceded that the right to fair hearing and observance of principles of natural justice can be read into the rules. It also appears that in 1983, the State has enacted the Tamil Nadu Prohibition Appeal and Revision Rules, 1983.
27. In Messrs Dwarka Prasad Laxmi Narain Vs. The State of Uttar Pradesh the Supreme Court held that the power of granting or withholding licenses has to be vested in certain public offices or bodies and they would certainly have to be left with some amount of discretion in these matters. It was held:
"So far no exception can be taken; but the mischief arises when the power conferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority. A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable."
28. This was referred to in 1956 SC 676=1956 SCR 393(cited supra) and it was also held that it is permissible to impose reasonable restrictions in public interest.
29. The rules, which are attacked in these writ petitions cannot be said to impose a total restriction. As has been seen already, it is not as if there is an absolute restriction on possession, sale or transportation of molasses, it is only that such possession, sale or transportation shall be within the parameters of the rules. The authorities cannot exercise the power of granting, suspending, cancelling or refusing to grant license as they please, because they have to give reasons for doing so. Each rule specifically mentions the duty to give reasons. There was no check or control on this power by higher authorities until 1983, when the Tamil Nadu Prohibition Appeal and Revision Rules were enacted. Therefore, subsequent to the filing of the writ petitions, the appellate and revisional safeguards have been introduced to check irregular exercise of power. So while the vice of uncontrolled power may have existed at the time these petitions were filed, now the powers given to the original authority to grant, suspend or refuse licence is subject to the check and control of the higher authorities.
30. We are also informed that the Central Order was repealed in 1993. As far as molasses is concerned, only the State Rules are in force today.
31. To conclude, the validity of the Act and Rules is upheld. It was submitted that pending disposal the respondents have renewed the licence year after year and the penalty imposed in the impugned orders have been paid.
32. Writ petition Nos.1921 of 1981 and 3568 of 1988 challenging the validity of Section 6-A of the Tamil Nadu Prohibition Act, are dismissed.
33. Writ petition Nos.5515, 5516 of 1981 wherein the validity of the orders directing forfeiture of security deposits of the petitioners for violation of the licences ML-2 and ML-6 were challenged and orders were passed after issuing show cause notices and after hearing the petitioners, are also dismissed.
34. In Writ petition No. 5514 of 1981, the writ petitioner has challenged the order of the Additional Collector refusing renewal of ML-2 and ML-6 licences for the year 1981-82. During the pendency of this petition, by reason of the interim order made by this Court, the petitioner had been given licence for that year and for the subsequent years and the petitioner continues to carry on the business as manufacturers of sugar, the by-product of that process of manufacture being molasses, which has necessarily to be stored before it is disposed.
35. The renewal was declined by the competent authority on the ground that the antecedents of the petitioner were not good and it was not desirable to renew the licence further. The antecedents referred to are certain monetary penalties imposed on the petitioner in the earlier years for breaches of the control order. The petitioner's manufacture of sugar is not to be brought to a standstill with the consequent loss of employment of those presently employed and the investment made in the industry rendered unproductive by declining to renew ML-2 and ML-6 licences on the ground of some breaches in the past. The petitioner can be subjected to rigorous supervision and control at it's cost to prevent breach of the conditions. Though the petitioner has been continuing to produce molasses, process, store and sell the same in these last two decades after the date of the impugned order, no violation in these years has been brought to our notice. We, therefore, set aside the order declining to renew the licences and dispose of the writ petition, directing the concerned authority to rehear the case and pass an appropriate order, which will be subject to an appeal for which provision is now made in the rules.
36. Writ petition No. 2097 of 1981, where the petitioner seeks a mandamus to the respondents to forbear them from investigating the first information report dated 17-03-1981. Further proceedings pursuant to that report, which reports violation of Tamil Nadu Molasses Control & Regulation Rules, 1958, had been stayed on account of the interim order made by this Court. Further proceedings had been stayed apparently because of the uncertainty regarding the validity of the law breach of which had been complained of. As we have now held that Section 6-A of the Tamil Nadu Prohibition Act, is valid, prosecution must be allowed to proceed. The writ petition is dismissed.
37. In writ petition No. 6809 of 1988, the validity of the order cancelling the ML-4 and ML-6 licences for the year 1984-85 has been questioned. Cancellation was ordered on the ground of unexplained excess stock of molasses. The appellate order does not disclose independent application of mind to the facts by the appellate authority. The petitioner has been continuing to function under the licences granted to it pursuant to the interim order made by this Court and no violation of the terms of the licences subsequent to the filing of the petition has been brought to our notice. The appellate order is set aside and the appellate authority shall rehear the appeal after notice to the parties and dispose of the appeal in accordance with law. Accordingly, the writ petition is disposed of.
38. No costs. The connected miscellaneous petitions are closed.