Karnataka High Court
Nsl Sugaras Limited-Unit Ii vs Government Of Karnatka And Ors on 1 December, 2023
Author: B.M.Shyam Prasad
Bench: B.M.Shyam Prasad
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 1ST DAY OF DECEMBER, 2023
PRESENT
THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD
AND
THE HON'BLE MR. JUSTICE UMESH M ADIGA
WRIT APPEAL NO. 200021 OF 2023 (GM-RES)
C/W
CIVIL CONTEMPT PETITION NO. 200037 OF 2022
CIVIL CONTEMPT PETITION NO. 200014 OF 2023
WRIT APPEAL NO. 200168 OF 2022 (GM-RES),
WRIT APPEAL NO. 200169 OF 2022 (GM-RES),
WRIT PETITION NO. 200423 OF 2023 (GM-RES)
Digitally
signed by
NARASIMHA IN WRIT APPEAL NO.200021/2023
MURTHY
VANAMALA BETWEEN:
Location:
HIGH K.P.R. SUGAR AND APPARELS LTD
COURT OF CHINAMGERA VILLAGE
KARNATAKA AFZALPUR TALUK, GULBARGA DISTRICT
(KALABURAGI) - 585 265
... APPELLANT
(BY SRI C.A. SUNDARAM SR. COUNSEL AND SRI S.S.
NAGANAND, SR. COUNSEL FOR SRI VEEREH R. BUDIHAL,
ADVOCATE)
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
AND:
1. THE COMMISSIONER FOR
CANE DEVELOPMENT AND DIRECTOR OF SUGAR
5TH FLOOR, KARNATAKA HOUSING BOARD
BUILDING, KAVERI BHAVAN,
BENGALURU-560 001.
2. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI - 585 101
3. SHRI DATTA MAHANTESHWAR SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, GHANGAPUR,
TALUK: AFZALPUR-585 213
KALABUARAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
4. THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU - 560 001.
5. SAHAKARI SAKKARE KHARKHANE NIYAMITA
ALAND(SSKN), A CO-OPERATIVE SOCIETY
REGISTERED UNDER CO-OPERATIVE SOCIETIES
ACT, 1959, HAVING ITS REGISTERED OFFICE AT
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT - 585 302
REPT. BY THE MANAGING DIRECTOR.
6. NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUK, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.AMARNATH .V
... RESPONDENTS
(BY SRI KIRAN V. RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1, R2 AND R4;
SRI. DAMA SESHADRI NAIDU, SR. ADVOCATE FOR
SRI KRUPA SAGAR PATIL, ADVOCATE FOR R5;
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
SRI BASAVA PRABU S.PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL, AND SRI.B.B. PATIL ADVOCATES FOR
C/R6;
NOTICE TO R3 HELD SUFFICIENT V/O DATED: 09.02.2023)
THIS WRIT APPEAL IS FILED UNDER SECTIONS 4 OF
THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET
ASIDE THE JUDGMENT DATED 28/09/2022 IN W.P
NO.201052/2022 PASSED BY THE LEARNED SINGLE JUDGE
AND DISMISS THE SAID WRIT PETITION.
IN CCC NO.200037/2022
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.AMARNATH H.V
... COMPLAINANT
(BY SRI BASAVA PRABU S.PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL AND SRI B.B.PATIL, ADVOCATES)
AND:
1. SHRI SHIVANAND H.KALAKERI
THE COMMISSIONER FOR CANE DEVELOPMENT
AND DIRECTOR OF SUGAR, 5TH FLOOR,
KARNATAKA HOUSING BOARD BUILDING
KAVERIBHAVAN, BENGALURU-560 001.
2. SHRI YESHWANT V. GURUKAR
THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE DC, KALABURAGI.
3. MR. P. SELVAKUMAR
MANAGING DIRECTOR
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
K.P.R. SUGAR AND APPARELS LIMITED
CHINMMGERA VILLAGE
AFZALPUR TALUQ, GULBARGA DISTRICT.
4. MR. SURYAKUMAR SHIVASAGARAN
DIRECTOR, SHRI DATTA MAHANTESHWAR
SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, GHANGAPUR,
TALUQA: AFZALPUR-585 213
KALABUARAGI DISTRICT.
5. SHRI PANKAJ KUMAR PANDEY
SECRETARY, C& I DEPARTMENT
THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS
VIDHANA SOUDHA
BENGALURU-01.
... ACCUSED
6. THE STATE OF KARNATAKA
REPT. BY ITS CHIEF SECRETARY
VIDHANA SOUDHA, BENGALURU -01.
... FORMAL PARTY
(BY SRI KIRAN V. RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR A1, A2, A5 AND R6;
SRI C.A. SUNDARAM, SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR
A3;
A4 IS DELETED V/O DATED: 13.06.2022)
THIS CCC IS FILED UNDER SECTIONS 11 AND 12 OF
THE CONTEMPT OF COURTS ACT, R/W ARTICLE 215 OF THE
CONSTITUTION OF INDIA, PRAYING TO INITIATE CONTEMPT
PROCEEDINGS AGAINST THE RESPONDENTS HEREIN, FOR
WILLFUL DISOBEDIENCE OF THE ORDER DATED 02.02.2022
PASSED BY THIS HON'BLE HIGH COURT IN WRIT PETITION
NO.200210/2022.
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
IN CCC NO.200014/2023
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.AMARNATH H.V.
... COMPLAINANT
(BY SRI BASAVA PRABU S.PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL AND SRI.B.B. PATIL, ADVOCATES)
AND:
1. SHRI YESHWANT V. GURUKAR
THE DEPUTY COMMISSIONER
AND DISTRICT MAGISTRATE, KALABURAGI
DEPUTY COMMISSIONER'S OFFICE
VIKAS BHAVAN, MINI VIDHAN SOUDHA
KALABURAGI.
2. SHRI SHIVANAND H.KALAHERI
COMMISSIONER FOR CANE DEVELOPMENT
AND DIRECTOR OF SUGAR,
HOUSING BOARD 'F' BLOCK,
5TH FLOOR, CPAB COMPLEX,
KAUVERY BHAVAN, K.G.ROAD
BENGALURU - 560 009.
3. SRI KALIAMPUDUR PALANISAMY
RAMASAMY,
CHAIRMAN AND DIRECTOR
K.P.R. SUGAR AND APPARELS LTD
CHINMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
4. SRI PALANI GOUNDER SELVAKUMAR
WHOLE TIME DIRECTOR
K.P.R. SUGAR AND APPARELS LTD
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
5. SHRI PANKAJ KUMAR PANDEY
SECRETARY, C& I DEPARTMENT
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS, VIDHAN SOUDHA
BENGALURU - 01
... ACCUSED
6. SECRETARY
STATE OF KARNATAKA
BENGALURU - 01
... FORMAL PARTY
(BY SRI SRI KIRAN V RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR A1, A2, A5 AND R6;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR A3 AND A4)
THIS CCC IS FILED UNDER SECTIONS 11 AND 12 OF
THE CONTEMPT OF COURTS ACT 1971, R/W ARTICLE 215
OF THE CONSTITUTION OF INDIA, PRAYING TO INITIATE
CONTEMPT PROCEEDINGS AGAINST THE RESPONDENTS
FOR WILLFUL DISOBEDIENCE OF THE ORDER DATED
04.11.2022 PASSED IN W.A.NO.200168-200169/2022 VIDE
ANNEXURE-Q, AS MODIFIED BY ORDER DATED 16/12/2022
IN SLP(C) NO.22782-22783/2022 VIDE ANNEXURE-S.
IN WRIT APPEAL NO.200168/2022
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.AMARNATH H.V.
... APPELLANT
(BY SRI BASAVA PRABU S. PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL AND SRI.B.B. PATIL, ADVOCATES)
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
AND:
1. THE COMMISSIONER FOR
CANE DEVELOPMENT OF SUGAR
5TH FLOOR, KARNATAKA HOUSING BOARD
BUILDING, KAUVERY BHAVAN, K.G.ROAD
BENGALURU-560 001.
2. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI
3. K.P.R. SUGAR AND APPARELS LIMITED
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
4. SHRI DATTA MAHANTESHWAR SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, GHANGAPUR,
TALUQ: AFZALPUR-585 213
KALABUARAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
5. THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU-01.
6. SAHAKAARI SAKKARE KHARKHANE NIYAMITA
ALAND(SSKN), A CO-OPERATIVE SOCIETY
REGISTERED UNDER CO-OPERATIVE SOCIETIES
ACT, 1959, HAVING ITS REGISTERED OFFICE AT
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT-585 302.
... RESPONDENTS
(BY SRI KIRAN V RON, AAG A/.W
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1, R2 AND R5;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR R3;
SRI. DAMA SESHADRI, NAIDU, SR. COUNSEL FOR
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
SRI KRUPA SAGAR PATIL, ADVOCATE FOR R6)
THIS WRIT APPEAL IS FILED UNDER SECTIONS 4 OF
THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET
ASIDE THE JUDGMENT DATED 28/09/2022 IN W.P
NO.200210/2022 AND ALLOW THE SAID WRIT PETITION IN
TERMS PRAYED.
IN WRIT APPEAL NO.200169/2022
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.AMARNATH H.V.
... APPELLANT
(BY SRI BASAVA PRABU S. PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL, ADVOCATE AND
SRI.B.B. PATIL, ADVOCATE)
AND:
1. THE COMMISSIONER FOR
CANE DEVELOPMENT AND DIRECTOR OF SUGAR,
5TH FLOOR, KARNATAKA HOUSING BOARD
BUILDING, KAVERI BHAVAN, BENGALURU-560 001.
2. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI.
3. K.P.R. SUGAR AND APPARELS LIMITED
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
(REPRESENTED BY ITS AUTHORIZED SIGNATORY).
4. SHRI DATTA MAHANTESHWAR SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, CHAGAPUR,
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
TALUKA: AFZALPUR - 585 213
KALABUARAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
5. THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU - 560 001.
6. SAHAKAARI SAKKARE KHARKHANE NIYAMITA
ALAND(SSKN), A CO-OPERATIVE SOCIETY
REGISTERED UNDER CO-OPERATIVE SOCIETIES
ACT, 1959, HAVING ITS REGISTERED OFFICE AT
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT-585 302.
... RESPONDENTS
(BY SRI KIRAN V RON, AAG A/W
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1, R2 AND R5;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR R3;
SRI. DAMA SESHADRI NAIDU, SR. COUNSEL FOR
SRI KRUPA SAGAR PATIL, ADVOCATE FOR R6)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF
THE KARNATAKA HIGH COURT ACT, 1961 PRAYING TO SET
ASIDE THE JUDGMENT DATED 28.09.2022 IN WP NO.
201052/2022 AND ALLOW THE SAID WRIT PETITION
INTERMS PRAYED.
IN WRIT PETITION NO.200423/2023
BETWEEN:
NSL SUGARS LIMITED- UNIT II
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956 AND CONTINUING
UNDER THE COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT # 60/1,
2ND CROSS, RESIDENCY ROAD, BENGALURU-560 025
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
KARNATAKA
HAVING ITS FACTORY AT:
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT, KARNATAKA
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.AMARNATH H.V. ... PETITIONER
(BY SRI BASAVA PRABU S. PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL, AND
SRI. B.B.PATIL, ADVOCATE)
AND:
1. GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU-01.
2. DEPUTY SECRETARY
GOVERNMENT OF KARNATAKA
DEPARTMENT OF COMMERCE
AND INDUSTRIES (SUGAR)
VIKAS SOUDHA, BENGALURU-560 001.
3. DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI
4. COMMISSIONER FOR CANE DEVELOPMENT
AND DIRECTOR OF SUGAR, 5TH FLOOR,
KARNATAKA HOUSING BOARD
BUILDING, KAVERI BHAVAN,
BENGALURU-560 001.
5. K.P.R. SUGAR AND APPARELS LIMITED
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956 AND CONTINUING
UNDER THE COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT # 5, AKS NAGAR
THADAGAM ROAD,COIMBATORE-641 001
TAMIL NADU
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
HAVING ITS FACTORY AT:
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
... RESPONDENTS
(BY SRI KIRAN V RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1 TO R4;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEERESH R. BUDIHAL, ADVOCATE FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
ISSUE A WRIT CERTIORARI OR ANY OTHER WRIT ORDER OR
DIRECTION QUASHING (I) CRUSHING LICENSE DATED
19/10/2022 BEARING NO. VAKAI 13 SGF 2022 ISSUED BY
RESPONDENT NO. 2. VIDE ANNEXURE-A: II) ORDER DATED
2/11/2022 BEARING NO. NIL PASSED BY RESPONDENT NO.4
VIDE ANNEXURE-B; AND III) ORDER DATED 12/01/2023
BEARING NO. NIL PASSED BY RESPONDENT NO.3 VIDE
ANNEXURE-C.
THESE WRIT APPEALS, THE CIVIL CONTEMPT CASES
AND THE WRIT PETITION COMING ON FOR ADMISSION
HAVING BEEN HEARD AND RESERVED ON 26.07.2023, AND
COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS
DAY, B.M. SHYAM PRASAD J., DELIVERED THE FOLLOWING:
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
JUDGMENT
These intra court appeals, the writ petition and the contempt proceedings emanate from the interim orders and the common final order in writ petitions in WP Nos.200210/2022 and 201052/2022 as also the interim order in these intra court appeals. These proceedings are because of the dispute between M/s NSL Sugars Limited - Unit II [M/s NSL] and M/s K.P.R Sugars and Apparels Limited [M/s KPR] over the exclusive right to procure sugarcane from certain 44 villages in Kalaburagi and Afzalpur Taluks [the Subject Cane Area]. The writ Court's first interim order dated 02.02.2022 in writ petition in WP No.200210/2022 is to maintain status quo inter alia on "diversion" of sugarcane from the Subject Cane Area, and the Writ Court's later interim order on 10.05.2022 in writ petition in WP No.201052/2022 is
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 directing the authorities to seize sugar, molasses and ethanol from M/s KPR's factory.
2. The writ Court has disposed of these writ petitions in WP Nos.200210/2022 and 201052/2022 by the common Order dated 28.09.2022 directing the State Government to decide on the dispute between M/s NSL and M/s KPR over the Subject Cane Area. The writ Court has also directed disposal of sugar, molasses and ethanol seized pursuant to its interim order in WP No.201052/2022 under the provisions of the Essential Commodities Act, 1955 [for short, the 'EC Act']. In the present proceedings, this Court, by the interim order dated 13.06.2023 [after the earlier interim orders and orders of the Hon'ble Supreme Court in SLP Nos.22782-22783/2022], has provided for sale of the seized sugar, molasses, and ethanol on certain terms.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
3. These products are sold and 40% of the proceeds received from the sale of sugar and molasses are being deposited with this Court in compliance with this Court's order on 13.06.2023, and this deposit is subject to this Final Order. The submission on behalf of the State Government is that as and when the proceeds from the sale of ethanol are received, the same are deposited with this Court to comply with the directions. The office informs that a sum of Rs.103,06,20,487/- is deposited as of 27.10.2023. This Court has directed the remaining 60% of the sale proceeds be given directly to M/s KPR subject to the outcome in these proceedings, but in the SLP Nos. 14359-14360/2023 filed by M/s NSL against this Court's interim order dated 13.06.2023, the Hon'ble Supreme Court has modified this order directing M/s KPR to maintain the proceeds received in its account without disbursing the same.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
4. If the writ appeals in WA Nos.200168/2022, 200169/2022 and 200021/2023 are against the common Order dated 28.09.2022 in WP Nos.200210/2022 and 201052/2022, the contempt proceedings in CCC Nos.200037/2022 and 200014/2023 are commenced complaining that there is violation of the interim order dated 02.02.2022 in the said writ petition and the interim order dated 04.11.2022 in the intra court appeals in WA Nos.200168/2022, 200169/2022 and 200021/2023. The writ petition in WP No.200423/2023 is as against the order dated 12.01.2023 by the Deputy Commissioner, Kalaburagi after the writ Court's common Order dated 28.09.2022.
5. Sri. Basava Prabhu Patil, the learned Senior Counsel for M/s NSL, Sri Dama Seshadri Naidu, the learned Senior Counsel for M/s Sahakaari Sakkare Karkhane Niyamita, Aland [M/s SSKN], Sri
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 C.A. Sundaram and Sri S.S. Naganand, the learned Senior Counsels for M/s KPR, and Sri Kiran Ron, the learned Additional Advocate General [who is assisted by Sri Shivakumar Tengli, the learned Additional Government Advocate], are heard for final disposal as requested. The learned counsels on record for the parties have filed voluminous record, and therefore, the facts and circumstances presented as uncontested and contested in the convenience compilations filed, on perusal of the pleadings, are recorded as hereinafter followed by the questions for consideration, the corresponding rival submissions, this Court's opinion and the final conclusions.
6. The contest in these proceedings, as aforesaid, is essentially between two sugar factories viz., M/s NSL and M/s KPR, but neither have established the respective factories themselves, and they have either acquired rights from the other or
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 because the other has withdrawn its rights. The details in this regard are as follows:
Reg: M/s NSL 6.1 M/s SSKN is established and registered under the Karnataka Co-operative Societies Act, 1959. According to the pleadings, the State Government represents 65% of the total share capital of M/s SSKN, and in addition, the State Government has provided loans to the extent of Rs.15,31,00,000/-. The State Government has nominated one of the Joint Registrars of Co-
operative Societies to officiate as the Managing Director of M/s SSKN. M/s SSKN has about a membership of 11,131 farmers with 5462 amongst them being cane growers and the others being non- cane growers, and the cane growing members, in terms of the byelaws that they have subscribed to,
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 have agreed to supply sugarcane grown by them to M/s SSKN.
6.2 The State Government, on 25.02.1987, has notified the Karnataka Sugarcane [Regulation of Distribution] [Aland] Order, 1986 allocating to M/s SSKN 369 villages in different talukas, including the villages in the talukas of Kalaburagi and Afzalpur as its Cane Area. This Order, which is hereinafter referred to as 'the Aland Order', is issued in exercise of the jurisdiction under Clause-3 of the Sugarcane Control Order, 1966 [hereinafter referred to as the 'Sugarcane Control Order 1966'] notified by the Central Government in exercise of its jurisdiction under Section 3 of the EC Act.
6.3 M/s SSKN has commenced crushing sugarcane at its factory at Bhusnoor village, Aland taluk with the capacity to crush 1250 Tons of Sugarcane per Day [TCD]. M/s NSL has operated its
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 factory at Bhusnoor village for about 15 [fifteen] years but has stopped its operations thereafter because of financial difficulties with the State Government resolving to lease this factory [as in the case of other co-operative sugar factories]. On 17.11.2005, the State Government has granted lease of M/s SSKN's factory at Bhusnoor village to M/s Shree Renuka Sugars Limited [M/s Renuka] for a period of seven years, but this company has discontinued the lease after two years.
6.4 On 13.10.2009 the State Government has issued orders to 'Lease, Rehabilitate, Operate and Transfer' [LROT] for a period of 30 [thirty] years, and consequent to this order, bids are invited representing that the lease would be for a period of 30 [thirty] years and the Cane Area would comprise
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 of 331 villages1 with the possibility of increase in the number of villages. There are pre-bid discussions between M/s NSL [the successful highest bidder in offering Rs. 75 crores] and M/s SSKN to incorporate the assurance to bring back 38 villages into the fold of 369 villages originally allotted.
6.5 On 06.03.2010, a lease deed is executed in favour of M/s NSL granting lease of the Sugar Factory at Bhusnoor village for a period of 30 [thirty] years with terms such as that M/s NSL would take measures to expand the crushing capacity from 1250 TCD to 2500 TCD at the minimum and that the State Government would issue appropriate notification for restoring 38 villages of Afzalpur taluk. This Lease Deed is executed referring to certain government orders issued permitting lease. 1 M/s SSKN is initially allocated 369 villages, but later certain villages are allotted to M/s Renuka, another Sugar Factory in the Area, and there are litigations in this regard.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 The State Government, on 31.10.2012, has rejected M/s NSL's request for allocation of the aforesaid 38 villages notwithstanding a recommendation by the Deputy Commissioner, Kalaburagi. M/s NSL has filed the writ petition in W.P.No.101201/2013 impugning the State Government's order dated 31.10.2012 and arraying M/s Renuka Sugars as a respondent. This writ petition is disposed of on 04.10.2021 but it is stated that the dispute in this regard is presently pending consideration in writ appeals in WA Nos.200043/2022 and 200177/2022.
6.6 M/s NSL contends that, in accord with the covenant in the lease deed to increase the capacity over a period of years, it has infused huge amounts to enhance the factory's crushing capacity. The
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 details2 in this regard are that it has a crushing capacity of 7500 TCD requiring a minimum sugarcane of 13.5 lakh MT per year, and it has commenced activities to increase the crushing capacity to 12000 TCD requiring a minimum sugarcane of 20-24 lakh MT per year. However, M/s NSL contends it has not been able to crush more than 6.5 lakh MT of sugarcane over the last two sugar seasons because of the Government's refusal to re-allocate the 38 villages from M/s Renuka and because M/s KPR is illegally diverting sugarcane from 44 villages in Kalaburagi and Afzalpur talukas [the Subject Cane Area]. Reg: M/s KPR:
6.7 Sri Datta Mahanteshwara Sugars Limited [the fourth respondent - M/s SDMSL] has filed an 2 These details are as per the Report of the Joint Director of Agriculture, Kalaburagi and which is referred to in the Order of the Commissioner for Cane Development.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Industrial Entrepreneur Memorandum [IEM]3, to start a sugar factory at Chinmigera Village, Afzalpur Taluk, Kalaburagi District. M/s SDSML, without setting up a factory after filing IEM, has consented to M/s KPR, which has its factory [Unit No.1] at Almel in Sindagi taluk, Vijayapura District with a capacity of 10,000 TCD and eco-friendly co- generation plant of 50 MWs, to set up its factory [Unit No.2] at Chinmigera Village.
6.8 M/s KPR has filed its separate IEM to start another factory [Unit-2] plant at Chinmigera Village, Afzalpur Taluk, Kalaburagi in the month of December 2020 with the validity for a period of four years but subject to further extension by another year. This IEM is filed to set up the factory with a crushing capacity of 10,000 TCD to manufacture 3 A declaration filed by those industrial undertakings which are exempted from the requirements of industrial licensing as contemplated under the Industries [Development and Regulation] Act,1951.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 white crystal sugar with co-generation of 50 MW power and distilling of 220 KLPD of ethanol.
6.9 M/s KPR contends that it has mobilized funds in excess of Rs.800 crores from M/s Bank of Baroda and M/s ICICI Bank after filing the IEM with the Union Government [which is acknowledged by the Government of India on 14.12.2022] and after obtaining the Distance Certificate dated 10.12.2020. M/s KPR has also referred to the different permissions and approvals obtained from the concerned for commencing production under the applicable laws. The details of the permissions and approval obtained by M/s KPR prior to commencement of the dispute are as follows:
07.10.2020 The Joint Director of Agriculture, Department of Agriculture, Government of Karnataka has furnished data pertaining to availability of
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 sugarcane area in response to M/s KPR's request.
11.12.2020 The Commissioner for Cane Development and Director of Sugar, Karnataka has issued the Distance Certificate as required under Sub-Clause [1] of Clause 6-B of the Sugarcane [Control] Order, 1966 to M/s KPR.
14.12.2020 The date of acknowledgement from the Ministry of Commerce and Industry, Government of India about the receipt of the IEM for manufacture of sugarcane.
22.12.2020 The date on which M/s KPR has submitted a Performance Guarantee for Rs. One crore to the Chief Director [Sugar], Ministry of Consumer Affairs, Food and Public Distribution as required under sub-Clause [2] of Clause 6-B of the Sugarcane [Control] Order, 1966.
06.02.2021 The date of in-principle approval for M/s KPR to establish its Unit at Chinmigera, Afzalpur Taluk
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 under the provisions of the Karnataka Industries [Facilitation]Act, 2002.
01.03.2021 The date on which M/s KPR has applied for Cane Allocation Area for its factory at Chinmigera Village.
17.11.2021 The date on which M/s KPR has applied for Crushing Licence to commence crushing at its factory at Chinmigera Village.
27.01.2022 The date of permission for running the factory by the Industries, Boiler, Industrial Security and Health Department, Government of Karnataka.
6.10 If these are the permissions and approvals taken before the commencement of the present dispute, M/s KPR has also referred to certain permissions obtained during the pendency of the writ petitions in WP Nos.200210/2022 and 201052/2022
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 and the present proceedings. These details are as follows:
31.03.2022 The date of the release order for domestic sale of sugar of 2351 MT for the month of March-
2022 by the Government of India, Department of Food and Public Distribution.
29.04.2022 The date of the release for domestic sale of sugar of 3970 MT for the month of April-2022 by the Government of India, Department of Food and Public Distribution.
25.05.2022 The date of final allotment of Plant Code and Short Name 'KPRSAL/69061' by the Government of India.
13.07.2022 The date of temporary allocation of Cane Area to M/s KPR comprising of 28 villages, excluding the 44 villages that form part of the present dispute.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 19.10.2022 The date on which the Cane Crushing Licence is issued for a period of 1 [one] year for the period between 01.07.2021 and 30.06.2022. The circumstances leading to the dispute over the allocation of the Subject Cane Area:
7. In the year 2016, a proposal is mooted to withdraw some of the villages from the 369 villages originally allotted to M/s SSKN under the Aland Order and allot the same to M/s SDMSL. M/s SSKN, with this proposal receiving publicity, has filed its objections. M/s NSL, which by then had acquired leasehold rights to the sugar factory at Bhusnoor set up by M/s SSKN, has also filed its objections on 03.09.2016. The Commissioner for Cane Development and Director of Sugar [for short, 'the Commissioner for Cane Development'] has sent a proposal for allocation of 78 villages to M/s SDMSL [now represented by M/s KPR], including the 44
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 villages within the 369 villages [the Subject Cane Area] originally allotted to M/s SSKN by the Aland Order.
7.1 The State Government, as part of its consideration of the aforesaid proposal to allot 78 villages to M/s SDMSL, has called upon the Commissioner for Cane Development to answer certain queries by its Communication dated 15.03.2017, and the Commissioner for Cane Development has responded to such queries by his communication dated 07.04.2017. M/s NSL contends that at this stage the proposal to allot 78 villages to M/s SDMSL is abandoned.
7.2 M/s NSL has filed its writ petition in W.P.No.200346/2021 contending that it has applied for allotment of Cane Area for the year 2021-22 and this application is not considered. M/s NSL has also
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 sought for directions to the authorities to stop M/s KPR and M/s Renuka Sugars from diverting sugarcane from its Cane Area. The writ petition in W.P.No.200346/2021 is disposed of on 12.07.2021 directing the authorities to consider M/s NSL's application within a period of three months. During the pendency of these proceedings i.e., on 13.07.2022, the State Government has allocated certain villages to M/s KPR, that is excluding the 44 villages which are referred to as the Subject Cane Area. It is submitted that this is a temporary allotment.
8. This Court, because of the contempt proceedings and the questions raised for consideration, must record in detail the different petitions leading to these proceedings, and these details are recorded thus.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 The details of the writ petition in WP No.200210/2022:
9. M/s NSL has filed this writ petition for different reliefs, but in filing the memo dated 27.06.2022, M/s NSL has confined the writ petition for issuance of mandamus to the Government authorities not to withdraw any portion of the cane area allotted to M/s SSKN and to take effective measures to ensure that no other factory receives or accepts sugarcane from such area. M/s NSL has asked for interim order to maintain status quo in the matter of re-allotment/re-allocation of cane area and withdrawal of villages contending that M/s KPR is likely to commence crushing encouraging the farmers in the villages that are already allotted to M/s SSKN to divert their produce.
9.1 M/s NSL has sought for the interim prayer in these terms:
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 "Pending disposal of the instant Writ Petition, the Petitioner most humbly prays that this Hon'ble Court may kindly be pleased to direct the Respondents to :
i) maintain status quo in the matter of re-
allotment/re- allocation of cane area that has already been made in favour of the Petitioner herein and further not to withdraw any villages from the cane area of the petitioner, in the interest of justice and equity.
ii) Ensure that there is no diversion of cane from the cane area of the petitioner to any other sugar factory, in the interest of justice and equity."
The writ Court on 02.02.2022 has granted interim order as prayed for without elaboration. The conclusion in the impugned Common Order dated 28.09.2022 insofar as the petition in WP No.200210/2022:
9.2 The writ Court, with M/s NSL giving up the prayer for issuance of a writ of mandamus to the authorities not to withdraw the villages that are already allotted to M/s SSKN and limiting the writ
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 petition for directions to the authorities to take steps to ensure that no other sugar factory receives or accepts sugarcane from the Cane Area allotted to M/s SSKN, has recorded that it should decide whether in the circumstances of the case a writ could be issued to the authorities to refrain them from discharging their duties. The writ Court has also considered the canvass that a writ of mandamus cannot be issued when M/s NSL has not even filed a representation with the authorities.
9.3 The writ Court, recording that the State Government has the power to consider a request by a new factory for allotment/reservation of cane area under the provisions of the Sugarcane Control Order 1966, has concluded that the State Government has not taken any decision to withdraw the Subject Cane Area which was reserved for M/s SSKN and allot the same to M/s KPR; and because no decision is taken,
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the only direction that can be issued to the State Government is to hear all the affected persons and take a decision on the application for reservation of the Subject Cane Area in the backdrop of the Aland Order dated 25.02.1987 [an order in favour of M/s SSKN under the Sugarcane Control Order 1966] and the subsequent Lease Deed dated 06.08.2020 in favour of M/s NSL. The writ Court has also observed that the State Government will have to take a decision in accordance with law and without being influenced by any earlier recommendation on allotment of Cane Area.
The details of the writ petition in WP No.201052/2022:
10. M/s NSL has filed the second writ petition in WP No.201052/2022, during the pendency of the first writ petition in WP No.200210/2022, for directions to the Commissioner for Cane Development
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 to seize the stock of sugar, molasses and other by- products at M/s KPR's factory at Chinmigera Village, Afzalpur Taluk, with further directions to ensure that effective steps are taken to prevent M/s KPR from selling the stock sugar or the by-products.
10.1 On 10.05.2022, the writ Court, while calling for a report, has directed the Cane Commissioner [or the Deputy Commissioner] to inspect M/s KPR's aforesaid factory at Chinmigera and take inventory of sugar and other by-products stocked at this unit with further direction to confiscate the stock. The Commissioner for Cane Development and the Deputy Commissioner, Kalaburagi have inspected the factory/godown and confiscated sugar and other by-products.
10.2 However, there is some controversy about how the seized stock is dealt with M/s NSL contending that M/s KPR has deliberately violated
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the interim order and removed some part of the stock and M/s KPR contending that there was damage because of high winds and otherwise the stock is not altered. Ultimately, on 10.06.2022, it is placed on record that the Deputy Commissioner has visited M/s KPR's factory at Chinmigera and it is ascertained that the seal put on 12.05.2022 was intact and that prima facie the stock remained the same as it was on 12.05.2022 [the date of seizure].
The conclusion in the impugned Common Order dated 28.09.2022 insofar as the petition in WP No.201052/2022:
10.3 The writ Court has opined that it cannot express any opinion on M/S NSL's contention that M/s KPR should be denied the opportunity of hearing because it is in violation of the interim order dated 02.02.2022 in WP No.200210/2022 as the contempt
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 proceeding in CCC No. 200037/20224 in this regard is pending consideration, and that all questions on whether M/s KPR has violated the interim order in WP No.200210/2022 will have to be examined in these contempt proceedings.
10.4 The writ Court, as regards M/s NSL's case that M/s KPR has started crushing sugarcane without obtaining licence for crushing and that it is poaching [diverting] sugarcane from the Subject Cane Area, has opined, after adverting to the provisions of Section 6A and Section 6B of the EC Act, that a separate mechanism is provided thereunder, and because sugar is an essential commodity, M/s NSL's grievance will have to be examined in the proceedings under Section 6A of the EC Act and this will be an efficacious remedy.
4 One of the two of the present Contempt Proceedings.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 10.5 The writ Court, consequent to its opinion as aforesaid, has issued a set of directions for disposal of the seized sugar, molasses, and ethanol. The writ Court, with Sri Basava Prabhu Patil expressing apprehension [after the pronouncement of the Common Order dated 28.09.2022] that M/s KPR may continue to poach sugarcane from the Subject Cane Area, has observed that if there is any such instance, M/s NSL would be at liberty to lodge a complaint with the competent authority. The writ Court's direction on disposal of seized sugar, molasses and ethanol must be extracted as certain interim orders are passed in the present proceedings in view of the same, and these directions read as under:
"64. Since the sugar is an essential commodity and the petitioner has an efficacious alternative remedy under the Essential Commodities Act, under that circumstance, I pass the following order:
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
(i) The Commissioner for Cane Development and Director of Sugar is directed to submit a report of the seizure of the sugar to the Deputy Commissioner, Kalaburagi under Section 6A of the Essential Commodities Act. In turn, the Deputy Commissioner is directed to hear the petitioner and respondent No.3 and pass appropriate orders in accordance with the provisions of Essential Commodities Act.
(ii) In respect of ethanol and molasses, the by-products of the sugarcane is concerned, the Commissioner for Cane Development and Director of Sugar is directed to sell the same in open auction between the petitioner and the third respondent and release the ethanol and molasses in favour of the highest bidder after taking the bank guarantee to that amount.
(iii) If the Deputy Commissioner under Section 6A of the Essential Commodities Act holds that the third respondent has crushed the sugarcane contrary to the Essential Commodities Act and Control Order 1966 and passes an order for confiscation of the sugar, then, the Commissioner for Cane Development and Director of Sugar is directed to release the confiscated sugar and bank guarantee in favour of the petitioner. If he passes an order holding that the third respondent has not violated any provisions of the Essential Commodities Act, then he can release the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 sugar and the bank guarantee in favour of the third respondent."
The details of the appeals in WA No. 200168/2022 and WA No. 200169/2022 and the interim orders therein:
11. M/s NSL, being aggrieved by the Writ Court's aforesaid common order dated 28.09.2022 has filed the intra court appeals in WA No. 200168/2022 [this relates to the order in WP No.200210/2022] and WA No. 200169/2022 [this relates to the order in WP No.201052/2022]. M/s KPR has also filed its intra court appeal in WA No.200021/2023 as against the writ Court's common order dated 28.09.2022, and although this appeal is filed on 02.11.2022, it is assigned a regular number only in 2023.
11.1 M/s NSL has filed its appeals impugning the writ Court's direction to the State Government to consider the rival claims to the Subject Cane Area
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 and the directions issued for enquiry under Section 6A of the EC Act on whether M/s KPR has legally crushed sugarcane at its factory at Chinmigera Village. This Court on 04.11.2022, has granted interim order in NSL's appeals directing the State Government not to pass any order in any manner reducing or altering the cane area/villages allotted to M/s NSL [M/s SSKN]. Insofar as the sale of sugar, ethanol and molasses, this Court has directed the Commissioner for Cane Development to dispose of the sugar, ethanol and molasses in a manner known to law and deposit the entire amount with this Court.
11.2 M/s KPR impugned this interim order dated 04.11.2022 before the Hon'ble Supreme Court in SLP Nos.22782-22783/2022. Though the Supreme Court on 16.12.2022 modified the interim order only insofar as the manner in which ethanol is sold, neither of the goods were sold. On an application by
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 M/s KPR, this Court, on 13.06.20235, has directed the Commissioner for Cane Development to sell the seized sugar, molasses, and ethanol. These are presently sold in compliance with the order, and 40% of the sale proceeds is deposited with this Court and the other 60% of the proceeds is paid to M/s KPR subject to the outcome of these proceedings.
11.3 M/s NSL has filed these appeals contending that the writ Court should not have directed an enquiry on M/s KPR's claim for allotment of the Subject Cane Area because, it has acquired a vested interest to procure sugarcane from the Subject Cane Area consequent to the Aland Order and the terms of the Lease Deed dated 06.03.2010 which is executed after negotiations on restoring the entire allotment. M/s NSL, apart from contending that it 5 In the light of the unanimous submissions made for the disposal of the applications
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 has vested rights as aforesaid, has also contended that the writ Court should have seen that the State Government was acting in a premeditated manner in permitting M/s KPR to commence crushing without licence and in procuring sugarcane without allotment of cane area and that the State Government is estopped from allotting any village because of the assurances held. M/s NSL has relied upon different circumstances to contend that M/s KPR has commenced crushing without licence and allocation of cane area despite interim orders against procuring sugarcane from the Subject Cane Area.
11.4 M/s KPR has filed the writ appeal in WA No.200021/2023 being aggrieved by the writ Court's direction to the Commissioner for Cane Development to file a report under the EC Act on seizure of sugar, molasses and ethanol at its factory and the directions to the Deputy Commissioner, Kalaburagi to pass
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 orders under Section 6A of the EC Act with the observation that there must be an auction between M/s KPR and M/s NSL and release of these products to the highest bidder against Bank Guarantee subject to the outcome of the enquiry.
11.5 M/s KPR has essentially contended that the writ Court could not have opined that an enquiry is necessitated because [a] it has filed an application for crushing and it is presumed that it will be granted unless rejected, [b] M/s NSL, which has defaulted in payments to the sugarcane growers, has not entered into agreements with the growers and unless such agreement is entered into M/s NSL cannot assert any exclusive interest, and [c] the concerned officers, even before the commencement of the first writ petition, have ascertained that the growers within the Subject Cane Area on their own volition have supplied sugarcane. M/s KPR also contends that the writ
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Court should have seen that the allocation of Cane Area is not permanent, and that the sugarcane growers' interest must be paramount. The details of W.P. No.200423/20236:
12. The Commissioner for Cane Development, after the writ Court's common order dated 28.09.2022, has filed his report on 02.11.2022, and the Deputy Commissioner, Kalaburagi, after this report dated 02.11.2022 and hearing M/s NSL and M/s KPR, has passed the order dated 12.01.2023 recording inter alia the different permissions and approvals obtained by M/s KPR and opining that it has not illegally crushed sugarcane at its factory at Chinmigera Village. M/s NSL has filed this writ petition in WP No. 200423/2023 calling in question the report dated 02.11.2022 and the Deputy 6 This Writ petition is filed before the writ Court but is placed before this Court by order dated 15.02.2023 because of the pendency of these proceedings.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Commissioner's order dated 12.01.2023 inter alia on the grounds of lack of jurisdiction and being arbitrary because of the stand taken by these officers in the earlier proceedings, including the contempt proceedings in CCC No.200037/2022. The details of the Deputy Commissioner's Statement of objections7:
12.1 The Deputy Commissioner has referred to the complaint filed by M/s NSL with the Deputy Superintendent of Police, Aland even before the date of the writ petition in WP No. 200210/2022 [the first writ petition], and the closure of this complaint after due enquiry. The Deputy Commissioner has adverted to the statements by the representatives of M/s NSL, M/s KPR and M/s Renuka Sugars to the Police during this investigation. According to the Deputy 7 Neither the Deputy Commissioner nor the Commissioner for Cane Development has filed statement of objections in W.P. No.200210/2022 and W.P. No.201052/2022.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Commissioner, M/s NSL's representative has stated that its factory at Bhusnoor has to crush 10 LMT of sugarcane in a year, but it is able to crush only 5 LMT because M/s KPR and M/s Renuka Sugar are illegally poaching sugarcane from the villages allotted to M/s SSKN/ M/s NSL. The Deputy Commissioner has furnished the details of sugarcane crushed by M/s NSL from the year 2013-13 as follows. Year Cane Crushed by Year Cane Crushed by M/s M/s NSL in Metric NSL in Metric Tonnes Tonnes 2013-2014 7,33,921 2018-2019 5,27,773 2014-2015 8,81,828 2019-2020 2,38,850 2015-2016 4,01,542 2020-2021 4,18,038 2016-2017 1,35,474 2021-2022 8,95,193 2017-2018 4,06,500 12.2 The Deputy Commissioner, insofar as the outcome of the inquiry into the complaint by M/s NSL, has stated that the jurisdictional Deputy Superintendent of Police has conducted an enquiry in the last week of January 2022 and this officer has also recorded the statements of M/s KPR's
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 representative. The representative in these proceedings has stated that there was communication with the Commissioner for Cane Development for allotment of 78 villages in Afzalpur and Aland, but the orders were awaited; that M/s KPR has established office in these villages, but no sugarcane is procured illegally; and that the sugarcane growers on their own initiative have been supplying sugarcane which is crushed for trial production.
12.3 The Deputy Commissioner has also stated that this representative has stated that M/s KPR has received sugarcane because the growers had insisted upon supplying sugarcane as they have not received payment from M/s NSL. The statements recorded on 27.01.2022, and the copies of these statements are produced as Annexures to the Statement of Objections. The Deputy Commissioner
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 has next referred to the writ petition in WP No. 200346/2021 filed by M/s NSL contending that this company is in the habit of filing multiple writ petitions alleging diversion of sugarcane though it was in default in paying the sugarcane growers compelling certain sugarcane growers/Association to file complaints.
12.4 The Deputy Commissioner has submitted that M/s NSL, as of March 2021, was due in a sum more than Rs. 27 crores to the sugarcane growers, and because M/s NSL is not prompt in paying sugarcane growers, the District Administration must handle strikes and dharnas by the sugarcane growers. Insofar as the proceedings culminating with the order dated 12.01.2023, the Deputy Commissioner has adverted to the different approvals taken by M/s NSL asserting that this order dated 12.01.2023 is in the light of the different
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 approvals and permissions, including IEM accepted by the Central Government, refuting all allegations of bias.
The details of the Statement of Objections by the Commissioner for Cane Development:
12.5 The Commissioner for Cane Development, while emphasising the increase in the sugarcane acreage and yield not just in India but also in Karnataka, has emphasized that Kalaburagi district is a dry semi-arid agro climatic region with very marginal rainfall and traditionally the sugarcane cultivation was very restricted. However, due to implementation of irrigation projects, sugarcane growing area has increased, and 56,333 hectares are brought under sugarcane cultivation during the year 2021-2022. The sugarcane available in the district, even with a yield of 80 -100 metric tonnes an acre, would be between 45 and 56 LMT. The
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 combined crushing capacity of all the four sugar factories in the district is only 27,500 TCD, and 42 LMT of sugarcane would be sufficient to meet the requirement of all these factories. 12.6 The Commissioner for Cane Development has also stated that in the year 1986, M/s NSL is allotted the entire district as its Cane Area because of the situation present then. However, with the establishment of more sugar factories, the allotment cannot be restricted to one factory, and if it is restricted, sugarcane farmers would be exploited. Significantly, the Cane Commissioner has mentioned that the Aland Order would be subject to amendments from time to time and has also stated that action could be taken against the sugarcane growers if they violate orders issued under Clause-6 of the Sugarcane Control Order 1966, but no action can be taken against a factory for receiving cane at
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 its Gate if sugarcane is supplied by the sugarcane growers on their own volition.
M/s NSL's reasons for the contempt proceedings in CCC No.200037/2022
13. M/s NSL has initiated contempt proceedings in CCC No. 200037/2022 contending that the Commissioner for Cane Development, the Deputy Commissioner for Kalaburagi, the concerned Secretary and the representatives of M/s KPR are in deliberate disobedience of the writ Court's interim order dated 02.02.2022 alleging that notwithstanding the direction to maintain status quo, M/s KPR, with the active connivance of the official respondents, has diverted to itself sugarcane from the farmers in the Subject Cane Area [44 villages] which is part of the Cane Area which is initially allocated to M/s SSKN.
13.1 On 11.04.2022, the Commissioner for Cane Development has filed an affidavit, and insofar
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 as the crushing at M/s KPR's factory in Chinmigera Village in violation of the interim order dated 02.02.2022 in WP No.200210/2022, the Commissioner has stated thus:
"9. I state that prior to the passing of the interim order in W.P.No.200210/2022 when it came to my notice that the Respondent No.3 illegally had started operating its factory before obtaining required due permissions from both the Central Government and the State Government, I had deputed our officers to visit the factory and submit a fact-finding report. The officers of my department visited the factory and submitted their report confirming the fact that the Respondent No.3 was operating without taking any due permissions.
10. I state that on 21.01.2022 I have directed the Tahashildar, Afzalpur Taluk, Kalaburgi District, to take immediate action and to stop the sugarcane crushing forthwith and to lodge a criminal case against the Respondent
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 No.3 for the violation of the provisions of Karnataka Sugarcane [Regulation of Purchase and supply] Act, 2013, Sugarcane [Control] Order, 1966, and Karnataka Sugar [Regulation of production] Order, 1975. Copy of the said letter is produced and marked as Annexure-R1. Another reminder dated 28.01.2022 sent through R.P.A.D. to the Tahasildar is produced along with postal acknowledgement as Annexure-R2 and R3. Therefore, I have taken all due steps within my purview to stop the Respondent No.3 factory from functioning further without due permissions and not to intrude into the cane area of the petitioner."
13.2 The Commissioner for Cane Development has also referred to the Show Cause Notice dated 21.01.2022 issued to M/s KPR to show cause against initiation of proceedings under Section 9 of the Karnataka Sugarcane (Regulation of Purchase and Supply) Act, 2013, and he has further stated that
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 M/s KPR in response thereto has filed its reply stating that the trial crushing is commenced and necessary applications have been filed for Plant Code and Short Name with the Central Government. The Commissioner for Cane Development has also adverted to the notice dated 29.01.2022 issued to M/s KPR against crushing and the communication by the jurisdictional Tahsildar about a complaint lodged with the concerned police station.
13.3 The Deputy Commissioner has also filed a counter affidavit denying deliberate disobedience with the writ Court's Order dated 02.02.2022 contending that, pursuant to the directions given to the jurisdictional Tahsildar on 29.01.2022, the jurisdictional police have issued Endorsement dated 30.01.2022 stating that they will register a complaint after obtaining legal opinion. It must be observed that the Deputy Commissioner, like the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Commissioner for Cane Development, has essentially stated that all measures are taken to ensure that there is due compliance and denied any deliberate violation of the writ Court's interim order.
13.4 M/s KPR's representative, a director and its authorized signatory, has filed response in these contempt proceedings on 25.01.2023 contending that with the writ Court's interim order dated 02.02.2022 having merged with the final order dated 28.09.2022, the contempt proceedings cannot continue. M/s KPR without a statement on whether it has procured sugarcane from the Subject Cane Area has asserted that M/s NSL which has not entered into agreement with the sugarcane growers with this area cannot assert any exclusive right to procure sugarcane. In the counter affidavit, there is detailed reference to the law in this regard.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 M/S NSL's reasons for the complaint in CCC No. 200014/2023:
14. M/s NSL has filed this complaint in effect alleging that M/s KPR's representatives, the incumbent Commissioner for Cane Development and the Deputy Commissioner are in contempt because they have deliberately violated the interim order dated 04.11.2022 in the present proceedings and the orders of the Hon'ble Supreme Court on 16.12.2022 in SLP Nos.22782-83/2022. M/s NSL contends that in the face of these orders, the Deputy Commissioner could not have issued notice dated 22.12.2022 for completion of the enquiry under Section 6A of the EC Act or passed the impugned order dated 12.01.2023.
14.1 M/s NSL also contends that both its representative and the representative of M/s KPR have participated in the proceedings, and the Deputy Commissioner is informed that he cannot proceed
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 with the enquiry in view of the interim orders. The Deputy Commissioner, despite being put on notice that continuation of the enquiry tantamount to violation of the interim orders of this Court, has concluded the enquiry by his order dated 12.01.2023 opining that M/s KPR has not illegally crushed sugarcane.
14.2 As against the Commissioner for Cane Development, M/s NSL contends that this officer, with the different directions on 04.11.2022 in these proceedings and the orders of the Hon'ble Supreme Court on 16.12.2022, should have taken immediate action to bring the seized sugar, molasses and ethanol for sale, but this officer, despite receiving representations from M/s NSL, has not initiated any action for bringing the aforesaid products to sale and this is only to help M/s KPR.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 The Deputy Commissioner's explanation 14.3 The Deputy Commissioner has filed his affidavit in these contempt proceedings contending that, according to his understanding and reading of the interim order dated 04.11.2022 in the present proceedings and the orders of the Hon'ble Supreme Court on 16.12.2022, the interim order is as against the State Government considering the rival claims over the Subject Cane Area as directed by the writ Court while disposing of the writ petition in W.P. No.200210/2022 and for sale of the seized sugar, ethanol and molasses with the modification permitted by the Hon'ble Supreme Court. As such, the enquiry is completed resulting in the order dated 12.01.2023, and he has not acted with any premeditation. The explanation by the Commissioner for Cane Development:
14.4 The Commissioner for Cane Development, almost in reiteration of the counter affidavit filed in
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 CCC No.200037/2022, has stated that his office has acted swiftly to ensure compliance with the interim order dated 10.05.2022 in W.P. No.201052/2022. His report dated 02.11.2022 is for the purposes of Section 6A[1] of the EC Act in view of the directions by the writ Court. The State Government has issued different circulars from time to time calling upon all the sugar factories in the State to enter into agreements as required under Clause-6 of the Sugarcane Control Order 1966 and notwithstanding these circulars, M/s NSL has not entered into agreements with the sugarcane growers. M/s. NSL, which has not entered into agreement with the sugarcane growers is trying to take advantage in initiating multiple proceedings.
14.5 The Commissioner for Cane Development has once again reiterated that the prohibition under the Sugarcane Control Order 1966 is as against the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 export of sugarcane from a cane area by the sugarcane growers and there is no prohibition restraining the factories receiving the sugarcane at its gate and as such, if M/s NSL could plead any cause of action, it is against the sugarcane growers. The State Government's Communication dated 26.11.2018.
15. During the course of the argument, a copy of the Communication dated 26.11.2018 is placed on record by Sri C.A. Sundaram [the learned Senior Counsel for M/s KPR] alluding to the statement by the Commissioner for Cane Development. Sri C.A. Sundaram submits that this Communication dated 26.11.2018, with the appended format for the agreement, is issued reiterating the requirement under the provisions of Clause 6[1][a] of the Sugarcane Control Order 1966.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 15.1 It is seen from this communication dated 26.11.2018, which is addressed to the Managing Director/Chief Executive Officers of all the sugar factories, that draft guidelines for bilateral agreement between the sugar factories and the sugarcane growers are sent from the office of the Director for Sugar with instructions to implement, but it is learnt that, despite such communication, the sugar factories are not entering into the prescribed agreement.
15.2 This Communication dated 26.11.2018 further records that the Hon'ble Chief Minister, who chaired the meeting, has directed all the factories to enter into bilateral agreements as per the prescribed format. Sri. C.A. Sundaram draws the attention of this Court to Clause-3 of this agreement, and the translation of this Clause reads as under:
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 "The cultivator agrees to grow sugarcane on the land shown in the schedule and to sell the full quantity of sugarcane contracted to the Sugar Mill, and the Sugar Mill is bound to purchase from the cultivator the full quantity grown in the land mentioned in the above schedule. The cultivator agrees not to sell to the sugar factory other than the sugarcane grown in the land mentioned in the schedule. Similarly, the sugar factory also agrees not to buy the sugarcane grown in any other tank by the farmer except the sugarcane grown in the land mentioned in the schedule."
Questions for consideration:
16. Upon hearing Sri. Basava Prabhu Patil, the learned Senior Counsel for M/S. NSL and Sri C.A. Sundaram and Sri. S.S. Naganand, the learned Senior Counsels for M/S. KPR, Sri Dama Seshadri Naidu, the learned Senior Counsel for M/s SSKN, and Sri Kiran V Ron, the learned Additional Advocate General, the following questions are framed, and the learned Senior Counsels and the learned Additional
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Advocate General are informed that the following questions are brought into focus by the rival submissions. The questions are as follows. I. Whether M/s KPR should be denied the opportunity of being heard in the writ appeals in WA Nos. 200168/2022, 200169/2022, 200021/2023 and WP No.200423/2023 because it is in contempt of the writ Court's interim order dated 02.02.2022 in WP No. 200210/2022 and this Court's interim order dated 04.11.2022 in the present proceedings. II. Whether the contempt proceedings in CCC Nos. 200037/2022 and 200014/2023 should be continued against.
• the representatives of M/s KPR for diverting sugarcane from the Subject Cane Area for the period commencing from 02.02.2022 until seizure pursuant to the next interim order dated 10.05.2022 in W.P. No. 201052/2022, • the Commissioner for Cane Development and Director of
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Sugars and the Deputy Commissioner, Kalaburagi for failing to take measures to prevent M/s KPR from procuring sugarcane as aforesaid, and • the Deputy Commissioner, Kalaburagi for continuing the enquiry under Section 6A of the Essential Commodities Act and passing the order dated 12.01.2023 which is impugned in WP No. 200243/2023 III. Whether, in the facts and circumstances of the case, the writ Court should have held that M/s NSL has vested right to procure sugarcane exclusively from the Subject Cane Area and that the Subject Cane Area cannot be allotted to any other sugar factory because of the doctrines of promissory estoppel and legitimate expectation.
IV. If the answer to the afore is in the affirmative, and if it is shown that the authorities are acting in a premeditated manner against M/s NSL, could it be opined that the writ Court8 8 The writ Court has essentially opined that because the State Government is vested with the power under the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 has erred in concluding that the State Government should decide on the rival claims for the reservation of the Subject Cane Area. V. Whether the Government of Karnataka has erred in granting licence dated 19.10.2022 in favour of M/s KPR for the year 2021-22, and whether the Deputy Commissioner has erred in holding that M/s KPR has not contravened the provisions of the EC Act and it has not crushed sugarcane illegally.
The rival Whether M/s KPR should be denied
submissions on
the right of hearing
Question No. I:
17. Sri Basava Prabhu Patil submits that it is undeniable that M/s KPR has violated the writ Court's interim order, and therefore, this Court must deny the right of hearing, especially when M/s KPR has refused to disgorge the benefits received by it in Sugarcane Control Order 1966, and no decision is taken for the allotment of cane area to M/s KPR, the State Government should take a decision in accordance with law.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 violation of the interim orders. Sri. Basava Prabhu's elaborate submissions in support of the same are as follows:
17.1 The writ Court by its interim order dated 02.02.2022 has directed M/s KPR, as also the authorities, to maintain status quo in view of the interim prayer not only as regards re-
allotment/reallocation of the Subject Cane Area but also against withdrawal of any village from such area and against diversion of sugarcane from the aforesaid cane area. Notwithstanding this interim order, M/s KPR has undeniably diverted sugarcane from there. This conduct is undeniably contumacious.
17.2 There cannot be any doubt about M/s KPR poaching/ diverting sugarcane from the Subject Cane Area because a substantial quantity of sugarcane is crushed between the months of February 2022 and May 2022 with the Central
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Government permitting M/s KPR to domestically sell sugarcane produced at its factory at Chinmigera village. The Government of India has issued orders for release of domestic sale of sugar manufactured by M/s KPR during this period. The orders in this regard are undisputed, and the orders are for the following quantities:
31.03.2022 2351 MT 29.04.2022 3970 MT 17.3 The Commissioner for Cane Development on 11.04.2022 has filed an affidavit in CCC No.200037/2022 reporting that M/s KPR has illegally procured and crushed sugarcane without a crushing licence. M/s KPR would have continued to divert sugarcane from the Subject Cane Area but for the interim order dated 10.05.2022 in W.P. No. 201052/2022 for seizure of the sugar cane, molasses and ethanol and the consequential seizure.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 17.4 M/s KPR cannot be permitted to take support of the impugned common order dated 28.09.2022 or plead ambiguity in the interim order dated 02.02.2022 or mitigating circumstances especially when it has derived an advantage to itself in violation of the interim orders to M/s NSL's detriment. Even if M/s KPR could be heard, it can only be after it has disgorged the benefits received by it in violation of the interim order.
17.5 As regards the legal propositions in support of these contentions, Sri Basava Prabhu Patil relies upon the following propositions:
[a] An order by a competent Court, whether interim order or final, is binding until it is varied by the court that has granted the order or set aside by a competent higher court. A party to the proceedings in which interim order is granted must adhere to such order and there cannot be
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 any exception. If there is violation or breach, the party committing the breach cannot be heard. In support of this proposition, reliance is placed upon the decision of the Hon'ble Supreme Court reported in Ravi S Naik v. Union of India and Others9;
[b] The Courts would not be unjust in denying hearing to a person where lack of worth is demonstrated by attacking the court [or disobeying the orders of the court] unless he or she has agreed to beat a retreat and the court concerned is convinced that such a retreat is genuine. In support of this proposition reliance is placed upon the decision of the Hon'ble Supreme Court in Anil Panjwani in Re10.
[c] A party to the litigation cannot be allowed to take an unfair advantage by committing breach of the interim 9 1994 Suppl [2] SCC 641.
10 [2003] 7 SCC 375
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 order and escape the consequences thereof pleading misunderstanding or mitigating circumstances, and disobedience must be put to an end with an iron hand, and the reliance is on the decision of the Hon'ble Supreme Court in All Bengal Excise Licencees Association v.
Raghabendra Singh and others11.
18. Sri C.A. Sundaram, responding to the afore, canvasses that the submissions on behalf of M/s NSL is based in the premise that M/s KPR is in disobedience of the interim order dated 02.02.2022 in diverting sugarcane from the Subject Cane Area and illegally crushing sugarcane without a crushing licence. The question whether there is diversion of sugarcane as alleged, or the question whether the crushing by M/s KPR is illegal, was yet to be decided by the writ Court as of the date of the seizure 11 [2007] 11 SCC 374
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 pursuant to the interim order in W.P. No.201052/2022. Until it is conclusively held that M/s NSL has a vested right to procure sugarcane from the Subject Cane Area, there cannot be any allegation of disobedience. Sri. C.A. Sundaram's further submissions in this regard are as follows.
18.1 This Court must consider the canvass for denial of the opportunity of hearing in the light of the law exposited in Anil Panjwani in re supra. The rule as regards the denial of an opportunity of hearing to a contemnor, unless contempt is purged, is not a rule of law, or a statutory rule, and it is only a rule of practice for protecting the sanctity of the Court proceedings and the dignity of the Courts. This rule to deny the opportunity of being heard is a flexible rule of practice and not a rigid rule of law.
18.2 The concerned Court, guided and governed by the facts and circumstances of a given
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 case, must form an opinion that a contemnor is persisting his behavior and initiation of proceedings for contempt has had no deterrent or reformatory effect or that the disobedience has continued for so long that it impedes the course of justice or that the conduct of the contemnor makes it impossible for the Court to enforce the orders. M/s NSL has not placed on record any material to opine that any of the circumstance is established and conclude that M/s KPR must be denied the opportunity of hearing.
18.3 M/s KPR has crushed 6.00 LMT after commencing trial crushing, and out of this quantity only 1.75 LMT [Lakh Million Tones] of sugarcane i.e., just 25% of the total sugarcane crushed is received from the Subject Cane Area. M/s KPR over a period of over 4 months prior to the order dated 02.02.2022 had entered into contracts with cane growers from this area paying different sums to them towards
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 plantation, harvesting and transportation costs, and about 0.22 LMT was delivered by the sugarcane growers as of 09.02.2022. M/s KPR after this date has received about 1.50 LMT of sugarcane that was agreed to be delivered, not even a single order is placed after 09.02.2022.
18.4 M/s KPR has commenced trial crushing after filing an application for crushing and has continued crushing in anticipation of licence being granted with retrospective effect as is the general practice. These circumstances are to be considered compendiously, and unless they are considered accordingly and conclusively held that M/s KPR's representatives are indeed in contempt, it would not be reasonable to apply a rule, which is flexible in its application, and deny the opportunity of hearing.
18.5 M/s NSL is asserting a vested right to procure and utilize sugarcane from the Subject Cane
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Area to the exclusion of every other factory, but this claim, at the best, is tenuous because of the Scheme in Clause-6 of Sugarcane Control Order 1966, which mandates reserving a cane area, a yearly determination of the quantity that a sugarcane factory will require for crushing during the year with further decision on fixing the quantity or percentage of sugarcane grown by a grower that should be supplied to a factory leading to an agreement. M/s NSL does not, and cannot, plead that these are established. In the absence of the circumstances, no vested right, can be pleaded, much less established. M/s NSL in that event cannot contend that there must be denial of opportunity of hearing.
The rival Whether the contempt proceedings in
submissions on
CCC Nos. 200037/2022 and
Question No. II:
200014/2023 should be continued.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
19. Sri Basava Prabhu Patil, reiterating that M/s NSL shall rely upon the other contentions in support of initiation of contempt proceedings, argues that M/s NSL has brought on record materials that demonstrate that the representatives of M/s KPR have, in deliberate violation of the interim order dated 02.02.2022 in W.P.No.200210/2022, have procured sugarcane from the Subject Cane Area for the period commencing from 02.02.2022 until seizure pursuant to the next interim order dated 10.05.2022 in W.P. No. 201052/2022, and the authorities mentioned in CCC NO.200037/2022 are guilty of deliberate disobedience with the orders of the writ Court on 02.02.2023 in W.P.No.200210/2022 because they have deliberately not taken measures to prevent M/s KPR from procuring sugarcane as aforesaid.
19.1 Sri Basava Prabhu Patil submits that the proceedings in CCC No. 200014/2023 are well
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 founded because it is shown that both the Commissioner for Cane Development and the Deputy Commissioner have failed to initiate action to prevent M/s KPR from diverting sugarcane from the Subject Cane Area; that these officers, deliberately and in willful disobedience of the interim order dated 04.11.2022, have also failed to take any measure to dispose of sugar, molasses and ethanol despite definite and unequivocal directions; and that the Deputy Commissioner has deliberately concluded the proceedings under Section 6A of the EC Act and has passed the order dated 12.01.2023, which is impugned in WP No. 200423/2023.
19.2 Sri Basava Prabhu Patil submits that the Commissioner for Cane Development and the Deputy Commissioner were informed through the months of November and December 2022 that M/s KPR was procuring sugarcane from the Subject Cane Area as
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 could be seen by the fact that representations as per Annexure - AB have been received by them but without taking any action. Similarly, during the enquiry under Section 6A of the EC Act, the Deputy Commissioner is informed about the interim order dated 04.11.2022 with a request to defer the enquiry.
19.3 Sri Basava Prabhu Patil argues that in the circumstances of the case this Court must opine that there is prima facie material on record to conclude that specific charges must be framed against the representatives of M/s KPR, the Commissioner for Cane Development, the Deputy Commissioner and the concerned Secretary as contemplated under Rule 10 of the High Court of Karnataka [Contempt of Court Proceedings} Rules, 1968 [for short, 'the Contempt of Court Rules'].
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
20. Sri C.A. Sundaram, on the other hand, submits that this Court must opine that there is no prima facie case and absolve the representative of M/s. KPR of the allegations of contempt in the light of the following grounds; and the learned Senior Counsel also submits that he would emphasize every ground urged in answer to each of the questions framed for consideration to demonstrate that there can be no justification to allege disobedience, either willfully or wantonly or otherwise. The learned Senior Counsel relies upon the following as specific circumstances that demonstrate that the contempt proceedings cannot be sustained.
a. The writ Court's interim order dated 02.02.2022 in these terms directs the parties to maintain status quo, and in the circumstances of the case it was capable of being read that M/s KPR could not have entered into fresh contracts to receive
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 sugarcane growers from the Subject Cane Area after the communication of the interim order dated 02.02.2022. M/s KPR is categorical that the order dated 02.02.2022 is served only on 09.02.2022 and that not a single order is placed with any of the sugarcane growers from any of the villages in the Subject Cane Area after this date. If 1.5 LMT of sugarcane is delivered and received after 09.02.2022, it is only because the contract for this quantity was concluded over a period of four months prior to 09.02.2022 incurring costs to the growers towards plantation, harvesting and transportation with the sugarcane growers volunteering to deliver sugarcane to M/s KPR on their own volition for their reasons.
b. The order dated 02.02.2022 is in the context of the interim prayer for order against diversion of the sugarcane from the M/s NSL's asserted cane area. M/s KPR, in the absence of a
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 reservation of the cane area including the Subject Cane Area specifically to M/s NSL and in the absence of an agreement between M/s NSL and sugarcane growers, has bona fide believed that it could receive the sugarcane for which contract was concluded with the growers from the Subject Cane Area even prior to the intimation of the order dated 02.02.2022.
c. The endeavour is to persuade this Court to opine, given the Scheme as contained in Clause-6 of the Sugarcane Control Order 1966, that there cannot be any vested right in favour of any factory to procure sugarcane from any particular area for an indefinite time unless the reservation of the Cane Area is periodically revisited, the requirement of sugarcane by a factory in a year is re-determined, the quantity of sugarcane grown [or percentage of the sugarcane by a grower] be supplied to a factory is re- fixed and a direction to both the sugarcane grower
- 82 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 [the society of sugarcane growers] is issued to conclude agreement based on the fulfillment of the aforesaid pre conditions.
d. M/s KPR is categorical that the question of reserving the Subject Cane Area in favour of M/s NSL is still pending open as none of the above exercise is complete and it cannot be disputed that there is no agreement because M/s NSL has caused public notice in the month of March 2023 calling upon the growers within the Subject Cane Area to enter into agreements with it for supply of sugarcane grown by them. In any event, even according to M/s NSL only 95% of the sugarcane grown could be bound to M/s NSL and there cannot be any embargo in law on the sugarcane growers to supply the remaining 5% of the sugarcane grown to any other factory.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 e. If the order dated 02.02.2022 is construed as creating a bar against supply of 5% of the sugarcane grown, it would be an unreasonable restriction even within the framework of the Scheme under the Sugarcane Control Order 1966 and the delegated subordinate legislation. As such, M/s KPR bona fide believed that it was not violating the interim order dated 02.02.2022 in receiving about 1,50,000 MT of contracted sugarcane after receipt of the intimation of the aforesaid order. This Court must consider the aforesaid circumstances in the light of the settled proposition that an order, because of the serious consequences that would befall as a culmination of the contempt proceedings, must be strictly construed.
20.1 Sri C.A. Sundaram, emphasizing that the writ Court's interim order dated 02.02.2022 is terse, submits that this order is capable of being read that
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 M/s KPR could not have entered into fresh contracts to receive sugarcane growers from the Subject Cane Area after the communication of the interim order dated 02.02.2022, and in any event this order is not clear. The learned Senior Counsel submits that it is a settled principle of law that if two interpretations are possible of an order that is ambiguous, a proceeding for contempt would not be maintainable, especially if a party has acted on the basis of one of the possible interpretations12; that this proposition is because a contempt action is in the nature of a quasi-criminal proceeding and the guilt must be established, as in the case of a criminal charge, beyond reasonable doubt13, and an ambiguous and equivocal order, because it admits of interpretation, 12 Sushila Raje Holkar vs. Anil Kak (Retired) [2008] 14 SCC 392.
13 T.C. Gupta Vs. Bimal Kumar Dutta & Others. [2014] 14 SCC 446.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 cannot be a reason for sustaining contempt proceedings.
20.2 Sri C.A. Sundaram concludes that willful disobedience is established when intentional, conscious, calculated and deliberate action with the full knowledge of the consequences that would follow is established, and this is in contrast when an action is thoughtless or inadvertent or negligent or involuntary14, and in the circumstances of the case, there cannot be any allegation of willful disobedience and hence, the contempt proceedings must be dropped.
21. The Deputy Commissioner has filed Reply Affidavit contending that this Court on 04.11.2022 has only modified the directions of the writ Court for sale of sugar, molasses and ethanol and there is no other interim order except insofar as the liberty 14 Abhishek Kumar Singh Vs. G. Pattanaik & Ors. [2021] 7 SCC 613.
- 86 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 granted to M/s NSL to challenge the Crushing Licence dated 19.10.2022; that M/s NSL has impugned the order dated 04.11.2022 before the Hon'ble Supreme Court in SLP(C) Nos.22782- 83/2022 and these SLPs are disposed of without altering the order dated 04.11.2022 in the light of the submissions made on behalf of M/s NSL recording the opinion that the Commissioner for Cane Development can sell ethanol and deposit the entire consideration with this Court.
21.1 The Deputy Commissioner thus asserts that neither this Court nor the Hon'ble Supreme Court has stayed the further proceedings in an enquiry under Section 6A of the EC Act, and hence, no exception can be taken with the conclusion of the enquiry and the culmination thereof in the order dated 12.01.2023. As regards the action taken against M/s KPR because of the complaint of
- 87 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 procurement of sugarcane from the Subject Cane Area, the Deputy Commissioner has once again referred to the complaint lodged against M/s KPR and M/s Renuka Sugars and the investigation by the Deputy Superintendent of Police.
21.2 The Deputy Commissioner has denied all the allegations of acting in violation of the interim orders to assist M/s KPR. The Reply Affidavit filed by the Commissioner for Cane Development is also in similar lines, and the Statement of Reply filed on behalf of the representatives of M/s KPR is also a reiteration of the objections filed otherwise. As such, there is no detailed reference to the same in this part of the order.
This Court's conclusion on Question No I:
22. M/s NSL's contention that M/s KPR should not be heard in these proceedings is based on the allegation that it has violated the writ Court's
- 88 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 interim order dated 02.02.2022 in procuring sugarcane from the Subject Cane Area and in crushing such sugarcane until 10.05.2022 without obtaining crushing licence. M/s KPR's essential defense is that upon receiving information about the writ Court's interim order dated 02.02.2022 it has not entered into contract with any sugarcane growers within the Subject Cane Area to procure sugarcane; that in the months preceding the date of information of such interim order [09.02.2022] it had entered into contracts with the sugarcane growers within the Subject Cane Area to procure about 1.75 LMT and received about 20-25% of such sugarcane; that after 09.02.2022, it has only received the remaining sugarcane. It is also contended that M/s KPR, as of the date of the seizure in the month of May 2022, had crushed a total of 6 LMT of sugarcane and only 1.53 LMT thereof is received from the Subject Cane Area.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 22.1 This Court must observe that the M/s KPR relies on these assertions which are presented for the first time during the course of the hearing without the detailed pleadings, but this Court is of the considered view that, because the test to deny the opportunity of hearing in Court proceedings is the test of gross persistence and the denial of an opportunity of hearing [which is an extreme step in any judicial proceeding where the maxim, no man is to be condemned unheard, is one of the bulwarks], the defense as put forth, even without the detailed pleadings must receive some consideration. This Court in this context must refer to the decision of the Hon'ble Supreme Court In the matter of Anil Panjwani supra wherein it is held as follows:
"To our mind, the rule as to denying hearing or withholding right of participation in the proceedings to the contemnor may briefly be summed up and so stated. It lies within the discretion of the Court to tell the contemnor
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 charged with having committed contempt of Court that he will not be heard and would not be allowed participation in the Court proceedings unless the contempt is purged. This is a flexible rule of practice and not a rigid rule of law. The discretion shall be guided and governed by the facts and circumstances of a given case. Where the Court may form an opinion that the contemnor is persisting in his behaviour and initiation of proceedings in contempt has had no deterrent or reformatory effect on him and/or if the disobedience by the contemnor is such that so long as it continues it impedes the course of justice and/or renders it impossible for the Court to enforce its orders in respect of him, the Court would be justified in withholding access to the Court or participation in the proceedings from the contemnor. On the other hand, the Court may form an opinion that the contempt is not so gross as to invite an extreme step as above, or where the interests of justice would be better served by concluding the main proceedings instead of diverting to and giving priority to hearing in contempt proceeding the Court may proceed to hear both the matters
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 simultaneously or independently of each other or in such order as it may deem proper."
Thus, even if M/s KPR can demonstrate, even as a mere possibility, that it has not entered into any contract with the sugarcane growers within the Subject Cane Area after 09.02.2022, it would not be reasonable to opine that there is gross precipitation to justify the denial of opportunity.
22.2 It remains undisputed that M/s KPR, on 06.02.2021 is granted in-principle approval for establishing its factory at Chinmigera under the provisions of the Karnataka Industries [Facilitation] Act, 2002 after being issued with the Distance Certificate on 11.12.2020 and that it has applied for cane allocation area and cane crushing licence on 01.03.2021 and 17.11.2021 respectively. It also remains indisputable that as of 12.05.2022 M/s KPR has crushed 6.00 LMT of sugarcane, including the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 sugarcane procured from the Subject Cane Area, as of 12.05.2022 when, pursuant to the writ court's order dated 10.05.2022, sugar, molasses and ethanol were seized at its premises.
22.3 In an enquiry by the jurisdictional police in the proceedings initiated on a complaint by M/s NSL and certain correspondence by the authorities on such complaint, the representatives of M/s KPR in their statements to the jurisdictional police on 27.01.2022 have stated that the sugarcane growers in certain villages of Afzalpur Taluk [which are part of the Subject Cane Area] on their own initiative have harvested sugarcane and delivered at M/s KPR's Unit at Chinmigera because M/s NSL's unit is at a distance of 60 km and M/s KPR's unit is at a distance of 20 km, and M/s KPR has received such sugarcane also to mitigate the difficulties of these
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 farmers. These proceedings are before the writ Court's interim order dated 02.02.2022.
22.4 This Court cannot opine that M/s KPR's case that the sugarcane growers from some of the villages in the Subject Cane Area, on their own initiative, have delivered sugarcane is contrived, and in fact, at this stage this Court must refer to the communication dated 12.03.2021 addressed by M/s NSL to the Deputy Director, Food and Civil Supplies, Kalaburagi District stating that it was in certain arrears to the sugarcane growers for sugarcane season 2020-21 but it will take measures to clear within a certain timeline. This Court must record that, for the purpose of answering the questions under consideration, that there is a strong possibility of the sugarcane growers, because of the default in the payment for the previous crushing season and the relative ease of delivering sugarcane to a factory
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 closer to their lands, could be encouraged to enter into contracts with M/s KPR.
22.5 Further, this Court must opine that nothing significant is brought on record to doubt M/s KPR's case that its contracts for procurement of 1.75 LMT of sugarcane from the Subject Cane Area were concluded before it was informed about the writ Court's order dated 02.02.2022 or that it has not entered into any contract with the sugarcane growers from this area after it was informed about this order. These circumstances, as also the other facets discussed later, do not persuade this Court to opine that it would not be reasonable to conclude that there is gross precipitation by M/s KPR to justify the denial of the opportunity of hearing in the present proceedings.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 This Court's conclusion on Question No II
23. The next question for consideration is whether the contempt proceedings in CCC No. 200037/2022 and 200014/2023 must be continued against the representative of M/s KPR and the official respondents. A person accused of being in civil contempt may, as contemplated under the provisions of the Rule 1015 of the Contempt of Court Rules, can file an affidavit to deny such allegation, and the Courts, after hearing the parties and upon consideration of the reply, may drop the proceedings and discharge the person, but if the court is satisfied 15 Hearing of Cases and Trial.- (i) The accused may file his reply duly supported by an affidavit on or before the first date of hearing or within such extended time as may be granted by the Court.
(ii) Upon consideration of the reply filed by the accused and after hearing the parties, the Court may drop the proceeding and discharge the accused;
(iii) if the court, upon hearing, is satisfied that there is prima facie case, it shall proceed to frame the charge and furnish a copy of the same to the accused;
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 that there is a prima facie case, it must frame charges for continuation of the proceedings. The material circumstances and the rival submissions are considered in the light of the afore.
23.1 As against continuation of the contempt proceedings, two propositions are strongly relied upon. It is canvassed that if an order is possible of two or more interpretations and therefore ambiguous, and if one of the interpretations is bona fide adhered to, the concerned cannot be held to be in contempt. It is next canvassed that the contempt proceedings cannot be sustained when the action complained is either thoughtless or negligent unlike in cases where there is intentional, calculated, conscious and deliberate action with full knowledge of the consequences that would ensue.
23.2 The merits of these propositions are not contested, and as such, there is no detailed
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 discussion in that regard, but the application of these propositions is considered in the light of the allegation that M/s KPR and the official respondents have deliberately and consciously violated the writ Court's order dated 02.02.2022. The merits of this allegation is examined as against the backdrop of the following undisputed facts as also the opinion recorded in answering the first question viz., that the sugarcane growers from the Subject Cane Area could have on their volition supplied sugarcane to M/s KPR.
23.3 As aforesaid, the in-principle approval for establishing M/s KPR's unit at Chinmigera on 06.02.2021 under the provisions of Karnataka Industrial [Facilitation] Act, 2002 is granted with the Department of Industries, Boilers, Industrial Security, and Health, Government of Karnataka granting permission on 27.01.2022 to commence
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 operations. It is contended that in the light of these permissions and other compliances, and in anticipation of the permissions for crushing and allotment of inclusive Cane Area, M/s KPR has commenced trial crushing.
23.4 The Government of India has issued release orders on 31.03.2022 and 29.04.2022 and has permitted M/s KPR to domestically sell 6321 MTs of sugar. The Commissioner for Cane Development has temporarily allocated certain villages to M/s KPR on 13.07.2022, and the crushing licence for the period up to 30.06.2022 is issued on 19.10.2022. M/s KPR has filed application for crushing licence on 17.11.2021. The merits of the allocation of Cane Area and issuing of Crushing Licence is being examined in these proceedings.
23.5 The Commissioner for Cane Development and the Deputy Commissioner, in response to the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 allegation of deliberate violation of the writ Court's order dated 02.02.2022, have filed affidavits stating that on 21.01.2022 i.e., before the writ Court's order dated 02.02.2022, he has directed the jurisdictional Tahsildar to take immediate action and stop sugarcane crushing by M/s KPR and that on coming to know about the writ Court's order dated 02.02.2022, he has directed the officers from the Department to visit M/s KPR's factory and take immediate actions to stop crushing. In support of these assertions, the Commissioner for Cane Development has also referred to the notices dated 21.01.2022 and 29.01.2022 issued to M/s KPR.
23.6 The Deputy Superintendent of Police on 28.01.2022 has filed a report on the complaint filed by M/s NSL stating that he has recorded the statements of the representative of M/s NSL, M/s KPR and M/s Renuka Sugars; that the farmers
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 within the 360 villages [including the Subject Cane Area] have harvested and transported sugarcane to the factories of these concerns because of the advantages that would inure to them in harvesting sugarcane and supplying the same to them; that M/s KPR, has indeed established its offices in the Subject Cane Area, but its representative is categorical that no sugarcane would be procured by them on their own volition without allotment orders. In the circumstances of the case, these prior circumstances will be crucial as would establish intendment and must have a decisive role.
23.7 M/s NSL has sought for multiple interim prayers viz., for direction to maintain status quo in the matter of [a] the allotment/re-allocation of Subject Cane Area, [b] the withdrawal of the villages from the Subject Cane Area, and [c] to ensure that there is no diversion of sugarcane from such area to any other
- 101 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 factory. The writ Court 02.02.2022, has granted interim order 'as prayed for', and this order is without elaboration. There is no dispute that status quo as regards the allotment and withdrawal of the villages in the Subject Cane Area is maintained, and the dispute is with regard to the diversion of sugarcane from this area. This Court must observe that if the directions are not elaborate, in the circumstances of a given case and as in the present case, it could allow for different reading of the import of the directions leading to bona fide decisions and conduct which could perhaps in prudence be avoided to avert allegations of being in contempt.
23.8 As against diversion of sugarcane from the Subject Cane Area after the order dated 02.02.2022, M/s KPR's case is that as of the date of information of the writ Court's order [09.02.2022], it had concluded contracts to procure 1.75 LMT from
- 102 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the Subject Cane Area, and that after coming to know about the interim order, it has not entered into any further contracts. If M/s KPR had in fact entered into any further contracts after coming to know about the writ Court's order, undoubtedly, the concerned, including the representative of M/s KPR, would be on a greater onus to establish bona fides and dispel doubts about deliberate violation of the order. However, if M/s KPR in due deference to the writ Court's order, as understood by its representatives, has not entered into any further contract this aspect must receive due consideration.
23.9 There is nothing on record, as discussed while considering the first question, to reasonably opine that M/s KPR has entered into contracts after coming to know about the writ Court's order dated 09.02.2022, and this aspect must be considered in the backdrop of the undisputed
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 proposition that mere violation of the Courts' orders will not be contumacious unless it is shown such violation is deliberate and is intended to derive advantage irrespective of the consequences in that a sense of bravado unmindful of the consequences must be too obvious to even refute. This proposition initially comes into force when directions of the Courts are not detailed and precise.
23.10 This Court, while considering whether contempt proceedings in CCC No. 200023/2022 must be continued must also consider that M/s NSL had filed writ petition in WP No. 200346/2021 [a writ petition filed prior to the present proceedings commenced in 2022] arraying M/s KPR and M/s Renuka Sugars as respondents for directions to the authorities to consider its application for allotment of Cane Area and for directions to the aforesaid not to divert sugarcane from its Cane Area/Subject
- 104 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Cane Area. This writ petition in WP No.200346/2021 is disposed of on 12.07.202116 directing the authorities to consider such application, but no such decision is taken. However, M/s KPR after this order on 12.07.2021 is allotted sugarcane area excluding the Subject Cane Area.
23.11 Further, M/s NSL asserts that only it is entitled to procure sugarcane from the Subject Cane Area, and this question, and every other related question, was open for consideration at that stage of the interim order dated 02.02.2022, especially with M/s NSL having not entered into agreements with the growers within the Subject Cane Area in the recent times and causing a public notice in the month of March 2023 calling upon the sugarcane growers within the Subject Cane Area to enter into agreement. The Commissioner for Cane Development and the 16 KPR and M/s Renuka Sugars, as verified from the order, are not issued notice.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Deputy Commissioner have filed counter affidavits explaining the action taken by them prior to the writ Court's interim order dated 02.02.2022 and tendering an unconditional apology.
23.12 These circumstances are considered holistically and in the light of the fact that the writ Court in its order dated 28.09.2022 has left open all questions to be considered in the enquiry enabled under Section 6A of the EC Act observing that sugar is an essential commodity and the petitioner, under the provisions of Section 6A has an efficacious remedy. The conduct of a party after the orders/interim orders are granted must be examined to decide whether such party must answer the charge of being in contempt, but this Court is of the considered view that the conduct alleged must also be seen in conjunction with all the attendant circumstances.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 23.13 It is often said that a particular conduct, or the relative quality of a conduct, would be crucial but the intendment behind such conduct must be examined in the circumstances surrounding such conduct in deciding on the culpability and the consequences that must visit such culpability. In the present case, insofar as the allegation of deliberate and willful disobedience of the writ court's order dated 02.02.2022, this Court is of the considered view that there is no prime facie case for framing of charges either against the representative of M/s KPR or the Commissioner for Cane Development and the Deputy Commissioner.
23.14 As regards the alleged deliberate and willful disobedience with this Court's order dated 04.11.2022, it would suffice for this Court to observe that no view be expressed at this stage because M/s NSL, which has challenged this Court's aforesaid
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 interim order before the Hon'ble Supreme Court in SLP (C) Nos. 22782 - 83/2022 that is disposed of by the order dated 16.12.2022, has filed contempt proceedings in Contempt Petition [C] Nos. 886- 887/2023 before the Hon'ble Supreme Court and these proceedings are pending with the parties filing their respective pleas.
The rival Whether M/s NSL has vested
submissions on right to procure sugarcane
Question No. III exclusively from the Subject
and IV Cane Area and whether the
writ Court17 has erred in
concluding that the State
Government should decide on
the rival claims for the
reservation of the Subject
Cane Area
17 The writ Court has essentially opined that because the State Government is vested with the power under the Sugarcane Control Order 1966, and no decision is taken for the allotment of cane area to M/s KPR, the State Government should take a decision in accordance with law.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
24. Sri Basava Prabhu Patil argues the following in support of M/s NSL's case that it has a vested right to purchase sugarcane from the Subject Cane Area, that its legitimate expectation to exclusively procure sugarcane from this area cannot be derived and that promissory estoppel must be applied against withdrawing any extent from this area. The learned Senior Counsel first argues that the State Government, with the issuance of Aland Order, has determined and reserved the area for supply of sugarcane to M/s SSKN. Accordingly, 369 villages, including the 44 villages that comprise of the Subject Cane Area, is reserved for the benefit of M/s SSKN. The State Government by this order has not only thus reserved the cane area, but it has also fixed the quantity of sugarcane to be supplied by each sugarcane growers in these villages, and the reliance in this regard on Clauses - 3 and 4 of this order which read as under:
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 "3. The Factory shall also secure the sugarcane from the area specified in Schedule-I except during the period when the concerned Khandasari Units in these areas were allowed to operate by the Government.
4]. Fixation of quantity of sugarcane to be supplied by the Growers:
1]. Every grower of sugarcane in the reserved area specified in Schedule-I shall supply to the Factory ninety five percent of the Sugarcane grown by each such grower by himself or if he is a member of sugarcane growers Co- operative society operating in the reserved area through such society. 2]. Every grower of sugarcane in the reserved area specified in Schedule-1 shall supply ninety five percent of the Sugarcane grower by each such grower, which he has not contracted or has not actually supplied to the Khandasari Units".
24.1 Sri Basava Prabhu Patil contends that every sugarcane grower in the aforesaid villages will have to enter into an agreement with M/s SSKN in terms of Clause 518 of the Aland Order, and this 18 Agreement to supply or purchase the determined quantity of sugarcane. Every grower of Sugarcane, or Sugarcane Growers Co-operative society supplying
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 agreement is indisputably constituted with each of the sugarcane growers in these villages being members of M/s SSKN and the byelaws of this Society stipulating that its members [the sugarcane growers] shall enter into an agreement to supply sugarcane to M/s SSKN at such rate and such place as may be fixed by the aforesaid Co-operative Society with the further stipulation that there shall be liability to pay penalty and damages if there is failure.
24.2 Sri Basava Prabhu Patil argues that these circumstances bring about the initial right in M/s SSKN to procure sugarcane from the Subject Cane Area [as also the entire extent of 369 villages mentioned in Schedule-I of the Aland Order], and this right is crystallized in M/s NSL, which has secured leasehold rights from M/s SSKN under the Lease sugarcane to the Factory, and the Factory shall enter into agreement to supply or purchase, as the case may be, the quantity of sugarcane determined under Clause - 4.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Deed dated 06.03.2010, because of the following circumstances:
a. The State Government has issued a tender notification for grant of lease of M/s SSKN factory for a period of 30 years. M/s NSL [the highest bidder] and the State Government are parties to pre-bid discussions as is provided for under the notification.
The State Government has specifically assured that M/s NSL would be entitled to "procure sugarcane available within the area allotted" under the Aland Order with the further assurance that a separate notification would be issued to ensure that 38 villages [out of the total 369 villages] allotted to M/s Renuka Sugars would also be restored to M/s NSL soon after the execution of the lease deed.
b. Therefore, the Clause-3 of the Lease Deed dated 06.03.2010 is executed with stipulations such as the following:
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 • The Lessee is entitled to procure the sugarcane available within the area allocated under the provisions of Sugarcane [Control] Order, 1966, to the Lessor.
• The Lessee shall have right to procure additional sugarcane required, from any other sources, but subject to the permissions of the competent authorities if required and in accordance with the prevailing laws in this regard.
• The State Government shall issue a separate notification restoring 38 villages which are temporarily allocated to M/S Renuka Sugars Ltd., in favour of lessee soon after signing of this lease deed.
c. M/s NSL has been pursuing not only for restoration of the aforesaid 38 villages but also ensuring that no village within the 369 villages is allotted to any other sugar factory. The petitioner has filed writ petition in WP No.101201/2013 for securing the assurance of restoration of the 38 villages allotted to M/s Renuka Sugars, and this writ petition stands disposed of by order dated 04.10.2021 directing the State Government to hold an enquiry and pass
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 appropriate orders. M/s NSL has also filed another writ petition in WP No. 200346/2021 for a set of directions to consider its representation against M/s KPR19 diverting sugarcane from the Subject Cane Area. This writ petition is disposed of on 12.07.2021 with directions to the authorities [including the Commissioner of Cane and Director Sugar] to hear all the concerned and pass appropriate orders.
d. In the meanwhile, M/s SDMSL, after filing IEM for establishing a sugar factory with a crushing capacity of 2005 TCD, has mooted a proposal for withdrawal of the Subject Cane Area to be allotted to it, and M/s SSKN as also M/s NSL, which by then had acquired lease hold rights, have filed their objections to this proposal. The Commissioner for Cane Development, notwithstanding the objections, has sent a proposal for allotment of the Subject Cane 19 M/s KPR is the sixth respondent in this petition. It is served but has remained unrepresented.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Area. There are exchanges between the Government of Karnataka and the Commissioner for Cane Development on certain queries, but no decision is taken.
24.3 Sri Basava Prabhu Patil argues that the aforesaid circumstances not only demonstrate a vested right in M/s NSL to procure sugarcane exclusively from the Subject Cane Area, but that M/s NSL also has been pursuing for restoration of all the villages and it is vindicated in asserting legitimate expectation of being secured the entire 369 villages mentioned in Schedule-I of Aland Order, including the Subject Cane Area. He further canvasses that because M/s NSL has a vested right backed by a promise by the State Government to restore and secure the entire 369 villages, the State Government is estopped from allocating any extent in the Subject Cane Area to any other factory or permit any other
- 115 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 factory from procuring sugarcane from the villagers. Therefore, the writ Court could not have directed consideration of allotting any village in the Subject Cane Area to M/s KPR.
24.4 Sri Basava Prabhu Patil, in support of the proposition that even a government will not be exempted from the liability to carry out the representation made by it as to its future contract, and that the government cannot, on some undefined and undisclosed ground of necessity of expediency, fail to carry out the promise or be a judge of its own obligation to a citizen to reappraise its obligations, relies upon the following paragraph in the decision of the Hon'ble Supreme Court in Union of India and others v. Indo-Afghan Agencies Ltd.20:
"Under our jurisprudence the Government is not exempt from liability to carry out the representation made by 20 [1968] 2 SCR 366
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise, solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen."
24.5 Sri Basava Prabhu Patil further relies upon the decision of the Hon'ble Supreme Court in National Buildings Construction Corporation v. S. Raghunathan21, to canvass that the doctrine of legitimate expectation, which has its genesis in the field of administrative law based on the equitable principles of fairness and reasonableness, gives rise to a cause to an aggrieved person to show that a decision of a public authority has effected some benefit/advantage which in the past he has been permitted to enjoy and which he legitimately expects 21 [1998] 7 SCC 66
- 117 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 to be permitted to continue to enjoy until he is given reasons for withdrawal and an opportunity to comment on such reasons.
24.6 Sri Basava Prabhu Patil lastly submits that the host of circumstances emphasized establish that the authorities, who are expected in law to act fairly and reasonably, are acting in a premeditative manner despite the risk of being in contempt of interim orders and the final orders22 to help M/s KPR, and when premeditative action is demonstrated, directing the authorities to decide on the question [as is done in the present case by the writ Court in the impugned order] would not yield any reasonable conclusion and would only result in a frustration of rights, and therefore, this Court must decide all questions and hold that M/s NSL has an inviolable 22 The circumstances relied upon by Sri Basava Prabhu Patil to bring forth premeditation is discussed while addressing other questions relating to contempt.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 and exclusive right to procure sugarcane from the Subject Cane Area. In this regard the learned Senior Counsel relies upon the following paragraphs in the decision of the Hon'ble Supreme Court in Siemens Ltd. vs State of Maharashtra and Others23:
"9. Although ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by this Court in some decisions including State of U.P. v. Brahm Datt Sharma [[1987] 2 SCC 179:
[1987] 3 ATC 319: AIR 1987 SC 943], Special Director v. Mohd. Ghulam Ghouse [[2004] 3 SCC 440: 2004 SCC [Cri] 826] and Union of India v. Kunisetty Satyanarayana [[2006] 12 SCC 28: [2006] 12 Scale 262], but the question herein has to be considered from a different angle viz. when a notice is issued with premeditation, a writ petition would be maintainable. In such an event, even if
23 [2006] 12 SCC 33
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the court directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose. [See K.I. Shephard v. Union of India [[1987] 4 SCC 431: 1987 SCC [L&S] 438: AIR 1988 SC 686]. It is evident in the instant case that the respondent has clearly made up its mind. It explicitly said so both in the counter-affidavit as also in its purported show-cause notice."
25. Sri C.A. Sundaram, at the very outset submits, that he would not have any quarrel with the doctrines of promissory estoppel and legitimate expectations as canvassed on behalf of M/s NSL. However, the learned Senior Counsel submits that he would endeavor to demonstrate that those doctrines would not apply in the present case because M/s NSL has primarily failed to establish a vested right, and if a vested right is not established, the doctrine would be inapplicable.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 25.1 Sri C.A. Sundaram also contends that this Court must consider the contentions on behalf of M/s NSL in the light of the decision of the Hon'ble Supreme Court in Dhampur Sugar [Kashipur] Ltd. v. State of Uttaranchal and Others24 wherein, considering the provisions of U.P. Sugarcane [Regulation of Supply and Purchase] Act, 1953 and U.P. Khandsari Sugar Manufacturers' Licensing Order, 1967, it is exposited that the area reserved for a sugar factory is not permanent in nature and no sugar factory can claim that the area reserved for a particular year would remain with it for all the times.
25.2 Sri C.A. Sundaram argues that the provisions of Clause-6 of the Sugarcane Control Order 1966 first contemplate reservation of an area for a sugar factory based on such factory's crushing capacity, the availability of sugarcane in the area and 24 [2007] 8 SCC 418.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the need for production of sugar. If there is reservation of an area under Clause-6[1][a] of the Sugarcane Control Order 1966 only a contingent right is created because there will have to be further compliances before it can even be said that there is a right to procure sugarcane exclusively from such area, and in that event the right that is conferred is limited both with regard the quantity of the sugarcane that can be procured and the time over which such quantity can be procured.
25.3 Sri C.A. Sundaram submits that after the reservation of the cane area as contemplated under Clause-6[1][a] of the aforesaid Order, there must be [i] determination of the quantity of sugarcane required by a factory for crushing during a given year, [ii] fixation of the quantity of sugarcane or percentage of sugarcane grown that shall be supplied to the factory concerned, and [iii] crucially, after the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 aforesaid exercise there must be a direction to both the sugarcane grower [in case there is a co-operative society, to such co-operative society] and the factory concerned to enter into an agreement incorporating the afore details.
25.4 Sri C.A. Sundaram canvasses that the requirement of yearly evaluation of a factory's requirement, the fixing of the percentage of the sugarcane grown to be supplied and a direction for a concluded agreement demonstrates that there can be never be a vested right in a factory to procure sugarcane exclusively from a particular cane area for ever, and hence, reading a vested right in a factory to procure sugarcane exclusively from a reserved area would be reading a rigour into the Scheme under Clause-6 of the Sugarcane Control Order 1966 without regard to the sugarcane growers' interest and the object of this Order which is also to ensure that
- 123 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the rights of the sugarcane growers are not sacrificed to the market forces.
25.5 Sri C.A. Sundaram next contends that M/s NSL, even if it could assert any right to exclusively procure sugarcane from the Subject Cane Area for any limited period, it must establish an agreement with the sugarcane growers. This would follow not only from the reading of the provisions of Clause-6[1] of the Sugarcane Control Order 1966 but also from Clause 6[2] of this Order and M/s NSL's own documents. The learned Senior Counsel emphasizes that the provisions of Section 6[2] stipulate that every sugarcane grower, sugarcane growers' co-operative society and factory, to whom or to which an order made under paragraph [c] of sub- Clause [1] applies, shall be bound to supply or purchase, as the case may be, that quantity of sugarcane covered by the agreement entered into
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 under the paragraph, and the provisions further stipulate any willful failure on the part of the sugarcane growers' cooperative society or the factory to supply or purchase, shall constitute a breach of the provision of the Order; as such, he contends that it is imperative that there is an agreement to bind the sugarcane growers to a particular factory and for penal consequences.
25.6 As regards the documents relied upon by M/s NSL, Sri C.A. Sundaram draws this Court's attention to certain provisions of the byelaws of M/s SSKN to contend that the Board of Directors are required to draw a program of sugarcane cultivation within its area of its operation and every member, who is assigned an area, must enter into a contract to grow crop according to such program and to deliver the same to M/s SSKN at such place and price as may be specified from time to time. Sri C.A.
- 125 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Sundaram argues that unless these circumstances are also established beyond doubt, M/s NSL cannot assert any vested right and in the absence of such right it cannot claim that the propositions of legitimate expectation or promissory estoppel must be applied.
The State's response during the course of the hearing:
26. In the light of the canvass as aforesaid, and the specific contention that once an application is filed for grant of crushing licence, crushing is commenced in anticipation of such licence being granted with retrospective effect, the Commissioner for Cane Development is called upon to make known the Government's stand and the officer is even permitted to file an affidavit. However, the affidavit is not placed, and reliance is placed on the defence
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 taken in the Statement of Objections by the authorities.
26.1 Sri Kiran V Ron, the learned Additional Advocate General, submits that the exercise as envisaged under the provisions of the Sugarcane Control Order 1966 need not be undertaken by the government each year but where the circumstances make it incumbent, it would be inevitable. Insofar as the present case, he invites this Court's attention to the specific stand taken as regards the increase in sugarcane growing and the potential for growth. This Court must mention that in Para 5(iv) of the Statement of Objections by the Commissioner for Cane Development the following is specifically stated:
"The order reserved (sic) the cane area to M/s SSKN viz., Karnataka Sugarcane (Regulation of Distribution) Order, 1996 is subject to amendments as may be made from time to time".
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 26.2 Sri Kiran Ron submits that for a factory to claim exclusive right to procure from an area it must necessarily [as contemplated under Clause-6[2] of the Sugarcane Control Order 1966] enter into agreement with the sugarcane growers from such area and therefore, the State government has issued Order/Communication dated 28.11.2018 to ensure that the sugar factories in the State must enter into bilateral agreements with the sugarcane growers in the prescribed format. The learned Additional Advocate General submits that if the factory in signing the contract agrees to purchase sugarcane grown in a given land for a particular year, the concerned grower also binds himself/herself to supply sugarcane to such factory, and because M/s NSL has not entered into such agreement it cannot claim any vested right.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 This Court's conclusion on Question No III and IV:
27. The reserving of a sugarcane growing area for a particular factory has been in vogue even from the days prior to independence. As observed by the Supreme Court in the U.P. Co-operative Cane Unions Federations Vs. West U.P. Sugar Mills Association and Others25, the provisions of the Sugarcane Act, 1934 contemplated inter alia a controlled area and purchase of sugarcane from factories at minimum price from the growers in such controlled area, and different provinces in the Country, in exercise of the delegated powers, brought into force respective statutory mechanism to bring about a controlled area. The Central Government, with the promulgation of the EC Act, in exercise of the powers conferred under Section 3 thereof, has brought into force the Sugarcane Control Order 1966 25 [2004] 5 SCC 430
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 stipulating, amongst others, the power to regulate distribution and movement of sugarcane [Clause 6 of this Order].
27.1 Insofar as the State of Karnataka, the Government of Karnataka, in exercise of the powers conferred under Clause 3 of the Sugarcane Control Order 1966 and the delegated power thereunder insofar as Clauses 6, 7, 8 and 9 the aforesaid Order, has been issuing separate Orders after determining the quantity of sugarcane required by a specific factory and reserving the area for supply of sugarcane factory, while providing for an agreement to supply/purchase the determined quantity of sugarcane between a factory and the sugarcane growers within the particular area [the reserved area] prohibiting movement of sugarcane from such reserve area except in accordance with the permission granted by the concerned Deputy Commissioner.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Insofar as the present proceedings, the State Government, on 25.02.1987, has notified the Karnataka Sugarcane [Regulation of Distribution] [Aland] Order, 1986 [Aland Order] allocating 369 villages in different talukas, including the villages in the talukas of Kalaburagi and Afzalpur.
27.2 The provisions of Clause-6 of the Sugarcane Control Order 1966 and the separate orders under this Clause continue to regulate the distribution and movement of sugarcane in the State of Karnataka, and this Court must refer to the brief interlude when the State Legislature enacted the Karnataka Sugarcane [Regulation of Purchase and Supply] Act, 2013 providing for purchase of sugarcane in the reserved area. This Act, in Section 7 thereof, stipulated that a sugarcane grower in a reserved area may sell sugarcane to the factory to which the area is so reserved and that the concerned
- 131 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 factory shall enter into an agreement with the sugarcane growers in such form and on such terms and conditions as are contained in Clause-6 of the Sugarcane Control Order 1966 with the stipulation that no other person shall enter into an agreement to purchase sugarcane grown by the grower as aforesaid.
27.3 However, with the Karnataka Act No. 28 of 2014, which is brought into force to amend the aforesaid Act of 2013, the provisions of Section 726 are substituted to read that the purchase of 26 Purchase of sugarcane in reserved area.- (1) A sugarcane-grower in reserved area may sell sugarcane grown to the occupier of the factory to which the area is so reserved.
(2) The factory shall enter into an agreement with a cane- grower in such form, by such date on such terms and conditions as specified in Clause 6 of the Sugarcane (Control) Order, 1966 for the purpose of purchasing the sugarcane offered in accordance with sub-section(1). (3) No person other than the factory aforementioned shall purchase or enter into an agreement to purchase sugarcane grown by the sugarcane grower except in accordance with agreement under sub-section (2).
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 sugarcane by the sugar factories from the reserve area shall be regulated as per the Sugarcane Control Order 1966 as amended from time to time. As such, status quo ante is restored, and the distribution and movement of sugarcane must essentially be regulated under the Sugarcane Control Order 1966 and the respective Orders issued by the State Government for each factory.
27.4 This Court must also record that the question of reserving cane area has received the attention of Central Government in the previous decade. The Economic Advisory Council to the Prime Minister headed by Dr. C Rangarajan has submitted a report 'On The Regulation Of Sugar Sector In India:
The Way Forward' in the month of October 2012, and insofar as the Cane Reservation/ Bonding, as per the PRS Legislative Research Report Summary, the Council has opined that over a period of time the
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 States could encourage development of a market-
based long term contract and phase out reserving Cane Area and bonding. It is reported that after this report, the States have been requested to consider the recommendations for implementation, and except the State of Maharashtra, none of the States have made any changes in the prevailing arrangement.
27.5 Therefore, the question whether there is a vested right in M/S NSL to procure sugarcane from the Subject Cane Area must be examined in the light of the provisions of the Sugarcane Control Order 1966 and the Aland Order.
The provisions of the Sugarcane Control Order 1966 are as follows:
"6. Power to regulate distribution and movement of sugarcane. -
[1] The Central Government may, by order notified in the official Gazette -
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
a) reserve any area where sugarcane is grown [hereinafter in this Clause referred to as "reserved area"] for a factory having regard to the crushing capacity of the factory, the availability of sugarcane in the reserved area and the need for production of sugar, with a view to enabling the factory to purchase the quantity of sugarcane required by it.
b) determine the quantity of sugarcane a factory will require for crushing during any year.
c) fix, with respect to any specified sugarcane grower or sugarcane growers generally in a reserved area, the quantity or percentage of sugarcane grown by such grower, or growers, as the case may be, which each such grower by himself, or if he is a member of a co-operative society of sugarcane growers operating in the reserved area, through such society, shall supply to the factory concerned.
d) direct a sugarcane grower or a sugarcane grower's co-operative society, supplying sugarcane to a factory, and the factory concerned to enter into an agreement to supply or purchase, as the case may be, the quantity of sugarcane fixed under paragraph.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
e) direct that no gur [jaggery] or khandsari sugar or sugar shall be manufactured from sugarcane except under and in accordance with the conditions specified in the licence issued in this behalf.
f) prohibit or restrict or otherwise regulate the export of sugarcane from any area [including a reserved area] except under and in accordance with a permit issued in this behalf.
[2] Every sugarcane grower, sugarcane growers' co-operative society and factory, to whom or to which an order made under paragraph [c] of sub-
Clause [1] applies, shall be bound to supply or purchase, as the case may be, that quantity of sugarcane covered by the agreement entered into under the paragraph and any willful failure on the part of the sugarcane growers' cooperative society or the factory to do so, shall constitute a breach of the provision of the Order:
Provided that where the default committed by any Sugarcane Growers' Cooperative Society is due to any failure on the part of any sugarcane grower, being a member of such society, such society, shall not be bound to make supplies of sugarcane to the factory to the extent of such default.:"
- 136 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.6 The provisions of the Aland Order read as under:
" Determination of the quantity of sugarcane required by the factory and preservation of the area for supply of sugarcane -
[1] The crushing capacity of the factory being one thousand two hundred and fifty tonnes per day, the quantity of sugarcane required by the factory during a year is about two and half lakh metric tonnes.
[2] The factory shall secure the sugarcane determined under sub-Clause (1) from the area specified in the Schedule I to this Order which shall be the reserved area for supplying of sugarcane to the factory.
[3] The factory shall also secure the sugarcane from the area specified in Schedule I except during the period when the concerned Khandasari units in these areas were allowed to operate by the Government.
4. Fixation of quantity of sugarcane to be supplied by the growers-
[1] Every grower of sugarcane in the reserved area specified in Schedule I shall supply to the factory ninety-five per cent of the sugarcane grown by each such grower by himself or if he is a member of a Sugarcane Growers Co-operative Society operating in the reserved area through such Society.
- 137 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 [2] Every grower of sugarcane in the reserved area specified in Schedule I shall supply ninety-five per cent of the sugarcane grown by each such grower, which he has not contracted or has not actually supplied to the Khandasari units.
5. Agreement to supply or purchase the determined quantity of sugarcane.
Every grower of sugarcane, or Co-operative Society, supplying sugarcane to the factory, and the factory Sugarcane Growers shall enter into agreement to supply or purchase, as the case may be, the quantity of sugarcane determined under Clause 4."
27.7 The Central Government, and because of the delegation, the State Government, may by order notified in the official Gazette reserve any area where sugarcane is grown for a factory having regard to [a] the factory's crushing capacity, [b] availability of sugarcane in reserved area and [c] the need for production of sugar. This is the first stage, and this Court must observe that with the issuance of the Aland Order insofar as M/S SSKN's factory at Bhusnoor [M/s NSL is granted leasehold rights for
- 138 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 thirty years and this lease subsists] this stage is accomplished as 369 villages in different talukas, including the villages in the talukas of Kalaburagi and Afzalpur, are reserved.
27.8 The provisions of Clause 6[1][b] of the Sugarcane Control Order 1966 further stipulate that the Central Government [the State Government] may determine the quantity of sugarcane a factory requires for crushing "during any year" and the provisions of Clause 6[1][c] stipulate that there must be fixation of the quantity [or the percentage] of the sugarcane grown by the sugarcane grower in such Area. This Court must observe that the aforesaid two requirements are also achieved by the issuance of Aland Order for M/s SSKN inasmuch as the assessment of the crushing capacity of the factory at Bhusnoor is assessed at 1250 TCD and the quantity of sugarcane required during a year is assessed at
- 139 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 1.5 lakh metric tones and every grower within the area reserved is directed to supply 95% of the sugarcane grown [by himself or as a member of the sugarcane growers cooperative Society operating in the reserve] to this factory.
27.9 However, the question would be whether this decision to reserve these villages as contained in the Aland Order must prevail forever, and the contentions on behalf of M/s KPR in this regard are that this decision cannot be forever cast in iron and that the State Government must every year undertake the necessary exercise for determining the quantity of sugarcane required by a factory and fix the quantity [or the percentage] of sugarcane grown with resultant direction to both the sugarcane grower and the factory to enter into an agreement for supply and purchase of the quantity of sugarcane fixed. This canvass, which is to meet the argument of the
- 140 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 'vested right' in M/s NSL to procure sugarcane from the 369 Villages [the reserved Area, including the Subject Cane Area] is stoutly refuted on behalf of M/s NSL.
27.10 It cannot be gainsaid that over a period of time circumstances are bound to change either substantially or otherwise. If the attendant circumstances of a factory and its reserved area remain without substantial changes, the question to be asked is should the exercise to reserve the cane area to determine the quantity of sugarcane required by a factory and the fixation of the quantity to be supplied be undertaken each year. If all the attendant circumstances significantly remain the same with some changes, and if the exercise as aforesaid is to be undertaken, this Court must opine, the same will be onerous and not conducive for good administration practices.
- 141 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.11 On the other hand, over a period of time the attendant circumstances may change significantly, and the circumstances may change in myriad ways inasmuch as it could be because of uncertain weather conditions, change in the crop pattern resulting in increase or reduction of the area under sugarcane cultivation, the possible increase in the number of factories in a region and a factory's inability to crush the available sugarcane and discharge its liabilities. In these circumstances, the decision taken [a] to reserve the cane area, [b] determine the quantity of sugarcane required by a factory for crushing in a given year [c] fix the quantity of percentage of sugarcane to be supplied by the sugarcane grown to the factory will have to be re- examined with the resultant change in the direction to the concerned factory and the sugarcane grower to enter into agreement which will bring about all the consequential rigour.
- 142 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.12 This Court must also observe that in devising the provisions of Clause 6 of the Sugarcane Control Order 1966 the inevitability for re- determination of the reservation of cane area and determination of the crushing capacity of a factory and fixation of the quantity because of the changing circumstances must have received due consideration. As such, the provisions of Clause-6 of this Order employ the expression 'may' as against the expression 'shall', and thus the State Government is given the discretion to act according to the changing circumstances in reserving a particular area or in determining the quantity of sugarcane required by the factory and the quantity or the percentage of sugarcane to be bound to a factory, or in fixing the quantity or percentage of sugarcane that is to be supplied.
- 143 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.13 Therefore, this Court is of the considered view that if it is not reasonable to opine that the decision under Clause-6 of the Sugarcane Control Order 1966 would be immutable, it would also not be reasonable to construe the provisions of Clause-6 of the Sugarcane Control Order 1966 as requiring the concerned government to take decision on the aforesaid aspects every year. This Court having thus opined, must also observe that the State Government must act timely inasmuch as both the sugarcane growers and the concerned factory are uniquely placed. If there is any delay to act, notwithstanding the circumstances staring, the balance of interests between them will be affected leading to protracted and multiple proceedings as in this case.
27.14 This Court, in this regard must make a useful reference to the exposition in paragraph 19 of the decision of the Hon'ble Supreme Court in U P Co-
- 144 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 operative Cane Unions Federation Vs. West UP Sugar Mills Association and Others supra, and it read as hereunder.
"The provisions referred to above have been made for the benefit of the sugar factory so that it is assured of and gets a continuous supply of freshly harvested sugarcane in quantity according to its crushing capacity and for the whole duration of the crushing season. No doubt the cane grower also gets some advantage in the sense that purchase of his yield is assured but at the same time many limitations and restrictions are imposed upon him. In view of the aforesaid statutory provisions, the position of a cane grower becomes entirely different from that of a farmer producing any other kind of agricultural crop where there are absolutely no restrictions upon him. He is at absolute liberty to harvest his crop at his convenience without being dictated by a third party, to sell it to anyone whomsoever he likes and whenever he wants. It is in this scenario, which is not the creation of the cane grower but of the statutory provisions operating in the field, that we have to examine
- 145 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the question whether the State has any authority or power to fix the price of the sugarcane supplied to a producer of sugar (sugar factory)."
27.15 The obligation to enter into contract as envisaged in Clause 6[1][d] of the Sugarcane Control Order 1966 and the terms of the Sugarcane Regulation of Distribution [Hospet] Order 197427 [the Hospet Order] qua a sugar factory and the sugarcane growers within the area reserved for this factory has come up for consideration before a Division Bench of this Court in Tungabhadra Sugarcane and Banana Growers Association Vs. Government of Karnataka28 when there was a dispute between a factory and the concerned sugarcane growers about the payment to be made by the factory to the growers. This question was listed before the Division 27 The essential terms of this Hospet and Aland Orders for the present purposes are materially the same. 28 2011 SCC Online Kar 187.
- 146 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Bench for consideration in view of the reference by a writ Court.
27.16 The Division Bench has examined the corresponding rights and obligations in the backdrop of the Scheme under Clause-6 of Sugarcane Control Order 1966/ the Hospet Order 1974 and the decision of the Hon'ble Supreme Court in UP Co-operative Cane Unions Federation Vs. West UP Sugar Mills Association and Ors. supra. The Division Bench, upon compliance with the different requirements as contemplated under Clause-6 of the Sugarcane Control Order 1966, has ultimately opined that an obligation is cast upon the concerned factory and the sugarcane growers to enter into an agreement stipulating the quantity of sugarcane sold or purchased, and there is no discretion for the parties in this regard with the further observation that if either want the benefit of the Sugarcane Control Order
- 147 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 1966, they must necessarily enter into an agreement as contemplated under Clause 6[1][e] of the Sugarcane Control Order 1966. The relevant paragraphs in this judgment read as under:
"21. ............... However, the most important Clause is, Clause 6. The Central Government by a notification in the Official Gazette can reserve any area where sugarcane is grown for a factory having regard to the crushing capacity of the factory based on the availability of sugarcane in the reserved area and the need for production of sugar with a view to enable the factory to purchase the quantity of sugarcane required by it. By a notification the said power is delegated by the Central Government to the respective State Governments.
Accordingly, the Central Government/State Government would determine the quantity of sugarcane which a factory will require for crushing during the year and fix the quantity or percentage of sugarcane
- 148 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 grown by such grower or growers in the reserve area which would be supplied to the factory concerned. It also has the power to direct the sugarcane grower or a sugarcane growers co-operative society to supply sugarcane to a factory and the factory concerned has to enter into an agreement to supply or purchase as the case may be, the quantity of sugarcane fixed by the Government. It also has been vested with the power to prohibit or restrict or otherwise regulate the export of sugarcane from the area including the reserved area except under and in accordance with the permit issued in this behalf. Sub- Clause [2] of Clause 6 makes it very clear that if the aforesaid provisions are contravened, by any of the parties, it shall constitute a breach of the provisions of the order."
27.17 This Court must reiterate the exposition and observe that when an area is reserved as contemplated under Clause 6[1[[a] of the Sugarcane
- 149 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Control Order 1966, and every time the decision to reserve an area is revisited, there must be determination, or re-determination, of the quantity of sugarcane required by a factory for crushing and fixing of the quantity [or percentage] of sugarcane grown to be supplied to the concerned factory as contemplated under Clause 6[1][b] and [c] of this Order. Crucially, simultaneously with the determination [or re-determination] there must be a direction to the concerned factory and the sugarcane growers [the concerned Co-operative Society] to enter into an agreement for binding the sugarcane grown as contemplated under Clause 6[1][d] of the Sugarcane Control Order 1966, apart from direction under Clauses 6[1][e] and [f], and the factory and the growers [the Co-operative Society] consequent to such directions must enter into an agreement resulting in vested rights paving way for prohibition under Clause 6[2] of the Sugarcane Control Order 1966.
- 150 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.18 This Court, while reiterating the exposition on the significance of the mentioned exercise resulting in direction to enter into an agreement and the consequential obligatory agreement, must also declare that the concerned Government, when circumstances have changed, must not only revisit the decision to reserve an area and/or re-determine the quantity of sugarcane reserved by a factory for crushing and fix the quantity [or percentage] of sugarcane to be supplied but must also direct a fresh agreement in the light of revisited/ re-determined times. The concerned Government, depending on the circumstances, must undertake all, or any, of the aforesaid exercise resulting in consequential direction to enter into an obligatory agreement. The State Government cannot be ad hoc in considering the changing circumstances.
- 151 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.19 In the present case, with the issuance of the Aland Order not only the area for M/s SSKN is reserved [paragraph 3 read with Schedule-I of the Order] but also the quantity of sugarcane to be supplied by the concerned sugarcane grower/Cooperative Society is fixed [paragraph 4 of the Order] with direction to enter into agreement with the sugarcane growers [paragraph 5 of the Order]. It is contended that the agreement as contemplated under Clause 6[1][d] of the Sugarcane Control Order 1996 and the paragraph-5 of the Aland Order is brought about between M/s SSKN and the sugarcane growers in the reserve area [369 villages, including the Subject Cane Area] with the sugarcane growers in these villages enrolling as members of M/s SSKN [a Co-operative Society] with Byelaws enjoining them to subscribe to the arrangement for supply of 95% of the sugarcane grown to M/s SSKN's Factory at Bhusnoor.
- 152 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 27.20 M/s NSL, to assert a vested right to procure sugarcane exclusively from the Subject Cane Area, relies upon these circumstances and the fact that it has entered into the lease deed dated 06.03.2010 after certain negotiations and that there are certain assurances to restore the villages allotted to M/s Renuka Sugars29. The learned Senior Counsels for both M/s NSL and M/s KPR have elaborated on the afore to contend why this Court must opine that M/s NSL can and cannot assert a vested right to procure sugarcane exclusively from the 369 villages, and the corresponding submissions are on whether M/s NSL can rely upon the byelaws of M/s SSKN when the details on the measures taken by its Board [as required under the Byelaws] to 29 The term in the Lease Deed in this regard read that the "State Government shall issue a separate notification restoring 38 villages which are temporarily allocated to M/S Renuka Sugars Ltd., in favour of lessee soon after signing of this lease deed".
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 promote the cultivation of sugarcane and the interest of the growers in these villages are not on record.
27.21 The learned Senior Counsel for M/s NSL places greater reliance on the pre-bid discussion on restoring the reservation of the 369 villages in favour of M/s NSL with certain terms in that regard being incorporated in the lease deed dated 06.03.2010 and the undisputed fact that M/s SSKN and M/s NSL have filed objections when there was a proposal to reserve the Subject Cane Area [44 villages of the 369 villages] in favour of M/s KPR. However, the proposal to reserve these villages has remained inchoate with no decision taken. This Court, in the backdrop of this Court's opinion on the need for re- determination of factors under Clause 6 of the Sugarcane Control Order 1966 when circumstances so command, must consider whether M/s NSL can assert a 'vested right ' to receive sugarcane from the
- 154 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 growers from the Subject Cane Area in the light of the Scheme under the Sugarcane Control Order 1966 and the Aland Order notwithstanding the circumstances over the last three decades rather than dilating on these aspects.
27.22 The State Government [as the concerned Government] in issuing the Aland Order in the year 1986 has reserved 369 villages in the different Talukas of the Kalaburagi District for M/s SSKN and considered that the crushing capacity of M/s SSKN's factory is at 1250 TCD and the requirement would be 1.5 lakh Metric Tonnes a year. The Aland Order is issued subject to the condition that its terms shall be subject to amendment inasmuch as this Order [in paragraph 2] stipulates that it shall continue to be in force till repealed subject to such amendments as may be made to it from time to time. Over the period of the last three decades, there
- 155 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 have been substantial changes in the circumstances, and these changes in the circumstances are seen from the following.
• M/s NSL, which has acquired rights from M/s SSKN, has increased this crushing capacity, and it is stated that M/s NSL, as of today, has the capacity of 10,000 TCD. If M/s NSL was crushing about 7.33 LMT during the year 2013- 2014, it has crushed 8.95 LMT during the year 2021-2022. M/s NSL proposes to increase its crushing capacity to 12,000 TCD, and it is asserted that it requires 20-24 LMT of sugarcane a year for crushing.
• Apart from M/s NSL and M/s KPR there are a few other factories in the region and the combined capacity of these factories is 27,500 TCD.
• Due to the implementation of irrigation projects over the decades in the region, the sugarcane growing area has increased and 56,333 hectares are brought under sugarcane cultivation as of the year 2012-22. Even if the yield of sugarcane
- 156 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 is 80 - 100 metric tonnes an acre, 45-56 LMT Sugarcane would be available in the district and about 42 LMT would suffice to meet the requirements of all the factories in the region. • M/s NSL, because of circumstances which may not be very germane for the present purposes, has defaulted in paying the price for the purchase of sugarcane in some of the years leading to protests by sugarcane growers in the region.
• M/s KPR has a crushing capacity of 10,000 TCD, and it has obtained, during the years 2020 - 2021 and 2021 - 2022 different permissions and approvals for establishing its unit, and it has also commenced crushing. M/s KPR has been reserved some villages, and there is no dispute over this allotment.
• A proposal is mooted to allocate the villages comprised in the Subject Came Area, but as aforesaid, it has remained inchoate without any conclusion. Several writ petitions have been filed for directions to the authorities to consider
- 157 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the application/representations as regards the reservation of cane area, and though these petitions are disposed, no decision is taken. 27.23 The State Government, because of the exigencies brought by the aforesaid circumstances, should have revisited the reservation of the cane area for M/s SSKN [now represented by M/s NSL] and re- determined the quantity of sugarcane required by M/s NSL for crushing and fixed the quantity of the sugarcane grown by the farmers in the region [or the percentage of Sugarcane grown] that will have to be supplied to M/s NSL. If necessary exercises were undertaken, a contingent right would have inured to M/s NSL, and if there were directions for conclusion of the agreement resulting in an agreement, M/s NSL could have asserted a vested right. Conversely, if notwithstanding the circumstances, the necessary exercises are not undertaken, M/s NSL cannot assert
- 158 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 a vested right leading to contemplated consequences if there is breach.
27.24 If the Scheme under Clause-6 of the Sugarcane Control Order 1966 does not envisage a right to a factory notwithstanding the circumstances; and if the State Government, which should have considered the changed circumstances and decided on re-examining and re-assessing the reservation of the cane area based on the varying crushing capacity and the availability of sugarcane has not, this Court is of the considered view that M/s NSL cannot assert a vested right to procure sugarcane from the Subject Cane Area. It is settled that a right is vested when an immediate right or a present right for future enjoyment is conferred without any dependence on some event which may or may not happen or ought to be performed. Therefore, the reliance upon the decision of the Hon'ble Supreme Court in MGB
- 159 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Gramin Bank v. Chakrawarti Singh30 is justified wherein, it is held that a vested right is a right independent of any contingency. M/s NSL also cannot seek invocation of the equitable principle of promissory estoppel or assert legitimate expectation.
The rival A. On the merits of the
submissions Government of Karnataka
on Question granting crushing licence
No. V dated 19.10.2022 in
favour of M/s KPR for the
year 2021-2022, and
B. On the Deputy
Commissioner holding that
M/s KPR has not violated
the provisions of the EC Act
and that it has not crushed
sugarcane illegally in the
months between January -
May 2022
30
(2014) 13 SCC 583
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
28. The Deputy Commissioner has examined the merits of the crushing license dated 19.10.2022 in the light of the different approvals and permissions obtained by M/s KPR after filing its Industrial Entrepreneur Memorandum, [IEM,] and the decisions of the Hon'ble Supreme Court in Dhampur Sugar Limited and Samarth Sugars and Afro Ltd. supra. The Deputy Commissioner has concluded that in view of the provisions of the Sugarcane Control Order 1966 and the decision in Dhampur Sugar Limited, that no sugar factory can assert that the reservation of area is forever, and because there is no shortage of sugarcane, M/s NSL can have a grievance. Significantly, the Deputy Commissioner has opined that in view of the decision in Samarth Sugars and Agro Industries Ltd, supra the ownership of sugarcane is not affected by the terms of the Order issued under the provisions of the EC Act.
- 161 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023
29. Sri Basava Prabhu Patil submits that the State Government could not have granted crushing licence dated 19.10.2022 retrospectively for the period between 01.07.2021 and 30.06.2022, but such licence is issued only to cover up the deliberate act of permitting M/s KPR to commence crushing without allocation of cane area and to create circumstances to absolve them of the consequences that would ensue because of the pending contempt proceedings. Sri Basava Prabhu Patil emphasizes that the State Government's policy is to grant crushing licence simultaneously with the allocation of the cane area and on the condition that the entrepreneur to whom such allocation is made must undertake promotion and development of cane cultivation in the allotted area, but M/s KPR is allotted certain cane area only in the month of June 2022, and it has commenced crushing in the month of January 2022.
- 162 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 29.1 Sri Basava Prabhu Patil canvasses that the Deputy Commissioner has upheld the challenge to the grant of crushing licence overlooking the afore and placing reliance upon the decision in Maharashtra Rajya Sahakari Sakkar Karkhana Sangh Limited and Others vs. State of Maharashtra and Others31 without considering the crucial fact that the Maharashtra Sugar Zoning Order does not have provision similar to Aland Order and that in terms of the Aland Order, every sugarcane grower within the reserved area is bound to supply 95% of the sugarcane grown to M/s NSL and there is complete prohibition insofar as this 95%.
29.2 Sri Basava Prabhu Patil also canvasses that the Deputy Commissioner could not have premised his order on the ground that the farmers have a right to choose the buyer and the reliance on 31 1995 Sppl.3 SCC 475
- 163 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the decision of the Hon'ble Supreme Court in Swami Samarth Sugars and Agro Industries Limited vs. Loknete Marutrao Ghule Patil Dnyaneshwar Sahakari Sakhar Karkhana Limited and others32 and the decision of the Division Bench of this Court in Indian Sugar and Refineries Ltd vs. State of Mysore33 is mischievous, and as such, there is primacy to the farmers' right to ensure that they can enjoy the fruits of their labour in a healthy manner.
30. Sri S. S. Naganand, the learned Senior Counsel for M/s KPR, submits that after submitting an application for crushing licence, the general practice is to commence crushing in anticipation of the licence being granted because it is generally granted and refusal is an exception. This could be seen in the undeniable fact that in the case of M/s Sangamnath Sugars Limited, the crushing licence is 32 [2022] 14 SCC 1 33 ILR 1959 Mys.688
- 164 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 granted on 30.04.2022 for the period between 01.07.2021 and 30.06.2022. Even if the crushing licence is refused when there is breach of a relevant condition, it is granted immediately when the breach is rectified.
30.1 Sri S. S. Naganand submits that the crushing licence dated 19.10.2022 is issued under the Karnataka Sugar (Regulation of Production) Order, 1975 [for short, the 'Regulation of Sugar Production Order 1975'] on conditions mentioned therein. When an application is filed for grant of, or renewal of, crushing licence as contemplated under Paragraph 4 [1] and [2] of the Regulation of Sugar Production Order 1975, the licence is granted after holding an enquiry as found fit by the State Government in the circumstances of a case. However, when an application for grant or renewal is proposed to be rejected, given the provisions of
- 165 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Paragraph 4[3] of this Order, the State Government must assign reasons and extend an opportunity of hearing.
30.2 Sri S. S. Naganand canvasses that the provisions of the Regulation of Sugar Production Order, 1975 do not contemplate 'prior' or 'previous' approval, and it has been held by the Hon'ble Supreme Court in Life Insurance Corporation of India vs. Escorts Limited and Others34 that the expression 'prior' or 'previous' may be implied but such implication must be contextual and in very compelling circumstances. He argues that this Court, because the terms of Paragraph-4 of the Regulation of Sugar Production Order 1975 contemplate recording of reasons and extending of opportunity when the proposal is to reject the application, must not find fault with the practice of 34 [1986] 1 SCC 264
- 166 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 granting crushing licence after the commencement of crushing or the crushing in anticipation of grant of licence or with the crushing licence dated 19.10.2022.
30.3 Sri S. S. Naganand submits that this Court, if notwithstanding the aforesaid circumstances, considers concluding against the issuance of crushing licence dated 19.10.2022 or the manner in which the crushing licence is issued, this Court must consider the settled proposition that the Courts must take a balanced approach while interpreting the statutory provisions in matters relating to industrial practices which have serious economic implications. In this regard Sri S.S. Naganand relies upon the decision of the Hon'ble Supreme Court in Shivashakthi Sugars Limited vs. Shree Renuka Sugar Limited and Other35. 35 [2017] 7 SCC 729.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 This Court's conclusion on Question No. V.
31. The State Government in exercise of the jurisdiction conferred vide Clause-3 of the Sugarcane Control Order 1966 and the notification dated 24.08.1967 issued by the Government of India, has notified the Karnataka Sugar [Regulation of Production] Order 1975 [the Regulation of Sugar Production Order 1975]. The crushing licences were being issued under this Order for manufacture of sugarcane on an application filed in the prescribed form. This Order of 1975 is repealed with the notification of the Karnataka Sugar [Regulation of Production] Order, 2022 [the Regulation of Sugar Production Order 2022]36.
31.1 Under the Regulation of Sugar Production Order 2022 [as in the earlier Regulation of Sugar 36 This Order is notified by the Notification dated 24th of February 2023.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Production Order 1975], the requisite application for crushing licence will have to be filed in the prescribed Form furnishing, amongst others, the details of the factory site, the quantity of sugarcane crushed during the three previous crushing seasons and the number of days that the factory has crushed sugarcane during the three previous crushing seasons. The crushing licence is granted, in the discretion of the State Government, for a term of one, or three or five years. If the licence is so granted [or renewed] it shall be valid up to the 30th June of the year following the year of issuance. If the State Government proposes to reject the application, it must assign reasons after extending an opportunity. These are the common features between these Orders.
31.2 However, there is short but significant change in the manner in which the crushing licence
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 is granted, and this can be seen when the erstwhile and the recent provisions are read in conjunction. The relevant of the The relevant of the Regulation of Sugar Regulation of Sugar Production Order 1975 Production Order 2022 [3] On receipt of an [3] On receipt of an application under sub application, the State Clause (1), the State Government may, Government may, after such inquiry, as after such enquiry, as it thinks necessary, if it thinks necessary, if satisfied that the satisfied that the license may be license may be granted or renewed, granted or renewed as the case may be, as the case may be grant or renew the grant or renew a license in Form - II, licence in Form II. before the start of crushing season, and it shall be valid up to [4] The State Government 30th June of the year, may, for reasons to following the date of be recorded in issue and shall be writing, refuse to subject to such grant or renew conditions as may be license after giving imposed by the the applicant an government from time opportunity of being to time.
heard.
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NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
[4] The State Government
may, for reasons to
be recorded in
writing, refuse to
grant or renew the
license after giving
the applicant an
opportunity of being
heard.
The underlining is by
this Court
The change under the Regulation of Sugar Production Order 2022 is that there is an express stipulation that if the State Government is satisfied that a license must be issued, such licence must be granted before the commencement of the crushing season. This is a deliberate shift from what should have been the practice viz., the grant of post facto licence and commencement of crushing of sugarcane in anticipation of the licence being so granted.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 31.3 M/s KPR has submitted its application for allocation of Cane Area in the month of March 2021 and it has submitted its application for grant of crushing license in the month of November 2021, and the State Government has allotted a certain cane area [excluding the Subject Cane Area] on 13.06.2022 and the crushing license on 19.10.2022. In view of the earlier accepted practice in the absence of express stipulation that crushing licence must be issued before the commencement of the crushing season, and the later change in the policy with the express stipulation that the crushing licence must be issued before commencement of the crushing season, this Court is of the considered view that no exception can be taken with the crushing licence being granted on 19.10.2022 after the commencement of crushing solely on this ground, but the next ground of challenge that the crushing licence is issued without the allocation of the cane area must be considered.
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NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 31.4 It is undisputed that the Commissioner for Cane Development has sent a proposal for allocation 78 villages to M/s SDMSL [now represented by M/s KPR], including the 44 villages within the 369 villages [the Subject Cane Area] originally allotted to M/s SSKN by Aland Order. M/S NSL and M/s SSKN have filed their objections in the year 2016 to the allotment of the Subject Cane Area to M/s KPR, and the Commissioner for Cane Development has responded to the Government's queries in this regard on 07.04.2017. There is no information on the status of this proposal.
31.5 In continuation of the examination of this proposal, the Government of Karnataka, which has on 06.02.2021 granted in-principle approval under the provisions of the Karnataka Industries [Facilitation] Act, 2002 to M/s KPR to set up its unit at Chinmigera in the proximity of an existing factory
- 173 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 at Bhusnoor [now managed by M/s NSL] though outside the permitted 15 kms radius, should have determined the quantity of sugarcane required by M/s KPR in the immediate years and fixed the quantity of the sugarcane grown by the farmers in the region [or the percentage of the sugarcane grown] to be supplied to the factory followed by directions for agreement between M/s KPR and the growers.
31.6 This is inevitable in the light of the provisions of the Sugarcane Control Order 1966. M/s KPR has also filed its application for allocation of the cane area in the month of June 2021, and considering this application M/s KPR is allotted certain cane area [17 villages excluding the Subject Cane Area] temporarily in the month of June 2022, and it is obviously during the pendency of the proceedings before the writ Court. However, essentially M/s KPR has commenced its activities
- 174 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 with Cane Area allocation, and Deputy Commissioner in the impugned order dated 12.01.2023 has ignored all these facets in opining that M/s KPR has not crushed sugarcane illegally. The Deputy Commissioner's opinion that the sugarcane growers do not lose ownership of the produce is extraneous to the present context. M/s NSL's grievance against the impugned order 12.01.2023 could be addressed, in the circumstances discussed, without disturbing this order but observing that the Deputy Commissioner should have been more circumspect in opining that M/s KPR has not crushed sugarcane illegally.
31.7 This Court is also of the considered opinion that there is a definite failure in the State Government not issuing necessary Orders under the Sugarcane Control Order 1966 for regulation and distribution of Sugarcane to M/s KPR, but this failure must necessarily be considered in the light of
- 175 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 the peculiar circumstances of the case and the surfeit of proceedings before this Court. The State Government, with the march in time and the resultant changes in the circumstances such as implementation of irrigation project resulting in larger tract of lands being brought under sugarcane cultivation and increased yield and new factories being established in the region, inevitably must also consider the dispute between M/s NSL and M/s KPR about the allocation/ reservation of the villages in the Subject Cane Area to ascertain whether the Aland Order requires to be amended. Though Sri. Dama Seshadri Naidu, the learned Senior Counsel for M/s SSKN, has clarified that M/s NSL has paid all dues to M/S SSKN, this Court must record that there are allegations of M/s NSL dithering on its payment to the sugarcane growers during some of the previous crushing seasons with the Civil Administration
- 176 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 having to handle law and order situation. This circumstance must also be considered.
31.8 This consideration of whether the Subject Cane Area will have to be allotted to M/s KPR or continued with M/s NSL will be in accordance with the Aland Order because in paragraph-2, it is stipulated that the terms shall continue to be in force till repealed subject to such amendments as may be made to it from time to time. This Court must also consider that there will be a need to manage the rival claims between M/s NSL and M/s KPR until the decisions as aforesaid are taken, and the decisions in this regard may also not be immediate. With both M/s NSL and M/s KPR, having invested substantial amounts exposing themselves to financial implications, cannot be expected to keep their respective factories idle or under utilize their respective capacities, and that would also not be
- 177 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 conducive to the interest of the sugarcane growers, who, it is said, have chosen to deliver sugarcane at the factories' gates to secure their interest. Therefore, the Government of Karnataka must be called upon to take certain interim measures that would mitigate the reasons for litigation especially with the commencement of the crushing season. On the writ appeal in WA No. 200021/2023 and Deposits
32. The writ appeal in WA No.200021/2023 is filed calling in question the writ Court's direction to the Commissioner for Cane Development to file a report under the EC Act on seizure of sugar, molasses and ethanol at M/s KPR's factory at Chinmigera and the direction to the Deputy Commissioner to pass orders in respect of the said seized products. This Court on 13.06.2023 has disposed of an application [IA No. 2/2022 in W.A.
- 178 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 No.200021/2023 and IA No.1/2023 in W.A. No.200169/2022] filed by M/s KPR, as requested by the learned Senior Counsels for M/s NSL and M/s KPR with interim directions for sale of the seized products and for disbursement of 60% of the proceeds to M/s KPR subject to further orders and for deposit of the remaining 40% of the proceeds with this Court, and again, subject to further orders. M/s NSL has filed petitions before the Hon'ble Supreme Court in SLP Nos. 14359-14360/2023. The Hon'ble Supreme Court has not interdicted the sale of the seized products but has directed M/s KPR to maintain the amount received in its account without utilising the same.
32.1 In compliance with this Court's interim order dated 13.06.2023, the office has informed that a total sum of Rs.103,06,20,487/- has been deposited with this Court. The details of the deposits
- 179 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 which are received in writ appeal in WA No.200021/2023 are as follows:
Sl. R.O. No/Date FDR No./Date Amount No.
1. 409/14.07.2023 42155344170/08.08.2023 Rs. 14,31,26,256/-
2. 410/14.07.2023 42180017797/16.08.2023 Rs. 34,79,52,951/-
3. 411/14.07.2023 42155185196/08.08.2023 Rs. 18,10,836/-
4. 412/14.07.2023 42155181077/08.08.2023 Rs. 85,29,712/-
5. 418/19.07.2023 42264395165/14.09.2023 Rs. 25,87,776/-
6. 419/19.07.2023 42264585076/14.09.2023 Rs. 1,05,42,728/-
7. 420/19.07.2023 42264586386/14.09.2023 Rs. 1,27,29,008/-
8. 451/01.08.2023 42155340482/08.08.2023 Rs. 16,10,26,000/-
Through k-II online payment
9. 461/03.08.2023 42263679578/14.09.2023 Rs. 19,43,360/-
10. 462/03.08.2023 42263679216/14.09.2023 Rs. 58,40,488/-
11. 463/03.08.2023 42267446845/14.09.2023 Rs. 7,53,25,740/-
12. 473/11.08.2023 42263680006/14.09.2023 Rs. 35,15,832/-
13. 474/11.08.2023 42264579345/14.09.2023 Rs. 2,04,36,716/-
14. 485/24.08.2023 42264487568/14.09.2023 Rs. 2,38,93,980/-
15. 494/24.08.2023 42263814702/14.09.2023 Rs. 71,35,988/-
16. 576/27.10.2023 Rs. 12,70,23,090/-
17. 577/27.10.2023 Rs. 7,72,00,026/-
TOTAL Rs.1,03,06,20,487/-
This Court is also informed that the aforesaid amount has been deposited in Short Term Deposits with a Nationalised Bank subject to further orders of this Court. However, the deposit will have to be subject to the orders of the Hon'ble Supreme Court in SLP Nos.14359-14360/2023 as this Court's order dated 13.06.2023 is called in question in such proceedings.
- 180 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 Therefore, there must be suitable directions in this regard, and with the turn of events, the appeal in WA No. 200021/2023 will not survive.
In the light of the afore, the following ORDER [A] The writ Appeals in W.A. Nos.200168/2022 and 200169/2022 are dismissed and the writ appeal in W.A. No.200021/2023 is disposed of confirming the common Order dated 28.09.2022 in W.P. Nos.200210/2022 and 201052/2022 affirming the writ Court's direction in Paragraphs - 36 and 37 to the State Government to consider the pending proposal as regards the allocation of the subject 44 villages in Afzalpur and Kalaburagi Talukas [the Subject Cane Area] at the earliest in the light of this Court's observations.
- 181 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 [B] The Contempt proceedings in CCC Nos.200037/2022 and 200014/2023 are dropped.
[C] The writ petition in W.P.No.200423/2023 is dismissed.
[D] The Commissioner for Cane Development is directed to call for a joint meeting of the representatives of M/s NSL and M/s KPR, within one[1] week from the date of receipt of a certified copy of the operative portion of this order, to ascertain whether these companies, without prejudice to their respective defences, could agree on a conciliatory interim arrangement for the coming crushing season insofar as the Subject Cane Area, and if for any reason the conciliation for an interim arrangement remains elusive at the end of fifteen [15] days from the date of the first
- 182 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 conciliatory meeting, the Commissioner for Cane Development shall file a report with the State Government, within the next one[1] week, on who can procure sugarcane from the Subject Cane Area for the coming crushing season considering the following:
• the crushing capacity of M/s NSL and M/s KPR and the availability of sugarcane for the crushing from the region, and in the Subject Cane Area;
• the financial ability to pay the sugarcane growers within the Subject Cane Area based on the records to demonstrate such ability;
and • the other circumstances that would be just and necessary.
- 183 -
NC: 2023:KHC-K:8950-DB WA No. 200021 of 2023 C/W CCC No. 200037 of 2022 CCC No. 200014 of 2023 WA No. 200168 of 2022 WA No. 200169 of 2022 WP No. 200423 of 2023 The State Government shall consider the report filed by the Commissioner for Cane Development and decide expeditiously.
[E] The amount of Rs.103,06,20,487/- deposited with this Court shall continue to be in Short-
term Deposits with appropriate instructions for timely renewal subject to the orders of the Hon'ble Supreme Court in the pending petitions in SLP Nos.14359-14360/2023.
All the pending applications stand disposed of in the light of this Order.
Sd/-
JUDGE Sd/-
JUDGE nv*