Karnataka High Court
M/S. The India Sugars And Refineried Ltd vs The Commissioner on 3 December, 2019
Bench: Alok Aradhe, N.S.Sanjay Gowda
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
Dated this the 3rd day of December 2019
Present
THE HON'BLE MR.JUSTICE ALOK ARADHE
and
THE HON'BLE MR.JUSTICE N.S. SANJAY GOWDA
Writ Appeal Nos.100807-100809 of 2014 (GM-RES)
Between
M/S. The India Sugars & Refineries Ltd.,
Having its registered office at:
Chitwadgi-583211, Hospet,
Bellary District, Rep. by its:
Manager Finance
Sri. P.S. Krishnamurthy
Son of late P.K. Soundarajan,
aged about 55 Years. ...Appellant
(By Sri. Rajesh Chandrakumar & Sri Aravind D.Kulkarni,
Advocates)
And
1. The Commissioner for Cane
Development and Director Of Sugar
In Karnataka, No. ,5th Floor,
KHB Complex, Cauvery Bhavan,
Kempegowda Road,
Bangalore-560009.
2
2. Hospet Raithara Sangha,
ISR Factory Road,
Hospet-583201,
Bellary District,
Represented by its Secretary
Sri Taralli Huthgujappa
3. The Thungabhandra Sugarcane and
Banana Growers Association,
(A Society Registered under the
Provisions of the Karnataka
Societies Registration Act,
Registration No.253/2009-10)
Old II Ward, Kamalapur-583221,
Taluk Hospet, District: Bellary,
Represented by its President,
Sri A.Narayana Singh,
...Respondents
(By Smt. K.Vidyavathi, Addl. Advocate General, and
Shri. G.K.Hiregoudar, Government Advocate for R1
Shri. G.I.Gachhinamath, & Sri Veeresh Budhihal,
Advocates for R2
Shri. Mallikarjunswamy B.Hiremath, Adv. for R3)
These Writ Appeals are filed under Section 4 of the
Karnataka High Court Act, 1961, praying to set aside
the order of the learned single Judge dated 25.04.2014
in W.P.No.84435/2013 by allowing this appeal and to
allow the writ petition as prayed for.
These Writ Appeals coming on for Final Hearing
this day, ALOK ARADHE, J, delivered the following:
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JUDGMENT
In these intra-court appeals, the appellant has assailed the validity of the order passed by the learned single Judge by which the writ petition preferred by the appellants against the orders dated 26.10.2013 and demand notice dated 30.10.2013 issued by the Cane Commissioner under the Sugar Cane (Control) Order, 1966, has been dismissed. In order to appreciate appellant's grievance, relevant facts need mention which are set out hereinafter.
FACTUAL MATRIX
2. The appellant is a company registered under the provisions of the Companies act, 1956. The appellant had its factory at Chitawadgi, which was set up in the year 1933. The sale of sugar and sugarcane are regulated under the Sugarcane (Control) Order, 1966 (for short, hereinafter referred to as 'the 1966 Order'). Under the 1966 Order, the Central Government 4 every year determines the minimum sugarcane price which is payable to the farmers. The sugarcane price determination order has also been issued and the price so determined is called fair remunerative price (FRP). The aforesaid order also mandates that no sugarcane grower shall sell sugarcane at less than FRP.
3. The State Government, in exercise of powers under Clause 6 of the 1966 Order has specified the areas which are earmarked as reserved areas for the appellant's factory to ensure availability of sugarcane having regard to its crushing capacity. By a notification dated 12.12.2002, the Government of India fixed the minimum sugarcane price at the rate of Rs.82.74 per quintal for sugar season 2002-03. Thereafter, a notification under clause 3(1) of 1966 Order was issued on 9th January 2003 by the Government of India by which the minimum sugarcane price was fixed at Rs.89.18 per quintal. The challenge to the validity fo the 5 aforesaid notification was made by the South Indian Sugar Mills association by filing a writ petition on or about 30th January 2003 before this Court. U.P. Sugar Mills Association filed W.P. No.897/2003 before the Delhi High Court. The Union of India filed a transfer petition in Transfer Petition No.174-178/2003 before the Supreme Court. The Supreme Court by an order dated 22nd March 2004 allowed the transfer petitions. However the aforesaid transfer petitions were dismissed as withdrawn by the Supreme Court vide order 18.10.2012.
4. The respondent No.2 - Hospet Raithara Sangha (hereinafter referred to as 'the Association') filed W.P. No.16580 of 2007 in which a grievance was made that there has been a shortfall in making payment in respect of sugar season 2002-03 and 2003-04. In the meanwhile, the appellant also filed writ petitions namely W.P. Nos.76567-568 of 2013 in which the validity of the notification dated 09.01.2003 was challenged. In the 6 aforesaid writ petitions even though it was held that same were filed belatedly, yet the Cane Commissioner was directed to hold an enquiry. The writ petition preferred by the Association was also disposed of on 29.07.2013 with a direction to the Cane Commissioner to ensure payment of alleged shortfall in payment to the farmers in respect of the sugar season 2002-03 and 2003-04. The order dated 29.07.2013 passed by the learned single Judge in W.P. Nos.76567-568/2013 was challenged in writ appeal by the appellant which was dismissed by an order dated 18.11.2013.
5. The appellants entered into an agreement with the farmers for sugarcane price at the rate of Rs.840/- per metric ton for the sugar season 2003-04. The Union of India issued a Gazette by which the statutory minimum price of sugarcane was fixed at Rs.891.50 per metric ton for the sugar season 2003-04. The appellant thereafter submitted an objection to the 7 Union of India with regard to frixation of statutory minimum price at Rs.891.50 per metric ton and requested for modification of the same at the rate of Rs.840.50 per metric ton. The Cane Commissioner, by an order dated 26.04.2008, in exercise of powers under Clause 5A of the 1966 Order directed the appellant to pay the balance of statutory minimum price at the rate of Rs.51.50 per metric ton for the sugar season 2003-
04. The aforesaid order was subject matter of challenge, at the instance of the appellant, in W.P. No.7169/2008 which pertained the sugar season 2003-04. The learned single Judge, vide an ad interim order dated 20.05.2008 stayed the order dated 26.04.2008.
6. Thereafter, the aforesaid writ petition was disposed of, and the order dated 26.04.2008 was quashed and the matter was remitted to the Cane Commissioner to hold an enquiry and to determine/quantify the arrears as well as to determine 8 the question of jurisdiction to deal with the dispute. The aforesaid order was upheld in W.A. No.31161/2013 by order dated 18.11.2013.
7. In November 2004, the Government of India fixed the statutory minimum price of sugarcane at Rs.868.20 per metric ton for the sugar season 2004-05. It is the case of the appellant that from December 2004 onwards, it entered into an agreement with the individual farmers to pay the statutory minimum price as notified by the farmers. It is also averred that the appellant by a communication dated 04.04.2006 reminded the Association about the fact that the amount was paid in excess towards shortfall made in the year 2002-03 and 2003-04. The aforesaid position was again reiterated by communication dated 28.08.2006.
8. For the sugar season 2005-06, the Government of India issued a notification in the month of November 2005 by which the statutory minimum 9 price of sugarcane was fixed at Rs.918.20 per metric ton. For the sugar season 2005-06, the appellant entered into an agreement with the individual farmers from December 2005 onwards to pay statutory minimum price as notified by the farmers. Thereafter, by a communication dated 04.04.2006, the appellant informed the Association that the shortfall in payment for 2002-03 and 2003-04 has been made good. It is averred that, on 03.01.2007, the appellant entered into an agreement with the Association to pay Rs.1140/- per metric ton for sugar season 2006-07 and, at the relevant time, the statutory minimum price was Rs.928.50 per metric ton. It is pleaded that the appellant entered into individual agreement signed by the farmers supplying cane on 26.01.2007 and agreed to receive the statutory minimum price as fixed by the Government and additional cane price under Clause 5A of the 1996 Order, if any. The appellant, thereafter on 18.05.2007, terminated the agreement dated 10 03.01.2007. Thereafter, a recommendation was made in favour of the appellant by the Cane Commissioner on 14.08.2007 that the appellant has suffered more loss by paying statutory minimum price at the rate of Rs.928.50/-.
9. On 04.06.2007, the Union of India and Government of Karnataka granted reliefs and concessions including exemption in respect of purchase tax till 31.03.2008. By order dated 17.12.2007, the Cane Commissioner directed the appellant to pay sugarcane price/arrears as per the agreement dated 03.01.2007 within a period of four weeks. The appellant thereupon submitted a reply on 08.01.2008 in which it was stated that it was not liable to pay any amount and it had paid the amount as per the statutory minimum price as agreed between the parties.
10. The appellant filed W.P. No.725/2008 in which the order dated 17.12.2007 passed by the Cane 11 Commissioner was challenged. A Bench of this Court by order dated 19.02.2008 allowed the writ petition and remitted the matter to the Cane Commissioner for fresh adjudication. The Cane Commissioner, in pursuance of the order of remand, passed an order on 05.07.2008 and directed the payment of arrears of sugarcane price by applying the agreement dated 03.01.2007 executed between the parties i.e. the appellant and the Association. The appellant thereupon filed W.P. No.10479 of 2008 in which the order dated 05.07.2008 passed by the Cane Commissioner was challenged. The aforesaid writ petition was allowed by order dated 14.08.2008 and the order dated 05.07.2008 passed by the Came Commissioner was set aside and the matter was remitted to respondent No.1 to decide the question of jurisdiction and to pass an order on merits.
11. The Cane Commissioner vide order dated 17.08.2009 held that it has the jurisdiction to resolve 12 the dispute between the Association and the appellant and directed the appellant to pay arrears for the sugar season 2006-07. Being aggrieved, the appellant filed W.P. No.64840/2009 in which the order dated 17.08.2009 passed by the Cane Commissioner was challenged. For the sugar season 2009-10, the total cane supplied by the growers to the appellant was only about 20,000 metric tons as against four lakh metric tons and there was wide spread diversion of sugar cane illegally to neighbouring factories. Thereupon, several complaints were made by the appellant against the neighbouring factories under the Essential Commodities Act. For the sugar season 2010-11, by an order dated 26.11.2010, the Government restricted the extent of cane to be crushed by the appellant to two lakh tons as against four lakh tons.
12. The aforesaid order was again challenged by the appellant in a writ petition namely W.P. 13 No.68780/2010. During the pendency of the writ petition, on 12.12.2010, the appellant entered into an agreement with the Association in the presence of MLA, Deputy Commissioner, Assistant Commissioner, Tahasildar and the Deputy Superintendent of Police under which it had agreed to pay a sum of Rs.1850/- per metric ton, when statutory minimum price was Rs.1,493.40/-. The appellant, further agreed to pay alleged arrears of 2006 & 2007 in two installments in full and final settlement of all alleged arrears of 2002-03 and 2003-04. On 11.01.2011, the Government withdrew the order dated 26.11.2010 permitted the appellant to crush four lakh metric tons of cane available in the area. Therefore, W.P.No.64840/2009 was disposed of recording the agreement dated 12.12.2010 and reserved liberty to the appellant to agitate the issue with regard to the jurisdiction of Cane Commissioner in an appropriate proceeding.
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13. The appellant entered into an agreement on 21.11.2012 with the Association under which it agreed to pay a sum of Rs.2510/- per metric ton, when the statutory minimum price was Rs.1,843/- per metric ton and again agreed to pay arrears of 2006-07 in full and final settlement and all alleged arrears of 2002-03, 2003-04 and 2006-07 provided all the sugarcane is supplied to the appellant without any diversion. The appellant thereupon field a contempt petition alleging that the State authorities are permitting diversion of the cane illegally contrary to the directions dated 15.07.2011 passed in W.P.No.60262-60264 of 2011.
14. The respondent No.3, thereafter, filed writ petition namely W.P. No.72498-502 of 2012 seeking a direction for making payment of arrears in respect of 2006-07 as per the agreement dated 3rd January 2007. The aforesaid writ petition and connected matters were disposed of with a direction to the Cane Commissioner 15 to consider the representation. Thereafter, the Cane Commissioner conducted an enquiry in which the appellant filed an objection. The Cane Commissioner by an order dated 26.10.2013 passed an order by which, inter alia, it was held that he has the jurisdiction under Clause 3(8) of 1966 Order to adjudicate the dispute. It was further held that the appellant is liable on the basis of the statutory minimum price fixed in the year 2002- 03 and 2003-04 and in view of the agreement with the Association for the year 2006-07. Thereafter, a demand notice dated 30.10.2013 was issued to the appellant. The appellant filed a writ petition namely W.P. No.84436/2013 and 84472-84473 of 2013 in which a challenge was made to the aforesaid orders. The learned single Judge by order dated 25.04.2014 dismissed the writ petitions. Thereafter, the appellant filed a review petition which was dismissed by an order dated 07.08.2014.
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15. The order dated 25.04.2014 as well as the order dated 07.08.2014 passed by the learned single judge were subject matter of appeal in W.A. Nos.100807-100809 of 2014. In the aforesaid appeals, an interim order was passed by which the appellant were directed to deposit 50% of the amount ordered, to be deposited with the Cane Commissioner within a period of four weeks. Thereafter, the appellant, on 16.12.2014, filed an application for modification of the interim order. The aforesaid application was considered and the appellant was directed to deposit 25% by the end of December 2014 and the remaining 25% amount by 15th January 2015.
16. Being aggrieved by the aforesaid order, the appellant challenged the aforesaid order in S.L.P. No.5168-5170 of 2015 which was dismissed by the Supreme Court by order dated 20th February 2015. A Division Bench of this Court by judgment dated 17 30.09.2015, quashed the order passed by the learned single Judge and remitted the matter to the Cane Commissioner for decision afresh in accordance with law. The Supreme Court in S.L.P. Nos.11248-11250/2016 directed the appellant to comply with the interim order dated 16.12.2014 passed by this Court in these writ appeals. The Supreme Court by an order dated 30.09.2016 disposed of both the special leave petitions field by the respondents No.2 and 3 against the judgment dated 30.09.2015 and remitted the matter to this Court without expressing any opinion on the merits of the case and directed the deposit to be transferred to this Court. The appellant did not press the finding regarding limitation qua the claim of the sugarcane growers before the Supreme Court. In the aforesaid factual background, these appeals have come up before us.
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SUBMISSIONS BY APPELLANT
17. Learned counsel for the appellant has made the submissions as follows:
i) The learned single Judge ought to have appreciated that the impugned order passed by the Cane Commissioner is per se without jurisdiction as lis, under Clause 3(8), can only be adjudicated between the sugarcane growers and the producer, before the Cane Commissioner and a lis between the Association and the producer cannot be subject matter of adjudication by the Cane Commissioner under clause 3(8) of the 1966 Order.
ii) The learned single Judge ought to have appreciated that the Association had no locus to approach the Cane Commissioner.
iii) That the order has been passed by the Cane Commissioner in violation of the directions of this Court passed in W.P. No.7169 of 2008 dated 29.07.2013 which pertained to sugar season 2003- 19
04 and W.P. Nos.76567-568/2013 dated 29.07.2013 which pertained to sugar season 2002-03, inasmuch as the Court had directed the matter to be adjudicated by the Cane Commissioner if the dispute raised is within the ambit of Clause 3(8) of 1966 Order. However, the Cane Commissioner without recording any finding in this regard proceeded to deal with the matter on merits. The parties, by virtue of the orders passed by the aforesaid writ petitions, were allowed to lead evidence and they adduced evidence before the Cane Commissioner. However, the Cane Commissioner did not consider the evidence and decided the matter in a cryptic and cavalier manner and the submissions made on behalf of the appellant were not taken into consideration.
iv) The learned single Judge ought to have appreciated that the order passed by the Cane Commissioner is 20 in violation of the directions issued by this Court inasmuch as it had directed that the Cane Commissioner shall pass a reasoned order by referring the evidence placed before it by both the parties. However, the Cane Commissioner has neither assigned any reasons nor has referred to the evidence which was placed before it.
v) The learned single Judge ought to have appreciated that the order passed by the Cane Commissioner is in violation of the principles of natural justice and is arbitrary as the Cane Commissioner has failed to render any finding on crucial aspects of the matter in its replies dated 11.09.2013, 25.09.2013, 05.10.2013, 10.10.2013 and 15.05.2013.
vi) The Cane Commissioner has failed to adjudicate the plea taken by the appellant of the alleged arrears for the year 2002-03 and 2003-04 have been discharged in the years 2004-05 and 2005-06. It 21 has also been urged that all the facts and data was provided by way of individual agreement executed with the farmers for the year 2004-05 and 2005-06 for payment of statutory minimum price and settlement of payments made, the actual payment made and the payment made in excess of the agree amounts. However, the aforesaid issue has not been addressed by the Cane Commissioner at all and no finding has been recorded.
vii) The Cane Commissioner ought to have appreciated that sugarcane growers had executed individual agreement with the producer namely the appellant for the season 2004-05 and 2005-06 fixing the minimum price and they had, in fact, received an amount in excess of the minimum price in both years i.e. at the rate of Rs.950/- and Rs.1065/- per metric ton. However, the aforesaid aspect of the matter has neither been considered by the Cane 22 Commissioner nor any finding has been recorded on the aforesaid issued.
viii) The Cane Commissioner ought to have appreciated that since the sugarcane growers had obtained a higher price for the year 2002-03 and 2003-04 for sugar season 2010-11 and 2012-13 in pursuance of the agreement dated 12.12.2010 and 21.11.2012 and therefore, had waived their rights under the statute. However, the aforesaid aspect of the matter was not adverted to by the Cane Commissioner.
ix) The Cane Commissioner ought to have appreciated that the cane growers cannot be allowed to approbate and reprobate and were estopped.
x) The Cane Commissioner ought to have appreciated that none of the farmers had individually filed the claim with the authority and the said claims were being processed by the Association which was not bona fide and the Association was set up only in 23 2009 with a view to create a stalemate between the factory and the farmers.
xi) It is also pointed out that the farmers, in fact, had been paid an amount of Rs.28 crores over and above the statutory minimum price and additional price payable under Clause 5A during the period from 2000-01 to 2011-12. It is also pointed out that the alleged arrears for the year 2006-07 cannot be adjudicated on the basis of an agreement dated 03.01.2007 alone when the aforesaid agreement was novated by subsequent agreement between the parties on 12.12.2015 and 21.11.2012. The contention that the amounts paid in excess of statutory minimum price are advances under Clause 5A under the agreements with the Association with no liability being found under Clause 5A and the same are adjustable against any payment dues as held by the Supreme Court in State of T.N. Vs. 24 Kothari sugars & Chemicals Ltd., (1996)7 SCC 752 has not been considered.
xii) The Cane Commissioner ought to have appreciated that all the farmers who had supplied cane in the year 2002-03 and 2003-04 did not make any claim for the alleged short payment of the price for the aforesaid season. It ought to have appreciated that the contention that the alleged arrears for 2006-07 was in fact, the matter which was resolved between the parties namely the appellant and the association by an agreement dated 12.12.2010 and the aforesaid agreement was acted upon by the parties by seeking to dispose of the pending litigation before the High Court. However, the aforesaid aspect of the matter also was not adverted to by the Cane Commissioner.
xiii) Lastly, learned counsel for the appellant fairly submitted that he has no objection to adjudication 25 of the claims made by the individual farmers and the appellant shall not take an objection before the Cane Commissioner that the same are barred by limitation.
SUBMISSIONS BY RESPONDENTS:
18. On the other hand, learned Additional Advocate General submitted that the appellant was afforded an opportunity of hearing and his claim was adjudicated. Thereafter, an order was passed on 26.10.2013. In pursuance of the aforesaid order, demand notice was issued on 30.10.2013. It is further submitted that the Cane Commissioner has the jurisdiction under Clause 3(8) of the 1966 Order.
Learned Additional Advocate General has also taken us through the provisions contained in Clause 3(9) as well as Clause 3(12) of the 1966 Order and has supported the order passed by the learned single Judge. 26
19. Learned counsel for the respondent No.2 submitted that the appellant is under a legal obligation to pay the cane growers the statutory minimum price or the agreed price whichever is higher and failure to make such payment within fourteen days is an cognizable offence punishable under the provisions of the Essential Commodities Act. It is further submitted that the Cane Commissioner has jurisdiction to decide the dispute as the same falls within the purview of Clause 3A of the 1966 Order. It is also submitted that the claim of the sugarcane growers cannot be rejected on the ground that it is being prosecuted by respondent NO.2. It is also submitted that the appellant has been declared to be a sick company and is attracted under Section 22 of the Sick Industrial Companies Act, 1985 and is therefore, under an obligation to make payment to cane growers. It is also urged tht the appellant is under a statutory obligation to make payment of either the statutory minimum price or the agreed price under Clause 3(2) of 27 the 1966 Order and there is no legal impediment for the parties to agree to the price higher than the statutory minimum price. In support of the aforesaid submissions, the learned counsel for respondent No.2 has placed reliance on the following decisions: Kedar Nath Motani and Ors. Vs. Prahlad Rai and Ors., AIR 1960 SC 213; A.K.Jain & Ors. Vs. Union of India & Ors., AIR 1970 SC 267; State of Madhya Pradesh Vs. Jaora Sugar Mills Ltd., 1997 AIR SCW 189; U.P. co-operative Cane Unions Federations Vs. West U.P.Sugar Mills Association and Ors. etc. etc., AIR 2004 SC 3697; Arunima Baruah Vs. Union of India (UOI) and Ors, (2007)6 SCC 120; Prestige Lights Ltd. Vs. State Bank of India, (2007)8 SCC 449; Raheja Universal Limited Vs. NRC Limited and Ors, AIR 2012 SC 1440; Anand Agro Chem India Ltd. Vs. Suresh Chandra & Ors. (SC) (Civil Appeal No.897 of 2014, decided on January 24, 2014); KSL & Industries Ltd. Vs. Arihant Threads Ltd (2015)1 SCC 166; M/s. The India sugars & Refineries Ltd. Vs. Commissioner for 28 Cane development & Director of Sugar, Karnataka & Ors. (SC) (SLP (C) Nos.5168-5170/2015, decided on 20.02.2015); Sri Nethaji Educational society and Ors. vs. The State of Karnataka and Ors. (W.P. Nos.234 to 241 of 1992, decided on 02.07.1996); Indian Plywood Manufacturing Company Limited, Dharwad Vs. The Commissioner of Labour in Karnataka, Bangalore and Others 1998(6) Kar.L.J.280; Bangalore Grain Merchants Association Vs. The District Registrar for societies and another, ILR 2001 KAR 766; Manohar and Others Vs. The Commissioner for Cane Development & the Director of Sugar and others (W.P. Nos.39163-68 of 2001, decided on 22nd March 2002); Indian Bank Vs. State of Karnataka and others (W.P. No.46964/2001 and connected matters, decided on 2nd December 2002); Maqsood and Others Vs. The Commissioner for Cane Development & the Director of Sugar and others (W.P. Nos.45849-851/2002 and connected matters, decided on 6th October 2003); Bowring Institute Vs. The District 29 Registrar of Societies (W.P. No.15128 of 2008, decided on 05.12.2008); M/s. India Sugars & Refineries Ltd. Vs. the Secretary to Government, Commerce and Industries department, Government of Karnataka and others (W.A. No.5139 of 2008, decided on 6th January, 2009); M/s India Sugars and Refineries Ltd. Vs. the Secretary to Government, Commerce and Industries Department, Government of Karnataka (W.P. No.31532/2008, decided on 9th September 2009); The Tungabhadra Sugarcane & Banana Growers Association and Others Vs. The Government of Karnataka and Others (W.P. Nos.60262-60264/2011 and connected matters, decided on 15th July 2011); M/s India Sugars and Refineries Ltd. Vs. Union of India and others (W.A. No.31161 of 2013, decided on 11th December 2013); Universal Paper Mills Limited and Ors. Vs. Regional Provident Fund Commissioner and Ors. (Calcutta High Court) (2001) 3 CALLT 186; Bengal Immunity Limited Vs. Mukul Kumar Kar and Ors. (Calcutta High Court) (2004)1 CALLT 130; 30 and Modi Industries Limited Vs. State of Uttar Pradesh and Others, 1993 LLR 689 (All) RELEVANT STATUTORY PROVISIONS
20. The Sugarcane (Control) Order, 1966 has been framed in exercise of powers under Section 3 of the Essential Commodities Act, 1955. Before proceeding further, it is apposite to take note of Clause 3(3) and 3(8) of the aforesaid 1966 Order which are reproduced below for the facility of reference -
3. Minimum price of sugarcane payable by producer of sugar.--(1) x x x x x x (2) x x x x x x x x (3) Where a producer of sugar purchases any sugarcane from a grower of sugarcane or from a sugarcane growers' co-operative society, the producer shall, unless there is an agreement in writing to the contrary between the parties, pay within fourteen days from the date of delivery of the sugarcane to the seller or tender to him the price of the cane sold at the rate agreed to between the producer and the sugarcane grower 31 or the sugarcane growers' co-operative society or that fixed under sub-clause (1), as the case may be, either at the gate of the factory or at the cane collection centre or transfer or deposit the necessary amount in the Bank account of the seller or the co-operative society, as the case may be.
(4) x x x x x x (8) Where any producer of sugar or his agent has defaulted in furnishing information under Clause 9 of this Order or has defaulted in paying the whole or any part of the price of sugarcane to a grower of sugarcane or a sugarcane growers co-operative society within fourteen days from the date of delivery of sugarcane, or where there is an agreement in writing between the parties for payment of price within a specified time and any producer or his agent has defaulted in making payment within the agreed time specified therein, the Central Government or an officer authorised by the Central Government in this behalf or the State Government or an officer authorised by the State Government in this behalf may either on the basis of information made available by the producer of sugar or his agent or on the basis of claims, if any, made to it 32 or him regarding non-payment of prices or arrears thereof by the concerned grower of sugarcane or the sugarcane growers co-operative society as the case may be, or on the basis of such enquiry that it or he deems fit, shall forward to the Collector of the district in which the factory is located, a certificate specifying the amount of price of sugarcane and interest due thereon from the producer of sugar or his agent for its recovery as arrears of the land revenue." LEGAL POSITION
21. The inherent jurisdiction of the courts to determine whether statutory powers have been exceeded is not readily ousted. Powers are often conferred in subjective terms, the competent authority being entitled to act when 'in its opinion', or when it is 'satisfied', or when it 'appears to' that authority that a prescribed state of affairs exists. In other words, any Tribunal or Authority conferred with the power to act under a statute has jurisdiction to satisfy itself with the condition that exercise of power existed and that the 33 case calls for exercise of that power. Such an adjudication relating to its own jurisdiction which could be called a decision on jurisdictional facts is not generally final (See Halsbury's Laws of England, Fourth Edition, Page 30 Para 21 ).
22. The Supreme Court in the case of S.N. MUKHERJEE V. UNION OF INDIA', (1990) 4 SCC 594 has held that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the 34 High Courts to effectively exercise the appellate or supervisory power.
23. It is trite law that even a quasi-judicial authority is required to assign reasons for passing the order. In view of the decision of the Supreme court in 'VICTORIA MEMORIAL HALL vs. HOWRAH GANATANTRIK NAGRIK', 2010 (3) SCC 732, reasons are held to be the heartbeat of every conclusion, apart from being an essential feature of the principles of natural justice, that ensure transparency and fairness, in the decision making process. (See: 'MAYA DEVI VS. RAJ KUMARI BATRA AND OTHERS', (2010) 9 SCC 486, 'SANT LAL GUPTA AND OTHERS VS. MODERN CO- OPERATIVE GROUP HOUSING SOCIETY LIMITED AND OTHERS', (2010) 13 SCC 336, 'UNION OF INDIA AND ANOTHER VS. TALWINDER SINGH', (2012) 5 SCC 480, and 'UNION OF INDIA VS. RAVINDER KUMAR', (2015) 12 SCC 291) .
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ANALYSIS
24. In the backdrop of the aforesaid statutory provisions and the well settled legal principles, we may advert to the case in hand. At this stage, we deem it appropriate to reproduce the order dated 26.10.2013, passed by the Cane Commissioner which reads as under:
"1. The Government of India has fixed the SMP for the sugar season 2002-03 at Rs.891.80 and for the sugar season 2003-04 at Rs.891.50, for the sugar season 2006-07, the company has agreed to pay Rs.1140/- as against the SMP of Rs.928/-. The sugar factory challenged the Notification of the Government of India in fixing SMP for 2002-03 and 2003-04. The Hon'ble Court has not set aside the Notifications issued by Government of India fixing the Statutory Minimum Price for the sugarcane purchased by the sugar factory.
2. As per clause 3(2) of Sugarcane (Control) Order, 1966, no person shall sell or agree to sell sugarcane to a producer of sugar or his agent, and no such producer or agent shall purchase or agree to purchase sugarcane at a price lower than that fixed under sub-clause (1). As such the 36 SMP fixed by the GOI is mandatory and any amount paid less than SMP, shall be deemed to have contravened the provisions of Sugarcane (Control) Order 1966.
3. It is very much evident from the statement furnished by ISR factory that it has crushed 3,11,481 MT of sugarcane during 2002-03, 1,46,408 MT of sugarcane during 2003-04 and 3,93,355 MT of sugarcane during 2006-07 and paid sugarcane price at the rate of Rs.830/- PMT for sugar season 2002-03, for sugar season 2003-04 at the rate of Rs.840/- per MT and for the sugar season 2006-07 at the rate of Rs.1000/- per MT & Rs.928.50 PMT. As per Clause 3(2) of sugarcane (Control) Order 1966, no person shall purchase sugarcane lower than the price fixed by Government of India and as per clause 3(3) rate agreed between the parties. Hence the ISR Sugar Factory shall pay the SMP of Rs.891.80 per MT for the sugar season 2002- 03 & Rs.891.50 per MT for the sugar season 2003-04 and the rate agreed i.e., Rs.1140/- per MT for the sugar season 2006-07 to the farmers who have supplied sugarcane to the factory in the respective years.37
4. The ISR sugar factory has crushed sugarcane during the sugar season 2002-03, 2003-04 and 2006-07. The factory has not produced any sugarcane purchase receipt raised in the name of HRS or TSBGA Associations or Sangha. As such the cane bill payable to HRS or TSBGA does not arise.
5. As regards the authority under clause 3(8) of the Sugarcane (Control) Order, 1966, the State government has authorized the commissioner for Cane Development and director of Sugar to exercise powers under clause 3(8) and 5A of Sugarcane (Control) Order 1966 vide notification No.CI 18 SGF 2001 dated 21.5.2001. As per Clause 3(8) on the basis of the claims, if any, made to it or him regarding non-payment of prices or arrears thereof by the concerned grower of sugarcane or the sugarcane growers co-operative society as the case may be, the certificate specifying the amount to recover it as arrears of land revenue can be effected. There are a number of farmers who have filed the claims for payment of sugarcane bill dues for the years 2002-03, 2003-04 and 2006-07.
6. As regards the question of limitation raised for claiming the arrears is concerned, 14 days 38 period is prescribed for making payment of sugarcane bills by the sugar factory as per clause 3-a of Sugarcane (Control) Order, 1966. Clause 3(7) of Sugarcane (Control) Order, 1966 reads as follows:
"3(7) In case, the price of the sugarcane remains unpaid on the last day of the sugar year in which cane supply was made to the factory on account of the suppliers of cane not coming forward with their claims therefor, it shall be deposited by the producer of sugar with the collector of the district in which the factory is situated, within three months of the close of the sugar year. The Collector shall pay, out of the amount so deposited, all claims considered payable by him and preferred before him within three years of the close of the sugar year in which the cane was supplied to the factory. The amount still remaining undisbursed with the collector, after meeting the claims from the suppliers, shall be credited by him to the consolidated fund of the State, immediately after the expiry of the time limit of 3 years within which the claims therefore could be preferred by the suppliers. The State government shall, as far as possible utilize such amounts for development of sugarcane in the State."
The Sugar factory has not complied with the provisions of Clause 3(7) of Sugarcane (Control) Order, 1966. In the light of the above provision in Sugarcane (Control) Order, 1966 the question of limitation cannot be raised. 39
In the circumstances, a certificate under Clause 3(8) of Sugarcane (Control) Order, 1966 shall be issued for sugarcane bill paid to the sugarcane suppliers lower than the Statutory Minimum Price fixed by Government of India for the Sugar season 2002-03 and 2003-04 and the amount agreed to by the Sugar factory over and above Statutory Minimum Price fixed by Government of India for the sugar season 2006-
07."
25. From perusal of the order passed by the Cane Commissioner, it is axiomatic that the Cane Commissioner has passed the order in a cryptic and cavalier manner. In terms of the previous orders passed by this Court, the parties were given opportunity to lead evidence before the Cane Commissioner. However, the Cane Commissioner has not even referred to the evidence adduced by the parties. From close scrutiny of the order passed by the Cane Commissioner, we find that none of the contentions raised on behalf of the appellant as well as Association, which mainly pertain to 40 factual dispute, have been adverted to by the Cane Commissioner. The order does not contain the reasons. The impugned order has been passed in a cryptic and cavalier manner. We are conscious of the fact that this litigation has a chequered history and repeated orders of remand have been passed. However, we find ourselves to be helpless in the fact situation of the case, as this Court in exercise of powers under Article 226 of the Constitution of India cannot adjudicate the question of facts which have necessarily to be examined by the Cane Commissioner. For the same reason, it is not necessary for us to deal with the contentions raised by the respondents as well, before this Court. Therefore, we have no option but to remit the matter once again.
26. At this stage, learned counsel for the appellant submits that the appellant has closed its operations about four years ago and has assets worth rupees hundred crores. It is further submitted that the 41 appellant the appellant had deposited a sum of Rs.9,86,25,000/- before the Supreme Court in S.L.P. No.11248-11250/2016, which was transferred to this Court by the Supreme Court. The aforesaid amount is due and payable to the individual farmers who have supplied sugarcane to the appellant for the period from 2013-14 and 2014-15 and 2015-16 and the appellant has no objection if the aforesaid amount is paid to the sugarcane farmers who have supplied sugarcane to the appellant for the aforesaid period. It is also submitted that the appellant has no objection to adjudication of the claims of the farmers for the year 2002-03, 2003-04 and 2006-07 and the appellant shall not raise the plea of limitation with regard to the adjudication of their claims.
27. In view of the preceding analysis, the impugned order dated order dated 25.04.2014 passed by the learned single Judge in W.P. No.84435/2013, the order dated 26.10.2013 as well as the demand notice 42 dated 30.10.2013 passed by the Cane Commissioner are hereby quashed and set aside and the matter is remitted with the following directions:
i) The amount of Rs.9,86,25,000 along with interest accrued thereon, deposited by the appellant shall stand transferred to the Cane Commissioner forthwith. On receipt of the aforesaid amount, the Cane Commissioner shall keep the same by way of FDR with Nationalised Bank. The aforesaid amount shall be paid to the farmers who have supplied sugarcane to the appellant for the year 2013-14, 2014-2015 and 2015-2016after proper verification and scrutiny, by the Cane Commissioner.
ii) The Cane Commissioner shall adjudicate the claims of the individual farmers for shortfall in the payment of prices of sugarcane for the sugar season 2002-03, 2003-04 as well as 2006-07 expeditiously.
iii) The Cane Commissioner shall also adjudicate the issue whether it has jurisdiction to entertain the claim on behalf of the Association under the provisions of the Sugarcane (Control) Order, 1966. While deciding the lis between the 43 parties, the Cane Commissioner shall bear in mind the orders dated 29.07.2013 passed in W.P. No.7169 of 2008 and W.P. Nos.76567-568/2013.
iv) The Cane Commissioner shall advert to the evidence adduced by the parties and shall pass a speaking order after analyzing the evidence adduced by the parties.
v) The Cane Commissioner shall determine the stand taken by the appellant in the replies dated replies dated 11.09.2013, 25.09.2013, 05.10.2013, 10.10.2013 and 15.05.2013 and shall adjudicate the claim of the appellant with regard to payment of arrears for the sugar season 2002-03 and 2003-04 and subsequently in the years 2004-05 and 2005-
06. The Cane Commissioner shall also ascertain the fact whether the farmers, who have supplied sugarcane to the appellant, have received the amount in excess of the minimum statutory price for the years 2004-05 and 2005-06.
vi) Since the company has already been wound up and the process of adjudication of the claims of the farmers may take some time, we deem it appropriate to protect the interests of the 44 farmers, who have supplied sugarcane to the appellant, in the event of their success before the Cane Commissioner. It is pertinent to mention here that by an order dated 26.10.2013, the Cane Commissioner had directed the appellant to pay a sum of rupees Nine Crores along with interest at the rate of 15% per annum. Therefore, in the fact situation of the case and with a view, to secure the interest of the farmers, in the event of their success before the Cane Commissioner, we deem it appropriate to direct the appellant herein to deposit a sum of rupees Three Crores before the Cane Commissioner within a period of two months from the date of receipt of a certified copy of the order passed today. The aforesaid amount shall be kept by the Cane Commissioner by way of FDR with a Nationalised Bank and shall be subject to adjudication of the claims of the farmers who have supplied sugarcane to the appellant. Needless to state that in case, the farmers/Association are found entitled to any payment, the aforesaid payment shall be made to them by the Cane Commissioner expeditiously along with statutory interest as admissible under the 1966 Order.
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vii) The Cane Commissioner shall also ensure that in the event of success of the claim of the farmers, who have supplied the sugarcane to the appellant or the Association, the amount due to them is paid in terms of Clause 3(8) of the Sugar Cane (Control) Order, 1966. Needless to state that, if any amount is left after adjudication of the claims of the farmers, who have supplied sugarcane to the appellant, the same shall be refunded to the appellant by the Cane Commissioner.
It is made clear that we have not expressed any opinion with regard to rival claims of the parties.
With the aforesaid directions, the writ appeals are disposed of.
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