Madras High Court
The South Indian Sugar Mills ... vs The Union Of India on 5 December, 2022
Author: Anita Sumanth
Bench: Anita Sumanth
W.P.No.11242 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.12.2022
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P.No.11242 of 2017 and
WMP.Nos.12175 & 12176 of 2017
The South Indian Sugar Mills Association,
Tamil Nadu,
'Karumuthu Centre' 2nd Floor,
New No.634 (Old No.498),
Anna Salai, Nandanam,
Chennai-600 035.
Rep. by its Secretary, S.Chellappa … Petitioner
Vs
1.The Union of India,
Rep. by the Secretary to Government,
Ministry of Consumer Affairs,
Food and Public Distribution, Government of India,
Krishi Bhavan, New Delhi - 110001.
2.The Joint Secretary,
Ministry of Consumer Affairs,
Food and Public Distribution, Government of India,
Krishi Bhavan, New Delhi – 110001.
3.The Chief Director - Sugar,
Ministry of Consumer Affairs,
Food and Public Distribution, Government of India,
Krishi Bhavan, New Delhi – 110001. … Respondents
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W.P.No.11242 of 2017
PRAYER: Writ Petition filed under Article 226 of the Constitution of India
praying for the issuance of Writ of Certiorarified Mandamus, calling for the
records of the First Respondent comprised in the notification bearing No.20(43)
2015-S.P-1 dated 19th May 2016 and quash the same as illegal and consequently
direct the 1st respondent to extend the benefits of the notification
No.20(43)/2015-S.P.-1 dated 2nd December 2015 issued by the 1st respondent to
the members of the petitioner association for the sugar season 2015-2016.
For Petitioner : Mr.Prahalad
for Mr.R.Parthasarathy
For Respondents : Mr.M.Arvind Kumar,
Senior Central Government Panel Counsel
ORDER
The petitioner is the South Indian Sugar Mills Association and comprises 11 Sugar Mills in Tamil Nadu. The main objects of the Association are as follows:
'(i)To do, perform all or any of the following operations, acts or things in respect of trade, commerce and industries of Tamil Nadu and in particular the trade, commerce and industries connected with sugar, industrial spirits, power, alcohol and their by-products and power generation.
(ii)To promote, support and protect the Sugar and Distillery Industries in Tamil Nadu and Pondicherry Zone and to consider all questions affecting them, with due regard to the interests of the cane farmers and the consumers.2/11
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(iii)To promote, support or oppose legislation and other measures to obtain the removal as far as possible of grievances affecting the operations of the industries.
(iv)To communicate with Chambers of Commerce and other commercial industrial and public bodies within or outside India and to concert or promote measures for protection of trade, commerce and industries and persons engaged therein.'
2.The submissions of Mr.Prahlad, learned counsel for the petitioner are as follows:
(i) The sale of sugarcane in the Country is regulated under the Sugarcane (Control Order) 1966 which determines the 'fair and remunerative price' of sugarcane.
(ii) The present writ petition challenges proceedings in respect of sugarcane year 2015-16, spanning the period 01.10.2015 and 30.09.2016.
(iii) For the previous two sugar seasons, the prices fixed by the Central Government for the sale of sugarcane was Rs.2,200/- and Rs.2,300/- per metric tonne respectively. However, on account of significant surplus production of cane, there was a massive fall in sugar prices, both at the international and national levels.
(iv) This led to a gross mismatch between the cost of production of sugar and realisation from the sales, as supply was far is in excess of demand.3/11
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(v) The arrears amounted to a sum of around Rs.22,000/- crores and the victims were the farmers who have not been able to receive the remuneration for their labour.
(vi) Thus, and as a measure for regulating the price and normalising the situation, the Central Government felt the need to push the suppliers of sugar to export the product in order to infuse liquidity and normalize the prices at a national level.
(vii) This resulted in the issuance of Notification F.No.1(10)/2015-SP-I dated 18.09.2015, granting a subsidy to the sugal mills upon their achieving Export Minimum Indicative quotas (quotas) pegged up at 12% of estimated sugar production.
(viii) The quotas were tradable and failure to adhere to the minimum quotas would render them defaulters to the Government.
(ix) The terms and conditions were set out in Notification dated 02.12.2015, which fixed at an eligiblity quota at 80% of the targets as per the terms and conditions of the Minimum Indicative Export Quota scheme. Mills having distillation capacities to produce ethenol, were required to achieve 80% of 4/11 https://www.mhc.tn.gov.in/judis W.P.No.11242 of 2017 the targets notified on 16.09.2015, to render them eligible for the production subsidy.
3. Point Nos.4 and 5 of the terms and conditions read as follows:
'4.The DFPD shall closely monitor the prices of sugar, both in domestic as well as global markets on monthly basis. In case prices are assessed to be substantially higher than levels required for operational viability of the industry, the scheme may be amended or withdrawn.
5.Where the Central Government is of the opinion that it is necessary or expedient so to do, it may, by order and for reasons to be recorded in writing relax any of the provisions of this scheme.'
4. It is the case of the petitioner that the mills in Tamil Nadu had enthusiastically responded to the call by the Center and had commenced crushing and exporting of the sugar based upon the production achieved. However, since there is a second crushing season in Tamil Nadu, period of export extended to a few months beyond the other sugar mills situated in the north of the Country.
5.While this is so, Notification dated 19.05.2016, the subsidy scheme that had been notified on 02.12.2015 stood unilaterally withdrawn. The reasons set out for withdrawal was that the domestic sugar prices were found to be substantially higher than export pricing and this impacted the viability of the 5/11 https://www.mhc.tn.gov.in/judis W.P.No.11242 of 2017 sugar industry. On account of the aforesaid reason, the scheme stood withdrawn with immediate effect.
6. Mr.M.Arvind Kumar, learned Senior Central Government Panel Counsel appearing for the respondents, refers to the counter wherein the measures taken for close monitoring of the sugar prices on month-on-month basis has been set out.
7. The State can certainly not be faulted for withdrawal of the scheme insofar as the purpose for the scheme was itself to correct the internal pricing mechanism and there is no justification to continue with the scheme once that object stood achieved.
8.However, according to the petitioner, the difficulty that has arisen in the present case is on account of two factors; (i) the abrupt withdrawal of the scheme even prior to the close of the sugar year in May 2016 itself, as a result that some of the export contracts of the petitioner mills were not taken into account to determine the eligibility of those mills for grant of subsidy and (ii) the fact that the production in the sugar mills, Tamil Nadu extended to a longer period than their counterpart mills in Northern India.
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9. According to the petitioner, some of the mills had, in fact, entered into contracts for export of sugar even prior to 19.05.2016, but, on account of the withdrawal of the scheme, such contracts were eschewed for the purposes of eligibility.
10. The petitioner has made two representations dated 22.09.2016 and 14.10.2016 setting forth its grievances as above, and requesting that the contracts entered into for export of sugar prior to date of withdrawal of the scheme be taken into account for reckoning eligibility to the scheme itself. These representations are, admittedly, pending.
11. During the sugar year in question, the State has revised the quotas on more than one occasion. However, what is relevant in the present case is the withdrawal of the benefit itself on 19.05.2016. All that the petitioners request, and I agree that this request is a legitimate one, is that exports contracted and concluded prior to the date of withdrawal of notification i.e. 19.05.2016 must be taken into account, to determine their qualification for the subsidy. To clarify, all valid contracts entered into prior to 19.05.2016 must be taken note of to determine eligibility of the mill for subsidy as per Clause 3 of Notification dated 02.12.2015.
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12. The impugned order is one which sets out the policy of the Government and which appears to have been passed based on a proper and scientific assessment of the sugar industry. I see no justification to intervene in the same.
13. Suffice it to say that in determining eligibility, the representations of the petitioner and all materials that they may furnish in support thereof must be taken into account and the question of eligibility will be decided taking note of all contracts concluded by the petitioner prior to date of withdrawal, which is 19.05.2016.
14. For this purpose, the petitioner is permitted to appear before the third respondent on 15.12.2022 at 10.30 a.m. without awaiting any further notice in this regard. If for any reason, the hearing cannot proceed on the aforesaid date, R3 shall intimate the petitioner sufficiently in advance and fix an alternate date of hearing proximate to that date, hear the petitioner and pass orders on its representations within a period of four (4) weeks from the date of hearing.
15. This writ petition is disposed. No costs. Connected miscellaneous petitions are closed.
8/11 https://www.mhc.tn.gov.in/judis W.P.No.11242 of 2017 05.12.2022 vs Index : Yes Speaking Order To
1.The Union of India, Rep. by the Secretary to Government, Ministry of Consumer Affairs, Food and Public Distribution, Government of India, Krishi Bhavan, New Delhi - 110001.
2.The Joint Secretary, Ministry of Consumer Affairs, Food and Public Distribution, Government of India, Krishi Bhavan, New Delhi – 110001.
3.The Chief Director - Sugar, Ministry of Consumer Affairs, Food and Public Distribution, Government of India, Krishi Bhavan, New Delhi – 110001.
9/11 https://www.mhc.tn.gov.in/judis W.P.No.11242 of 2017 Dr.ANITA SUMANTH,J.
vs W.P.No.11242 of 2017 and WMP.Nos.12175 & 12176 of 2017 10/11 https://www.mhc.tn.gov.in/judis W.P.No.11242 of 2017 05.12.2022 11/11 https://www.mhc.tn.gov.in/judis