Karnataka High Court
Nsl Sugars Limited-Unit Ii vs The Commissioner For Cane Development ... on 28 September, 2022
Author: H.T.Narendra Prasad
Bench: H.T.Narendra Prasad
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IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 28th DAY OF SEPTEMBER 2022
BEFORE
THE HON'BLE MR. JUSTICE H.T.NARENDRA PRASAD
WRIT PETITION No.200210 OF 2022 (GM-RES)
C/W.
WRIT PETITION No.201052 OF 2022
WP No.200210/2022:
BETWEEN:
NSL Sugars Limited - Unit II,
Aland, Bhusnoor Village,
Aland Taluq, Kalaburagi District,
Represented by its Authorised Signatory,
Mr.Amarnath H.V.
... Common petitioner
(By Sri Basava Prabhu Patil & Sri Udaya Holla, Senior
Advocates for Sri B.B.Patil and Sri A.M.Nagral,
Advocates)
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.
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3. K.P.R.Sugar and Apparels Limited,
Chinmmgera 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, Taluka: Afzalpur - 585 213,
Kalaburagi District,
(Represented by its Authorized Signatory).
5. The Government of Karnataka,
Represented by its Secretary,
C & I Department
Vidhana Soudha, Bengaluru - 01.
6. 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.
..Common respondents
(By Sri Prabhuling Navadgi, Advocate General along with
Sri.Y.H.Vijayakumar, AAG and
Sri Shivakumar R.Tengli, AGA for R1, 2 & 5:
Sri S.M.Chandrashekhar, Senior Advocate for
Sri S.S.Halalli, Advocate for R3: R4 - served:
Sri Dama Sheshadri Naidu, Senior Advocate
for Sri Sachin M.Mahajan, Advocate for R6)
WP No.200210/2022 is filed under Articles 226 and
227 of the Constitution of India praying to direct
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respondent Nos. 1 and 5 to constitute an independent
Committee of Experts and Agricultural Scientists to
ascertain accurately the availability of sugarcane in the
region and the sugarcane requirement of the petitioner
and allocate sufficient designated cane area to the
petitioner to operate its plant at the capacity of 7000 TCD
and direct respondent Nos. 1 an 5 not to withdraw the
villages that have already been allocated to M/s.Sahakara
Sakkara Karkhane Niyamit, Aland and to take effective
steps and measures to ensure that no other sugar factory
receives or accepts the sugarcane from the cane area
allocated to M/s.Sahakara Sakkara Karkhane Niyamit,
Aland and etc.
WP No.201052/2022 is filed under Articles 226 and
227 of the Constitution of India praying to direct the
respondent No.1 to seize the stock of sugar molasses and
other by-products situated in the godown and factory of
M/s.KPR Sugar and apparels Limited, situated at
Chinmagera Village, Afzalpur Taluk, Gulbarga District and
to direct the respondent to take effective steps and
measures to ensure that respondent No.3 herein does not
sell the illegally stocked sugar and other by-products
manufactures by respondent No.3 and stocked in godown
and factory M/s.KPR Sugar and Apparels Limited, situated
at Chinmagera Village, Afrzalpur Taluk, Gulbarga Disrtrict
and to direct that the stock of sugar, molasses and other
by-products manufactured by M/s.KPR Sugar and Apparels
Limited, the third respondent herein to be sold in public
auction and the proceeds of the same be given to the
petitioner herein and etc..
These writ petitions, having been heard and reserved
for orders on 14.09.2022, coming on for pronouncement,
this day, the Court made the following:
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ORDER
Even though the matters are posted for orders on vacating the interim order, with the consent of both the parties, it is taken up for final hearing.
2. The petitioner is a Limited Company incorporated under the Companies Act. The respondent No.6 herein is M/s.Sahakara Sakkara Karkhane Niyamita, Aland (hereinafter referred to as 'M/s.SSKN' for brevity), which is a co-operative sugar factory situated at Bhusnoor Village, Aland Taluk, Kalaburagi District registered under the provisions of the Karnataka Co-operative Societies Act, 1959 and the Rules under which it was established in the year 1989.
3. The Government of Karnataka, by exercising power under Clauses 6, 7, 8 and 9 of the Sugarcane (Control) Order, 1966, issued a Notification on 5 25.02.1987 (Annexure-D) which is called as Karnataka Sugarcane (Regulation of Distribution) (Aland) Order, 1986. Under that order, 369 villages were allotted to M/s.SSKN. The said M/s.SSKN had submitted Industrial Entrepreneur Memorandum ('IEM' for short) to the Ministry of Commerce and Industry, Government of India. The Government of India has allotted the plant code and short name and the same are '32501' and 'Alanda', respectively. The said M/s.SSKN crushed about 1250 TCD of sugarcane for almost 15 years from the date of establishment. After the said 15 years, because of severe financial crisis and unavoidable circumstances was unable to continue crushing. Under those circumstances, Government of Karnataka took a decision to lease out M/s. SSKN Sugar Factory to M/s.Shree Renuka Sugars Limited for a period of seven years. However, the said M/s.Renuka Sugars Limited was unable to 6 manage the sugar factory. The Government has taken a decision to lease out to M/s.SSKN for a period of 30 years. Thereafter, the State Government has floated a tender inviting bids for taking the factory on lease for a period of 30 years. Pursuant to that, the petitioner has participated in the tender. The petitioner was declared as a successful bidder and the bid was approved by the Government of Karnataka vide its letter dated 25.01.2010 (Annexure-B) and directed the Deputy Commissioner, Gulbarga for execution of lease deed.
4. Pursuant to that order, M/s.SSKN has executed a lease deed dated 06.03.2010 in favour of the petitioner. The same is produced as Annexure-C. Thereafter, the petitioner has taken over the possession of M/s.SSKN, Aland by an understanding that 369 villages allotted to M/s.SSKN would be retained with the petitioner.
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5. It is the further case of the petitioner that the Government has withdrawn 38 villages from M/s.SSKN and re-allocated to M/s.Shree Renuka Sugars Limited. Having leased out M/s.SSKN to the petitioner, the petitioner was under the impression that 38 villages will be re-allotted to the petitioner. Since 38 villages are not re-allotted to the petitioner, petitioner has challenged the same before this Court in W.P.No.101201/2013. This Court, by order dated 04.10.2021 has remanded the matter back to the State Government for re-consideration. The same is pending before the State.
6. It is the further case of the petitioner that when things stood thus, the Government of Karnataka proposed to further withdraw about 116 villages which was allotted to M/s.SSKN and to re-allot the said 116 villages to proposed sugar factory sought to be 8 established by M/s.King Rudra. The petitioner has filed an objection (Annexure-F) to that proposal of the Government. Despite the objection, 57 villages have been withdrawn from the reserve zone of M/s.SSKN and allotted to M/s. King Rudra.
7. When things stood thus, respondent No.3 taken an IEM for establishment of 2500 TCD plant, about an aerial distance of 41 kms. from the petitioner's leased sugar mill and they have requested the Government for allotment of villages. Pursuant to the request, first respondent has called for a meeting of the representatives of neighbouring sugar factories of respondent No.4 and proposed to allot 72 villages to the said respondent No.4 and sent a proposal to respondent No.5. Out of 72 villages, 44 villages are coming within the cane area of M/s.SSKN, the Government wants to withdraw 44 villages from the petitioner. The fifth respondent - Government has 9 sought for a clarification from the first respondent for the allotment of villages to respondent Nos. 3 and 4.
8. It is the further case of the petitioner that the third respondent has not obtained the crushing licence and other mandatory licence from the competent authority and also without getting allotment of the villages from the competent authority are taking steps to start their crushing activity. Therefore, the petitioner has brought the same to the notice of the respondent vide letter dated 20.09.2021 (Annexure-J) and requested them not to permit respondent No.3 to commence the crushing without getting allotment of villages and crushing licence. Inspite of that, the Government, contrary to the promise made to the petitioner, making an effort to withdraw the villages allotted to the petitioner. Therefore, the petitioner is before this Court.
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9. When the petitioner has approached this Court by filing a writ petition in W.P.No.200210/022 and obtained an interim order, by violating the interim order, the third respondent has started crushing the sugarcane which is coming within the cane area of the petitioner. Therefore, the petitioner has filed the second writ petition in W.P.No.201052/2022 seeking a direction to respondents to seize all the stocks of sugar, molasses and other by-products situated in the godown and the factory of M/s. KPR Sugar and Apparels Limited and other directions.
10. Since both the matters are inter-linked and heard together, common order is being passed. W.P.No.200210/2022:
11. Sri Basava Prabhu Patil, learned Senior Counsel on behalf of Sri A.M.Nagral, appearing for the petitioner through video conference submitted that 11 the petitioner has filed a memo dated 27.06.2022 stating that the petitioner will not press the first prayer.
12. He further contended that in the second prayer the petitioner has sought for a mandamus not to withdraw villages that have already been allotted to M/s.SSKN. The prayer is not properly worded. In fact, the petitioner has sought for a writ of prohibition not to withdraw the villages allotted to the petitioner.
13. He further contended that it is well settled position of law that it is the nature of the prayer that is material and not the nomenclature/description/title assigned to them.
14. He would further contend that the Government, by exercising the power under Clauses 6, 7, 8 and 9 of the Sugarcane (Control) Order, 1966 (for short, 'Control Order, 1966') has issued a 12 Notification on 25.02.1987 allotting 369 villages to M/s.SSKN. When the Government has issued a tender notification, vide para 2.3 represented that the villages which are allotted to M/s.SSKN was spread over to 331 villages and there was scope for increase. Even the lease deed vide Annexure-C dated 06.03.2010 is executed between M/s.SSKN and the Director of NSL Sugars Limited after the approval of the State Government. Thereafter, petitioner wrote a letter to State Government to restore 38 villages to the petitioner. The Commissioner for Cane Development and Director of Sugar has accepted the petitioner's request for restoration of 38 villages. On the assurance of respondent Nos. 1 and 5, the petitioner has accepted the lease deed. Now the respondents cannot withdraw the villages allocated to M/s.SSKN.
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15. He further contended that in the Government Order dated 25.02.1987 the Government has not reserved any right to withdraw 369 villages allotted to M/s.SSKN. It is also mentioned in the tender documents that M/s.SSKN Sugar Factory can carry out the operation spread over to 331 villages. Even in the lease agreement executed after approval of the Government there is an assurance that the villages allocated to M/s.SSKN Sugar Factory will be continued. Therefore, the petitioner is seeking an enforcement of its rights as promised by the Government by the allotment order dated 25.02.1987, tender document and lease agreement dated 06.03.2010. Now Government is estopped from withdrawing the villages allotted to the petitioner under the principle of promissory estoppel and legitimate expectation. In support of his contention 14 he has relied on the following judgments of Hon'ble Apex Court:
(i) (1968) 2 SCR 366: Union of India & Ors.
Vs. Indo-Afghan Agencies Ltd.
(ii) (1979) 2 SCC 409: Motilal Padampat Sugar Mills Co.Ltd. vs. State of U.P.,
(iii) (1998) 7 SCC 66: National Buildings Construction Corporation vs. S.Raghunathan.
(iv) (2006) 12 SCC 33: Siemens Ltd. Vs. State of Maharashtra. .
16. He further contended that respondent No.3 without obtaining a licence from the competent authority, without allotment of cane area, illegally crushing the sugarcane. This aspect has been admitted in the affidavit filed by the Commissioner for Cane Development and Director of Sugar in the contempt petition. Inspite of the interim order 15 granted by this Court, violating the order passed by this Court, respondent No.3 illegally crushing the sugarcane.
17. He further contended that the contemnor cannot be protected by the orders of this Court. In support of his contentions, he relied on the following judgments of the Hon'ble Apex Court:
(i) (2007) 8 SCC 449:Prestige Lights Ltd.
Vs. State Bank of India.
(ii) (2003) 7 SCC 375:Anil Panjwani (Suo Motu contempt)
(iii) 2022 SCC Online 826: State Bank of India & others vs. Dr.Vijay Mallya.
(iv) (1998) 8 SCC 640: H.Phunindre Singh (Dr.) vs. K.K.Sethi.
18. Per contra, the learned Advocate General appearing for the State has contended that 16 the writ petition filed by the petitioner is not maintainable. No writ can be issued against a statutory authority restraining them from discharging their statutory duties.
19. He further contended that to seek for a mandamus the petitioner should establish its legal rights and there should be a statutory duty cast on the respondents and there should be a demand from the petitioner and if there is failure to discharge the statutory duty by the authority, then a writ petition can be filed for a writ of mandamus. In this case, there is no demand from the petitioner and no right has been created to the petitioner under any statutory law. Hence, the relief sought for by the petitioner cannot be granted. In support of his contentions, he has relied on the judgment of the Hon'ble Apex Court in the case of TATA CELLULAR vs. UNION OF INDIA reported in AIR 1996 SC Page 11. 17
20. He further contended that as per Clause 6 of Control Order, 1966, it is the power of the State Government to reserve any sugarcane area in favour of the sugar factory after considering the crushing capacity of the factory and the availability of the sugarcane in that area. The Government has called for report from the Commissioner for Cane Development and Director of Sugar, so far, the Government has not taken any decision under Clause 6 of the 1966 Order. Still the matter is pending before the State Government. The State Government, after hearing the necessary parties, takes a decision. If the petitioner is aggrieved by the decision of the Government, then only he can approach this Court. At this stage, the writ petitions filed by the petitioner is premature. In support of his contentions, he has relied on the judgment of the Hon'ble Apex Court in the case of SARASWATI 18 INDUSTRIAL SYNDICATE vs. UNION OF INDIA AND OTHERS reported in (1974) 2 SCC 630. Hence, he sought for dismissal of the writ petitions.
21. Sri S.M.Chandrashekhar, learned Senior Counsel appearing for respondent No.3 on behalf of Sri S.S.Halahalli submits that the writ petitions filed by the petitioner are not maintainable, no writ of mandamus or direction can be issued to the Government restraining from exercising their statutory duty.
22. He further contended that the petitioner has approached this Court by suppressing the true facts. On that ground alone, the writ petition has to be dismissed.
23. He further contended that no interim order has been granted against respondent No.3. The interim order is only to maintain status-quo in respect 19 of re-allotment of cane area which is allotted in favour of the petitioner and further direction not to withdraw any villages from cane area of the petitioner. This direction is only against respondent Nos. 1 and 5. There is no interim order against respondent No.3. Respondent No.3 has not violated any order of this Court.
24. He further contended that respondent No.3 after obtaining necessary IEM from the Central Government and after entering into an agreement with the farmers on trial basis have crushed the sugarcane, they have not violated any provisions of law. Hence, he sought for dismissal of the writ petitions.
25. By way of rejoinder, Sri Basavaprabhu Patil, learned Senior Counsel contended that the petitioner is seeking a writ of prohibition not to withdraw the 20 villages allotted to the petitioner as promised by the Government in its Control Order, 1987, tender document, lease deed and subsequent orders. Even though the State has not taken any final decision, the authorities have pre-determined the issues and have already decided to somehow give away 44 villages from the petitioner's reserved area to respondent No.3. Therefore, he contended that decision making process is wrong, they cannot initiate any proceeding for withdrawal of the villages from petitioner's reserved area as promised by the State Government. In support of his case, he relied on the decision of the Hon'ble Apex Court in the case of SIEMENS LTD. Vs. STATE OF MAHARASHTRA reported in (2006) 12 SCC 33.
26. Heard learned counsel for the parties and perused the writ papers.
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27. The petitioner has filed a memo dated 27.06.2022 stating that he will not press prayer (1). The other prayers are extracted hereinbelow:
"(ii) Issue a writ in the nature of mandamus and direct the respondent Nos.
1 and 5 not to withdraw the villages that have already been allocated to M/s.Sahakara Sakkara Karkhane Niyamit, Aland.
(iii) Further to take effective steps and measures to ensure that no other sugar factory receives or accepts the sugarcane from the cane area allocated to M/s.Sahkara Sakkara Karkhane Niyamit, Aland.
(iv) Issue such other writ, grant such other relief/s as this Hon'ble Court deems fit in the facts and circumstances of this case, in the interest of justice and equity." 22
28. I have perused the writ petition pleadings and documents produced along with the writ papers. Even though the prayers sought for is in the nature of mandamus, the actual relief sought for by the petitioner is writ of prohibition not to withdraw the villages allotted to the petitioner from its reserved area.
29. The only question that arises for consideration in these writ petitions is, 'whether writ of prohibition can be issued against the State Government and its authorities to restrain them from discharging their statutory duty, in the facts and circumstances of the case?'
30. To consider the relief sought for by the petitioner in this writ petition it is necessary to consider the provisions of the Control Order, 1966. 23 The relevant provision is Clause 6 and 6A. The same is extracted hereinbelow:
"6. Power to regulate distribution and movement of sugarcane.--(1) The Central Government may, by order notified in the Official Gazette.--
(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 which 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 24 operating in the reserved area, through such society, shall supply to the factory concerned;
(d) direct a sugarcane grower or a sugarcane growers' 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
(c);
(e) direct that no [x x x x x] 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 25 paragraph and any wilful failure on the part of the sugarcane grower, sugarcane growers' cooperative society or the factory to do so, shall constitute a breach of the provisions of this Order:
Provided that where the default committed by any sugarcane growers' co-
operative 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.
[6-A. Restriction on setting up of two sugar factories within the radius of 15 kms.-- Notwithstanding anything contained in Clause 6, no new sugar factory shall be set up within the radius of 15 kms of any existing sugar factory or another new sugar factory in a State or two or more States:
Provided that the State Government may with the prior approval of the Central Government, where it considers necessary and expedient in public interest, notify such minimum distance higher than 15 kms or different minimum distances not less than 15 26 kms for different regions in their respective States.
Explanation 1.--An existing sugar factory shall mean a sugar factory in operation and shall also include a sugar factory that has taken all effective steps as specified in Explanation 4 to set up a sugar factory but excludes a sugar factory that has not carried out its crushing operations for last five sugar seasons.
Explanation 2.--A new sugar factory shall mean a sugar factory, which is not an existing sugar factory, but has filed the Industrial Entrepreneur Memorandum as prescribed by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry in the Central Government and has submitted a performance guarantee of rupees one crore to the Chief Director (Sugar), Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution for implementation of the Industrial Entrepreneur Memorandum within the stipulated time or extended time as specified in Clause 6-C. 27 Explanation 3.--The minimum distance shall be determined as measured by the Survey of India.
Explanation 4.--The effective steps shall mean the following steps taken by the concerned person to implement the Industrial Entrepreneur Memorandum for setting up of sugar factory.--
(a) purchase of required land in the name of the factory;
(b) placement of firm order for purchase of plant and machinery for the factory and payment of requisite advance or opening of irrevocable letter of credit with suppliers;
(c) commencement of civil work and construction of building for the factory;
(d) sanction of requisite term loans from banks or financial institutions;
(e) any other step prescribed by the Central Government, in this regard through a notification."
31. By a plain reading of the above provision it is clear that the State Government may reserve sugarcane area for a factory on the basis of crushing 28 capacity of the factory and availability of sugarcane in the reserve area and also taking into consideration the quantity of sugarcane which the factory will require for crushing during a year.
32. In the case on hand, the specific case of the petitioner is that respondent No. 5 issued a Government Order dated 25.02.1987 by exercising power under Clauses 6, 7, 8 and 9 of Control Order, 1966 reserving 369 villages to M/s.SSKN. When the Government has floated the tender for leasing out M/s.SSKN Sugar Factory, they have assured that the area of operation was spread over to 331 villages and there was scope for increasing. The Government has not reserved any rights in the G.O. dated 25.02.1987 for withdrawal of any villages allotted to M/s.SSKN.
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33. It is also the case of the petitioner that 38 villages which have been withdrawn from the petitioner will also be restored. That has been assured by the Commissioner for Cane Development and Director of Sugar by his letter dated 04.07.2011.
34. The further case of the petitioner is that now the Government is under the process of withdrawing 44 villages from petitioner's reserved area, contrary to what was promised by the State Government.
35. But as rightly submitted by the learned Advocate General, the Government has not yet taken any decision to withdraw any villages from petitioner's reserved area and any recommendation of authority is not binding on the Government, the Government will take a decision after giving notices to the affected parties and order will be passed as per the Control Order, 1966.
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36. As per the provisions of Clause 6 of the Control Order, 1966, when any person has established a new factory and requests for allotment of reserve area, the Government has power to consider the same. As per the request made by respondent No.3 for allotment of cane area, the Government is under the process to consider the request. Under the Control Order, 1966 any recommendation of the Commissioner for Sugarcane and Director of Sugar is not binding on the State Government. So far, no order has been passed and as contended by the petitioner, 44 villages have not yet been withdrawn from the petitioner's reserve area and allotted to respondent No.3. When Government has the power under the Control Order, 1966, this Court cannot issue any writ of mandamus or prohibition restraining the statutory authorities from discharging their statutory duties. If the Government 31 passes any order, the petitioner is aggrieved, then it can challenge the same before the appropriate legal forum. In this case, no such order has been passed. Therefore, the only direction that can be issued to the State is that before taking any decision on the application filed by respondent No.3 for allotment of cane area under Clause 6 of the Control Order, 1966, the Government has to hear all the affected persons and also take into consideration the earlier Government Order dated 25.02.1987, condition in the tender documents and also the lease deed dated 06.03.2020 (Annexure-C). The Government is directed to take a decision in accordance with law without being influenced by the recommendations of the authorities.
37. With the above observations, WP No.200210/2022 stands disposed of. 32 WP 201052/2022:
38. Sri Basava Prabhu Patil, learned Senior Counsel appearing for the petitioner has contended that if any person wants to establish a new sugar factory, he has to submit IEM to the Central Government and he has to obtain the crushing licence under the control order. Accordingly, petitioner has obtained IEM from the Central Government and also obtained the crushing licence from the State Government. After the crushing licence has expired, the petitioner submitted an application along with the necessary fee for renewal of crushing licence. The same is pending before the State Government. The State Government by notice dated 11.12.2018 has sought for levy of Re.1/- per MT of sugar. The demand notice has been challenged by the petitioner before this Court in W.P.No.9091/2020 33 where they have an interim order and the same is pending before this Court.
39. He further contended that no sugarcane area has been reserved for respondent No.3. The respondent No.3, contrary to the provisions of Control Order, 1966 illegally crushed the sugarcane. Therefore, the petitioner has given a complaint to the Cane Commissioner to take action against the respondent No.3 for violation of the provisions of Control Order, 1966. But he has not taken any action against respondent No.3.
40. He further submitted that in Contempt Petition No.CCC No.200037/2022, the Commissioner for Cane Development and Director of Sugar has filed an affidavit stating that the respondent No.3 commenced the factory without obtaining approval and the licence from competent authorities. He 34 further contended that even though there is an interim order passed by this Court in W.P.No.200210/2022, by violating the said interim order passed by this Court respondent No.3 has crushed the sugarcane illegally. Therefore, he contended that the writ petition has to be allowed.
41. Sri Udaya Holla, learned Senior Counsel appearing for the petitioner submits that this Court by order dated 10.05.2022 directed respondent Nos. 1 and 2 to inspect the factory and the godown of respondent No.3, take an inventory of the sugar and other by-products, if it is found that the same is illegally confiscated, to submit a report. After the interim order passed by this Court, the third respondent has violated the same by breaking open the shutters and tampered with the stock. Immediately the same has been brought to the notice of this Court. This Court passed one more order on 35 19.05.2022 directing respondent No.3 to take steps to get the shutters of godown repaired and also directed the Deputy Commissioner to re-verify the stock and submit a report. But even today, no report has been submitted.
42. He further contended that in the contempt petition filed by the petitioner the Commissioner has filed an affidavit admitting that respondent No.3 has illegally crushed the sugar. Therefore, he contended that since the petitioner has violated the interim order of this Court, he is not entitled for any relief at the hands of this Court. In support of his contentions, he has relied on the following judgments of the Hon'ble Apex Court:
(i) (2007) 8 SCC 449 - M/s.Prestige Lights Ltd. Vs. State Bank of India - para 24 and 36
(ii) (2003) 7 SCC 375 : Anil Panjwani (Suo-
motu) - para 6.
43. He further contended that it is an admitted fact that the third respondent has violated the order of this Court and the contemnor should not be heard. In support of his contentions, he relied on the following judgments of the Hon'ble Apex Court:
(i) (1998) 8 SCC 640: Dr.H.Phunindre Singh & Ors. vs. K.K.Sethi & Anr. and
(ii) (2020) 22 SCC Online 862.
44. Per contra, learned Advocate General submitted that any person who wants to establish an industry had to obtain the licence as per Section 11 of the 1951 Act. By amendment to the Central Act on 29.08.1991, the Central Government has exempted the licence under Section 11 of the Act, but it requires to obtain IEM from the Central 37 Government. In Schedule I Entry 25, the sugar is also one of the subject coming under the Act.
45. He further contended that under Control Order, 1966, the Central Government has delegated the power to the State Government. The State Government, by exercising power under Clause 3 of the Control Order, 1966 has issued an order called Karnataka Sugar (Regulation and Production) Order, 1975. As per that order, no person shall establish an industry for manufacture of sugar without obtaining licence. The petitioner has not renewed the licence which is obtained under Regulation Order, 1975. Show-cause notice has been issued to the petitioner on 18.08.2020.
46. He further submitted that even respondent No.3 has also not obtained any licence, the 38 Government will also issue notice to respondent No.3 under Regulation Order, 1975.
47. He further contended that as per the Control Order, 1966 if any person violates any provision of the said control order, complaint has to be given to the competent authority, the competent authority after seizure of the essential commodities will forward the complaint and seized report to the Deputy Commissioner under Section 6A of the Essential Commodities Act, 1955 (for short, '1955 Act'). The Deputy Commissioner will issue notice before confiscation of food grains under Section 6B of the 1955 Act. After enquiry he will pass an order under Section 6A of the 1955 Act for confiscation of essential commodities. If the respondent No.3 has violated any provision of Control Order, 1966 and crushed the sugarcane, the petitioner has to give a complaint to the competent authority and he will take action under 39 the 1955 Act. Without exhausting such a remedy the petitioner has approached this Court. Hence, he contended that the relief sought for by the petitioner is not maintainable and no such relief can be granted.
48. Sri S.M.Chandrashekhar, learned counsel appearing for respondent No.3 submitted that the petition filed by the petitioner is not maintainable. The petitioner has not established his right over the sugar, ethanol and molasses seized by the Commissioner pursuant to the direction of this Court. Therefore, no mandamus can be issued.
49. He further contended that this writ petition is filed on the basis of the interim order passed by this Court in W.P.No.200210/2022. In the said interim order there is no direction against the third respondent and the third respondent has not violated any interim order. Therefore, the writ petition filed 40 by the petitioner against the third respondent is not maintainable and he is not a necessary party in this case.
50. He further contended that the prayer in this writ petition is not maintainable. The petitioner without exhausting the remedy available under the 1955 Act has directly approached this Court.
51. He would further contend that the petitioner also filed an application for issuance of cane crushing licence. The respondent No.3 has also filed an application for issuance of cane crushing licence and the same is pending before the Government. The petitioner has also crushed the cane without licence. Therefore, he cannot contend that respondent No.3 has no licence to crush the sugarcane.
52. He further contended that as required under the law the respondent No.3 has obtained IEM from 41 the Central Government and the Government has also allotted factory code to the respondent No.3 and he has applied for allotment of villages. After obtaining IEM and factory code he has established the factory. What is required under the Control Order, 1966 is, no new factory shall be set up within the radius of 15 kms. of existing sugar factory. The third respondent's factory is beyond 15 kms. from the petitioner's factory. Therefore, there is no violation of the Control Order, 1966.
53. It is the further case of the respondent No.3 that earlier, as per the Karnataka Sugarcane (Regulation of Supply and Purchase) Act, 2013, there is prohibition for purchase of sugarcane in reserved area. On 28.08.2014, by amendment, that restriction has been removed. Therefore, there is no bar for third respondent to enter into an agreement with the cane growers within the reserved area of the petitioner. 42
54. He further contended that for farmers interest is paramount consideration. In support of his contention, he has relied on the following judgments of the Hon'ble Apex Court:
(i) (2017) 7 SCC 729:Shivashakti Sugars Ltd. Vs. Sree Renuka Sugar Ltd. - paras 41, 42
(ii) (2007) 8 SCC 418: M/s.Dhampur Sugar (Kashipur) Ltd. vs. State of Uttaranchal & Ors. - paras 45, 46 & 50
(iii) (1998) 4 SCC 324: Maharashtra Rajya Sakhar Kharkhana Sangh Ltd. & Ors. Vs. State of Maharashtra & Ors. - paras 15, 16 Therefore, the relief sought for by the petitioner in this writ petition cannot be granted. Hence, he sought for dismissal of the writ petition.43
55. Sri Dhama Sheshadri Naidu, leaned Senior Counsel appearing for respondent No.6 has submitted that respondent No.6 is a Co-operative Sugar Factory and the factory is established by the Government. The Government has invested more than Rs.3.5 crores and it has 65% shares and rest of the shares has been held by the farmers. Respondent No.6 has been established in the public interest. This factory is owned by the farmers. Sixth respondent has been leased out in favour of the petitioner for certain period. Therefore, respondent - Government before passing any order have to hear the sixth respondent. When the Commissioner for Cane Development and Director of Sugar has recommended for withdrawing the villages allotted to sixth respondent, no notice has been given.
56. He further contended that when the factory has been established, the Government has allotted 44 369 villages. Now some of the villages have been withdrawn. Ultimately, it will affect the interests of the farmers, only for certain period it has been leased out to the petitioner, after the lease period the factory has to be represented by the members of respondent No.6 - co-operative society.
57. Heard the learned counsel for the parties and perused the writ papers.
58. The first contention of the petitioner is that respondent No.3 by violating the interim order passed by this Court illegally crushed the sugarcane and he should not be heard and he is not entitled for any relief at the hands of this Court is concerned, in respect of violation of interim order passed by this Court is concerned, the petitioner has filed contempt petition in CCC No.200037/2022 which is pending before the Division Bench of this Court. Therefore, at this stage, it is not proper for this Court to decide 45 whether respondent No.3 has violated this Court's order or not.
59. The second contention of the petitioner in this writ petition is that respondent No.3 without obtaining the licence for crushing, contrary to the provisions of Control Order, 1966 and contrary to the provisions of the Essential Commodities Act and the Control Order issued by the State Government under the Essential Commodities Act has crushed the sugarcane illegally and the further case of the petitioner is that respondent No.3 is pouching the sugarcane from the cane area of the petitioner and has crushed the sugarcane in violation of the law.
60. If any person violates the provisions of the Essential Commodities Act, under the 1955 Act, a separate mechanism has been provided. For better 46 understanding, Sections 6-A and 6-B of the Essential Commodities Act, 1955 are extracted hereinbelow:
"[6A. Confiscation of essential
commodity.― [(1)] Where any [essential
commodity is seized] in pursuance of an order made under section 3 in relation thereto, [a report of such seizure shall, without unreasonable delay, be made to] the Collector of the district or the Presidency town in which such [essential commodity is seized] and whether or not a prosecution is instituted for the contravention of such order, the Collector [may, if he thinks it expedient so to do, direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied] that there has been a contravention of the order [may order confiscation of―
(a) the essential commodity so seized;
(b) any package, covering or receptacle in which such essential commodity is found; and
(c) any animal, vehicle, vessel or other conveyance used in carrying such essential commodity:] 47 Provided that without prejudice to any action which may be taken under any other provision of this Act, no foodgrains or edible oilseeds in pursuance of an order made under section 3 in relation thereto from a producer shall, if the seized foodgrains or edible oilseeds have been produced by him, be confiscated under this section:
[Provided further that in the case of any animal, vehicle, vessel or other conveyance used for the carriage of goods or passengers for hire, the owner of such animal, vehicle, vessel or other conveyance shall be given an option to pay, in lieu of its confiscation, a fine not exceeding the market price at the date of seizure of the essential commodity sought to be carried by such animal, vehicle, vessel or other conveyance.] [(2) Where the Collector, on receiving a report of seizure or on inspection of any essential commodity under sub-section (1), is of the opinion that the essential commodity is subject to speedy and natural decay or it is otherwise expedient in the public interest so to do, he may― 48
(i) order the same to be sold at the controlled price, if any, fixed for such essential commodity under this Act or under any other law for the time being in force; or
(ii) where no such price is fixed, order the same to be sold by public auction: Provided that in case of foodgrains, the Collector may, for its equitable distribution and availability at fair prices, order the same to be sold through fair price shops at the price fixed by the Central Government or by the State Government, as the case may be, for the retail sale of such foodgrains to the public.
(3) where any essential commodity is sold, as aforesaid, the sale proceeds thereof, after deduction of the expenses of any such sale or auction or other incidental expenses relating thereto, shall―
(a) where no order or confiscation is ultimately passed by the Collector,
(b) where an order passed on appeal under sub-section (1) of section 6C so requires, or
(c) where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made 49 under this section, the person concerned is acquitted, be paid to the owner thereof or the person from whom it is seized.].
6B. Issue of show cause notice before confiscation of food grains, etc.― [(1)] No order confiscating [any essential commodity] package, covering, receptacle, animal, vehicle, vessel or other conveyance] shall be made under section 6A unless the owner of such [essential commodity] package, covering, receptacle, animal, vehicle, vessel or other conveyance) or the person from whom [it is seized]―
(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the [essential commodity] package, covering, receptacle, animal, vehicle, vessel or other conveyance];
(b) is given an opportunity of making a presentation in wiring within such reasonable time as may be specified in the 50 notice against the ground of confiscation; and
(c) is given a reasonable opportunity of being heard in the matter.
[(2) Without prejudice to the provisions of sub-section (1), no order confiscating any animal, vehicle, vessel or other conveyance shall be made under section 6A if the owner of the animal, vehicle vessel or other conveyance proves to the satisfaction of the Collector that it was used in carrying the essential commodity without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the animal, vehicle, vessel or other conveyance and that each of them had taken all reasonable and necessary precautions against such use.] [(3) No order confiscating any essential commodity package, covering, receptacle, animal, vehicle, vessel or other conveyance shall be invalid merely by reason of any defect or irregularity in the 51 notice, given under clause (a) of sub- section (1), if, in giving such notice, the provisions of that clause have been substantially complied with]"
61. From a plain reading of the above provision it is very clear that if any person violates provisions of the Essential Commodities Act, the concerned authority has to seize the product. Thereafter, he has to report the seizure to the Deputy Commissioner. The Deputy Commissioner has to initiate the proceedings for confiscation under Section 6A of the 1955 Act. Before confiscating of the essential commodities, he has to issue a notice to the concerned persons. Before passing the final order if the opinion of the Deputy Commissioner that essential commodities which is seized is subject to speedy and natural decay or it is otherwise expedient in the public interest, order the same to be sold at the control 52 price, if any, fixed for essential commodities under this Act or under any other law for the time being in force. After issuing show-cause notice to the concerned person under Section 6B of the Act, he has to pass a final order. Being aggrieved by that order there is also a provision to file an appeal under Section 6C of the Act and also there is a provision for initiation of criminal prosecution.
62. In the case on hand, the specific case of the petitioner is that respondent No.3 has crushed the sugarcane without obtaining the crushing licence from the competent authority and without allotment of sugarcane area by pouching the sugarcane from the reserve area of the petitioner. Therefore, the petitioner immediately lodged a complaint to the concerned officer. Since he has not taken any action, the petitioner has approached this Court. 53
63. This Court by an interim order directed the Commissioner to seize the sugar, ethanol and molasses. Pursuant to the interim order of this Court now the sugar and its by-products have been seized by the competent authority.
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:
(i) The Commissioner for Cane Development and Director of Sugar is directed to submit a report of the seizure of the sugar to 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.
54
(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 55 sugar and the bank guarantee in favour of the third respondent.
With the above observations, W.P.No.201052/2022 stands disposed of.
It is made clear that disposal of these writ petitions will not prejudice the case of the petitioner in CCC No.200037/2022.
In view of disposal of the main matters, IA for direction and IA for vacating stay in both the petitions do not survive for consideration.
In respect of IA No.7/2022 filed for impleading in W.P.No.200100/2022 is concerned, the 38 villages allotted to the impleading applicant is not an issue in this petition. Hence, the impleading applicant is not a necessary and proper party to this petition. Hence, IA No.7/2022 is dismissed as unnecessary.
After pronouncement of the order, Sri Basava Prabhu Patil, learned senior counsel for the petitioner submitted 56 that it is their apprehension that, before taking any decision on the application filed by respondent No.3, respondent No.3 may pouch the sugar cane from the petitioner's reserve area and may crush the sugar cane. If there is any such instance, the petitioner is at liberty to lodge complaint before the competent authority.
If such complaint is lodged, the competent authority has to take action in accordance with law.
Sri S.S.Halalli, learned counsel for respondent No.3 submitted that the Government may be directed to fix some time limit for considering the application filed by respondent No.3 for allocation of sugar cane area.
The State Government is directed to consider the application as observed above, as early as possible, but not later than four weeks from today.
Sd/-
JUDGE Cm/-