# Simbhaoli Sugars Ltd v. State Of U.P. & Ors

- **Citation:** (2016) 5 ILRA 1236
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-05-24
- **Bench:** V.K. Shukla, A.C.J. Umesh Chandra Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/simbhaoli-sugars-ltd-v-state-of-u-p-ors-43717
- **Pages:** 12

## Headnote

Held: Under the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 and the Sugarcane (Control)
Order, 1966, the statutory scheme mandates timely payment of cane price and creates automatic liability for
interest upon default. Payment of principal dues does not extinguish liability to pay interest. Mere pendency of
an application seeking waiver of interest does not suspend statutory liability, as power of waiver vests
exclusively in the State Government upon recommendation of the Cane Commissioner under Section 17(3). In
absence of recommendation and Government order, liability subsists. (Paras 2, 14, 18-21, 28-29)

STATUTORY CONTROL - SUGAR INDUSTRY - CENTRAL & STATE REGULATORY FIELDS -
REPUGNANCY

Held: Sugar is a controlled industry under the Industries (Development and Regulation) Act, 1951; sugarcane
is an essential commodity under the Essential Commodities Act, 1955. The Sugarcane (Control) Order, 1966
and the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 operate harmoniously, regulating
supply, pricing, and recovery. No repugnancy arises, as there is no irreconcilable conflict between the Central
delegated legislation and the State enactment. Both occupy the field complementarily. (Paras 10-13, 22-27)

SUGAR - PAYMENT OF PRICE - MODE OF RECOVERY - RECOVERY AS ARREARS OF LAND
REVENUE

Held: Where default in payment occurs, Cane Commissioner may forward certificate specifying arrears of price
plus interest to Collector, who is mandated to recover the same as arrears of land revenue. The procedure
adopted for recovery is valid and in conformity with statutory framework. (Paras 2, 18-19)

WAIVER OF INTEREST - NATURE OF POWER - LIMITS - REQUIREMENT OF RECOMMENDATION
5 All. Simbhaoli Sugars Ltd. Vs State Of U.P. & Ors.

1237
Held: Waiver of interest is not a matter of right for mill owners. Power is exceptional, must be exercised
sparingly, and only upon recommendation of the Cane Commissioner with approval of the State Government.
Till such time as an order of waiver is actually passed, statutory dues remain recoverable. (Paras 7, 20-21,
28-29)

RECOVERY CHARGES - COLLECTION CHARGES @10% - PERMISSIBILITY

Held: Inclusion of recovery charges in the demand notice is not per se illegal; assessment of final quantum
must be made in accordance with the law settled in Mahrajwa v. State of U.P., 2013 (1) ADJ 426. Recovery
charges are dependent on actual steps undertaken by authorities toward recovery. (Paras 30-31)

INRESULT

Disposed of with observations; statutory recovery proceedings upheld; liberty reserved to the authorities to
consider waiver application as per law. (Paras 29, 32)

WRIT PETITION DISPOSED OF.

List of Cases cited:

Tika Ramji v. State of Uttar Pradesh & Ors.(1956) 1 SCR 393 : AIR 1956 SC 676
A.K. Jain v. Union of India & Ors.(1970) 1 SCR 673 : AIR 1970 SC 267
Belsund Sugar Co. Ltd. v. State of Bihar (1999) 9 SCC 620
Krishi Upaj Mandi Samiti v. Shiv Shankar Khandsari Udyog (2012) 9 SCC 368
U.P. Cooperative Cane Union Federation v. West U.P. Sugar Mills Association (2004) 5 SCC 430
Yogendra Kumar Jaiswal & Ors. v. State of Bihar (2016) 3 SCC 183
Mahrajwa v. State of U.P. & Others 2013 (1) ADJ 426
Rashtriya Kisan Mazdoor Sangathan v. Union of India & Others PIL No. 64933 of 2013
M/s Triveni Engineering Works Ltd. & Anr. v. Union of India & Ors. AIR 1996 All 420

## Text

1236 INDIAN LAW REPORTS ALLAHABAD SERIES
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.05.2016

BEFORE

 THE HON'BLE V.K. SHUKLA, A.C.J.
THE HON'BLE UMESH CHANDRA SRIVASTAVA, J.

Writ C No.- 14417 Of 2016

Simbhaoli Sugars Ltd. ...Petitioner
Versus
State Of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Rohan Gupta

Counsel for the Respondents:
C.S.C., Ravindra Singh

SUGAR - REGULATION OF SUPPLY, PURCHASE AND PAYMENT OF CANE PRICE - INTEREST ON
DELAYED PAYMENT - WAIVER

Held: Under the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 and the Sugarcane (Control)
Order, 1966, the statutory scheme mandates timely payment of cane price and creates automatic liability for
interest upon default. Payment of principal dues does not extinguish liability to pay interest. Mere pendency of
an application seeking waiver of interest does not suspend statutory liability, as power of waiver vests
exclusively in the State Government upon recommendation of the Cane Commissioner under Section 17(3). In
absence of recommendation and Government order, liability subsists. (Paras 2, 14, 18-21, 28-29)

STATUTORY CONTROL - SUGAR INDUSTRY - CENTRAL & STATE REGULATORY FIELDS -
REPUGNANCY

Held: Sugar is a controlled industry under the Industries (Development and Regulation) Act, 1951; sugarcane
is an essential commodity under the Essential Commodities Act, 1955. The Sugarcane (Control) Order, 1966
and the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 operate harmoniously, regulating
supply, pricing, and recovery. No repugnancy arises, as there is no irreconcilable conflict between the Central
delegated legislation and the State enactment. Both occupy the field complementarily. (Paras 10-13, 22-27)

SUGAR - PAYMENT OF PRICE - MODE OF RECOVERY - RECOVERY AS ARREARS OF LAND
REVENUE

Held: Where default in payment occurs, Cane Commissioner may forward certificate specifying arrears of price
plus interest to Collector, who is mandated to recover the same as arrears of land revenue. The procedure
adopted for recovery is valid and in conformity with statutory framework. (Paras 2, 18-19)

WAIVER OF INTEREST - NATURE OF POWER - LIMITS - REQUIREMENT OF RECOMMENDATION
5 All. Simbhaoli Sugars Ltd. Vs State Of U.P. & Ors.

1237
Held: Waiver of interest is not a matter of right for mill owners. Power is exceptional, must be exercised
sparingly, and only upon recommendation of the Cane Commissioner with approval of the State Government.
Till such time as an order of waiver is actually passed, statutory dues remain recoverable. (Paras 7, 20-21,
28-29)

RECOVERY CHARGES - COLLECTION CHARGES @10% - PERMISSIBILITY

Held: Inclusion of recovery charges in the demand notice is not per se illegal; assessment of final quantum
must be made in accordance with the law settled in Mahrajwa v. State of U.P., 2013 (1) ADJ 426. Recovery
charges are dependent on actual steps undertaken by authorities toward recovery. (Paras 30-31)

INRESULT

Disposed of with observations; statutory recovery proceedings upheld; liberty reserved to the authorities to
consider waiver application as per law. (Paras 29, 32)

WRIT PETITION DISPOSED OF.

List of Cases cited:

Tika Ramji v. State of Uttar Pradesh & Ors.(1956) 1 SCR 393 : AIR 1956 SC 676
A.K. Jain v. Union of India & Ors.(1970) 1 SCR 673 : AIR 1970 SC 267
Belsund Sugar Co. Ltd. v. State of Bihar (1999) 9 SCC 620
Krishi Upaj Mandi Samiti v. Shiv Shankar Khandsari Udyog (2012) 9 SCC 368
U.P. Cooperative Cane Union Federation v. West U.P. Sugar Mills Association (2004) 5 SCC 430
Yogendra Kumar Jaiswal & Ors. v. State of Bihar (2016) 3 SCC 183
Mahrajwa v. State of U.P. & Others 2013 (1) ADJ 426
Rashtriya Kisan Mazdoor Sangathan v. Union of India & Others PIL No. 64933 of 2013
M/s Triveni Engineering Works Ltd. & Anr. v. Union of India & Ors. AIR 1996 All 420

(Delivered by Hon'ble V.K. Shukla, A.C.J.)

1. M/s Simbhaoli Sugars Limited a company duly incorporated under the Companies Act
1956, having its registered office at Simbhaoli, District Hapur engaged in the manufacture of white
crystal sugar is before this Court challenging the demand notices, in terms of which
State/Respondents seek to recover 10% collection charges pursuant to recovery proceeding.

2. Brief background of the case is that for crushing season 2014-15 cane price and interest
on the same has not been paid to cane growers, in view of this, notice has been sent to the
petitioners informing that they have fallen into default in payment of cane price alongwith interest.
Petitioner's Company was put to notice by issuing a recovery certificate dated 12.10.2015 by the
office of Cane Commissioner requiring it to pay the sums mentioned therein towards cane price
with interest thereon, failing which coercive action as is envisaged under Sections 17 and 18 of the
U.P. Sugarcane (Regulations of Supply and Purchase) Act, 1953 was to be undertaken. Petitioners
submit that sum of Rs. 18132.42 (Eighteen Thousand One Hundred and Thirty Two point Forty
Two Lacs) has been directly paid to the Cane Co-operative Societies by means of cheques received
1238 INDIAN LAW REPORTS ALLAHABAD SERIES
by the Co-operative Cane upto 19.02.2016. Petitioners submit that they have made entire payment
of balance of cane price.

3. Thereafter, respondents authorities issued impugned demand notice dated 24.02.2016
and 18.03.2016, seeking 10% collection charges on the amount paid due to coercive process i.e. Rs.
18132.42 (Eighteen Thousand One Hundred and Thirty Two point Forty Two Lacs) directly to the
Cane Co-operative Societies.

4. Petitioners on the presentation of the writ petition in question have been informed that in
the citation in question, interest amount due to inadvertence has been left out and accordingly
revised demand notice has also been issued and same has been subjected to challenge by means of
amendment application writ petition and same has been allowed. By means of said demand notice
petitioners have been informed that coercive measure has been initiated for recovery of cane dues
to the tune of Rs. 18132.42 Lacs and on account of the same cane price to the tune of Rs. 16041.71
Lacs has only been deposited whereas interest on delayed payment to the tune of Rs. 2090.68 lacs
has not been deposited and on the total amount due 10% recovery charges have not been paid.

5. Petitioners have also filed supplementary affidavit along with chart showing progress
report of the Cane Price payment by the petitioners and other sugar mills as well as copy of the
representation made before the Competent Authority for waiving of the interest for the year 201415 and the fact that same is pending consideration.

6. Based on pleadings available and instruction that has been so received by the State
Government as well as by Cane Union, present matter has been taken up for final hearing/disposal
with the consent of the parties.

7. Sri S.D. Singh, Senior Advocate, appearing with Sri Rohan Gupta, Advocate submitted
before this Court that in the facts of the present case, as is provided for under sub-section (3) of
Section 17, for the waiver of the interest for the crushing Season 2014-15, an application has
already been moved under U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 and said
application has not been disposed of, in view of this, no coercive action should be taken for
recovery of interest amount and 10% amount i.e. being charged towards recovery is perse bad and
in teeth of full Bench judgement rendered in the case of Mahrajwa Versus State of U.P. and others
2013(1) ADJ 426, as such this Court should come to the rescue and reprieve of petitioner's
Company as sugar industry is passing through a very lean phase.

8. The request that has been made on behalf of petitioners has been resisted by learned
Standing Counsel as well as Sri Ravindra Singh, Advocate by submitting that it is true that
principal amount has been paid but fact of the matter is that till date interest amount has not at all
been paid, and once interest has not been paid and recovery proceedings are on, then in such a
situation and in this background, no interference is called for and writ petition should be dismissed.
5 All. Simbhaoli Sugars Ltd. Vs State Of U.P. & Ors.

1239
9. Sri. Ravinder Singh, Advocate has additionally submitted that interest cannot be waived
once recovery certificate has been issued and further the provision of waiver of interest is
repugnant to the provision of Sugar Control Order 1966.

10. In order to appreciate the arguments that have been so advanced, this Court proceeds to
examine the relevant statutory provisions holding the field for running of sugar mills, sugar and
sugarcane.

"Sugarcane" is an essential commodity as defined in Section 2(b) of the Essential
Commodities Act, 1955. In the leading decision Tika Ramji v. State of Uttar Pradesh & Ors.,
(1956) 1 SCR 393 : AIR 1956 SC 676, Apex Court held that the Essential Commodities Act
included within the definition of "essential commodity" "food-crops" which would include
sugarcane. Again, in A.K. Jain v. Union of India & Ors. (1970) 1 SCR 673 : AIR 1970 SC 267,
following Tika Ramji, Apex Court held that Section 2 of the Essential Commodities Act provided
that sugarcane would be an "essential commodity" within the meaning of the Act and hence
cultivation and sale of sugarcane could be regulated by law.

11. The Industries (Development and Regulation) Act, 1951 declared certain industries as
controlled industries. Section 2 of the said Act enacts that it is expedient in the public interest that
the Union should take under its control, the industries specified in the First Schedule. The First
Schedule, inter alia, included "sugar" industry as one of the controlled industries.

12. In M/s Triveni Engineering Works Ltd. & Anr. v. Union of India & Ors., AIR
1996 All 420, this Court held that the sugar industry is a controlled industry. The Government is
exercising control on the sugarcane at all levels, namely; of production, distribution, pricing as also
on the production and marketing of finished product of sugar.

13. Section 3 of the Essential Commodities Act empowers the Central Government to issue
order providing for regulating or prohibiting the production, supply and distribution of any
essential commodity if it is of the opinion that it is necessary or expedient so to do for maintaining
or increasing supply of any essential commodity or in securing equitable distribution and
availability at fair price. In exercise of the said power, the Central Government framed the
Sugarcane (Control) Order, 1966. Clause 2 thereof defines important terms such as "factory",
"khandsari sugar", "khandsari unit", "crusher", "power crusher", "producer of khandsari sugar",
"reserved area", etc., whereas Clause 3 enable the Central Government to fix minimum price of
sugarcane payable by producer of sugar.

14. Sub-clause (3) and Sub-clause (3-A) of Clause 3 obligates the producer of sugarcane
when he purchases any sugarcane from the grower of sugarcane or from a sugarcane grower's
cooperative society to ensure payment of the price of the cane within 14 days of the date of
delivery and also talks of interest on delayed payment. Sub-clause (3) and Sub-clause (3-A) of
Clause 3 are extracted below;
1240 INDIAN LAW REPORTS ALLAHABAD SERIES
"(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 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.

(3-A) Where a producer of sugar or his agent fails to make payment for the
sugarcane purchased within 14 days of the date of delivery, he shall pay interest on the amount due
at the rate of 15 per cent per annum for the period of such delay beyond 14 days. Where payment of
interest on delayed payment is made to a cane growers' society, the society shall pass on the
interest to the cane growers concerned after deducting administrative charges, if any, permitted by
the rules of the said society."

15. Under this very order, the way and manner of effectuating payment to sugarcane
grower has also been provided for and same also provides for mechanism for recovery of the said
amount towards price of sugarcane. Relevant provisions are sub clause (4) to (14) of Clause 3 of
U.P. Sugarcane Control Order is extracted below:

"(4.) Where sugarcane is purchased through an agent, the producer or the agent
shall pay or tender payment of such price within the period and in the manner aforesaid and if
neither of them has so paid or tendered payment, each of them shall be deemed to have contravened
the provisions of this clause.

(5.) At the time of payment at the gate of the factory or at the cane collection
centre, receipts, if any, given by the purchaser shall be surrendered by the cane grower or
cooperative society.

(6.) Where payment has been made by transfer or deposit of the amount to the
bank account of the seller or the cooperative society, as the case may be, the receipt given by the
purchaser, if any, to the grower, or the cooperative society, if not returned to the purchaser, shall
become invalid.

(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 the 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 3 years of the close of the sugar year in which the cane was
supplied to the factory. The amount still remaining un-disbursed with the Collector, after meeting
the claims from the suppliers, shall be credited by him to the Consolidated Fund of the State,
5 All. Simbhaoli Sugars Ltd. Vs State Of U.P. & Ors.

1241
immediately after the expiry of the time limit of three years within which claims therefor could be
preferred by the suppliers. The State Government shall, as far as possible, utilise such amounts, for
development of sugarcane in the State.]

(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' cooperative 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 authorized by the Central Government in this behalf or the State Government or an
officer authorized 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 or
him regarding non-payment of prices or arrears thereof, by the concerned grower of sugarcane or
the sugarcane growers' cooperative 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 land revenue.

(9.) The Collector, on receipt of such certificate, shall proceed to recover from
such producer of sugar or his agent the amount specified therein as if it were arrears of land
revenue.

(10.) After effecting the recovery, the Collector shall intimate to the concerned
growers of the sugarcane or the concerned sugarcane growers' cooperative societies through a
public notice to submit their claims in such a manner as he considers appropriate within thirty days:

Provided that the Collector may, for the reasons to be recorded in writing, allow
the submission of claims after the period so specified if he is satisfied that there was sufficient
cause for not submitting such claim earlier.

(11.) If the amount recovered is less than the amount specified in the certificate
under sub-clause (8), the Collector shall distribute the amount so recovered among the concerned
growers of the sugarcane or the concerned sugarcane growers cooperatives in proportion to the
ratio determined by the Collector on the basis of the sugarcane supplied by the concerned growers
of sugarcane or the sugarcane growers' cooperative society, as the case may be.

(12.) If the amount recovered and distributed under sub clause (11) is less than the
amount specified in the certificate under sub-clause (8), the Collector shall proceed to recover the
remaining amount, as if it were arrears of land revenue till the full amount is recovered and
distributed to satisfy the remaining claims.
1242 INDIAN LAW REPORTS ALLAHABAD SERIES
(13.) If the amount is given to the concerned sugarcane growers cooperative
societies, it shall distribute the amount through cheque/draft/or any other recognized banking
instrument on any scheduled bank to the concerned sugarcane growers within ten days of the
receipt of the amount from the Collector.

(14.) If the concerned sugarcane grower or the concerned sugarcane growers
cooperative society do not come forward to claim or collect the amount so recovered by the
Collector within three years from the date of the public notice referred to in sub-clause (10), the
unclaimed amount shall be deposited by the Collector in the Consolidated Fund of the State."

16. In order to regulates the production of sugar by vacuum pan sugar factories the Central
Government under Clause 3 of the Sugar (Control) Order, 1966 has delegated its authority to
regulate production of sugar by vacuum pan sugar factories to the State Government under Clause
15 of the said order by the Ministry of Food and Agriculture, Community Development and Cooperative, Department of Food, Government of India and pursuant thereto the State Government
for regulating production of sugar by vacuum pan sugar factories has proceeded to issue order
known as U.P. Vacuum Pan Sugar Factories Licensing Order, 1969 and therein Clause 3 deals with
the grant of license, Clause 4 deals with the period for which licenses to be issued, Clause 5 deals
with the issue of duplicate license, Clause 6 deals with the conditions for suspension or cancellation
of license and Clause 8 specifically provided that if a person contravenes any of the provisions of
this order or conditions of the license he shall be punishable in accordance with the provisions
of the Essential Commodities Act, 1955.

17. This Court at this juncture also proceeds to take note of the provisions as contained
under the U.P. Sugarcane (Regulation of Supply & Purchase) Act, 1953 wherein as stated in the
preamble, the Act has been enacted with a view "to regulate the supply and purchase of sugarcane
required for use in sugar factories and gur, rab or khandsari sugar manufacturing units." The object
of enactment was stated to be as follows: " with the promulgation of the Industries (Development
and Regulation) Act, 1951, with effect from 8/5/1952, the regulation of sugar industry has become
exclusively a Central subject. The State Government are now only concerned with the supply of
sugarcane to the sugar factories. The bill is being introduced in order to provide for a rational
distribution of sugarcane to factories, for its development on organised scientific lines, to protect
the interest of cane growers and of the industry and to put the new Act permanently on the Statute
Book." Section 17 therein deals with the payment of cane price and also deals with the procedure
that is to be followed for recovery of the amount in question. Relevant Section 17 is being quoted
below.

"17. Payment of Cane Price:- (1)The occupier of a factory shall make such
provision for speedy payment of the price of cane purchased by him as may be prescribed.

(2) Upon the delivery of cane the occupier of a factory shall be liable to pay
immediately the price of the cane so supplied, together with all other sums connected herewith.
5 All. Simbhaoli Sugars Ltd. Vs State Of U.P. & Ors.

1243
(3) Where the person liable under sub-section (2) is in default in making the
payment of the price for a period exceeding fifteen days from the date of delivering, he shall also
pay interest at a rate of 7-1/2 per cent per annum from the said date of delivering, but the Cane
Commissioner may, in any case, direct, with the approval of the State Government, that no interest
shall be paid or be paid at such reduced rate as he may fix:

[Provided that in relation to default in payment of price of cane purchased after the
commencement of this proviso, for the figure '7-1/2' the 'figure 12' shall be deemed substituted.]

(4.) The Cane Commissioner shall forward to the Collector a certificate under his
signature specifying the amount of arrears on account of the price of cane plus interest, if any, due
from the occupier and the Collector, in receipt of such certificate, shall proceed to recover from
such occupier the amount specified therein as if it were an arrear of land revenue.

(5.) (a). Without prejudice to the provisions of the foregoing sub-sections, where
the owner or any other person having control over the affairs of the factory or any other person
competent in that behalf enters to an agreement with a bank under which the bank agrees to give
advance to him on the security of sugar produced or to be produced in the factory, the said owner
or other person shall provide in such agreement that a [percentage determined by such authority
and in such manner as may be prescribed] of the total amount of advance shall be set apart and be
available only for re-payment to cane growers or their co-operative societies on account of the price
of sugarcane purchased or to be purchased for the factory during the current crushing season from
those cane-growers or from or through those societies, and interest thereon and, such societies,
commission in respect thereof.

(b) Every such owner or other person as aforesaid shall sent a copy of every such
agreement to the Collector within a week from the date on which it is entered into.

18. On the parameters of the provision quoted and noted above, sub-section (3) of Section
17 provides where the person liable under sub-section (2) is in default in making the payment of the
price for a period exceeding fifteen days from the date of delivering, he shall also pay interest at a
rate of 7-1/2 per cent per annum from the said date of delivering, but the Cane Commissioner may,
in any case, direct, with the approval of the State Government, that no interest shall be paid or be
paid at such reduced rate as he may fix. Proviso wherein it has been provided that in relation to
default in payment of price of cane purchased after the commencement of this proviso, for the
figure '7-1/2' the 'figure 12' shall be deemed substituted. Sub section (4) of Section 17 provides that
the Cane Commissioner shall forward to the Collector a certificate under his signature specifying
the amount of arrears on account of the price of cane plus interest, if any, due from the occupier
and the Collector, in receipt of such certificate, shall proceed to recover from such occupier the
amount specified therein as if it were an arrear of land revenue. Sub section (5)(a) of Section 17
provides that without prejudice to the provisions of the foregoing sub-sections, where the owner or
any other person having control over the affairs of the factory or any other person competent in that
behalf enters to an agreement with a bank under which the bank agrees to give advance to him on
1244 INDIAN LAW REPORTS ALLAHABAD SERIES
the security of sugar produced or to be produced in the factory, the said owner or other person shall
provide in such agreement that a (percentage determined by such authority and in such manner as
may be prescribed] of the total amount of advance shall be set apart and be available only for repayment to cane-growers or their co-operative societies on account of the price of sugarcane
purchased or to be purchased for the factory during the current crushing season from those canegrowers or from or through those societies, and interest thereon and, such societies, commission in
respect thereof.

19. Thus provision in question is clear and categorical that cane payment price has to be
ensured in the manner prescribed and in case there is delay in payment of price of cane purchased,
then interest on the same is payable and if there is default in payment of price of cane purchased,
then Cane Commissioner is entitled to forward to the Collector a certificate under his signature
specifying the amount of arrears on account of the price of cane plus interest, if any, due from the
occupier and the Collector, in receipt of such certificate, shall proceed to recover from such
occupier the amount specified therein as if it were an arrears of land revenue.

20. Here this much is accepted position that for crushing season 2014-15 principal amount
has been paid and interest has not at all been paid and shelter is being taken of the fact that an
application has been moved before the Cane Commissioner for forwarding the same to the State
Government, as it has been done in the past for waiving the interest and as said application is
pending, as such demand raised along with 10% of the collection charges i.e. being demanded is
illegal.

21. Fact of the matter is that till today, Cane Commissioner has not recommended the
matter to the State Government for waiving of the interest. Authority to waive the interest vests
with the State Government on the recommendation of the Cane Commissioner. Once such is the
factual situation that is so emerging that till date there is no order passed by the State Government
nor there is any recommendation made by the Cane Commissioner for waving of interest, liability
of interest continues to subsist. As on date liability of interest to be paid by the petitioner's
company is staring on the face of it, and in view of this, once accepted position is that statutory
liability in the shape of interest is there, then it cannot be presumed in favour of petitioners that as
on date there is no liability in existence.

22. Sri Ravindra Singh, learned counsel for the Cane Cooperative Society has proceeded to
make a mention that the provisions of Sugarcane (Control) Order, 1966 operates in the same field
in which U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 applies and taken
together, they wholly occupy the field of regulation of price of sugarcane and also the mode and
manner in which sugarcane has to be supplied and distributed to earmarked sugar factories and both
lay down comprehensive scheme of regulating purchase and sale of sugarcane to be supplied by
earmarked cane-growers to earmarked sugar factories and the provision of waiving of interest is
running counter to the provision of Sugarcane (Control) Order 1966.
5 All. Simbhaoli Sugars Ltd. Vs State Of U.P. & Ors.

1245
23. Sri. S.D. Singh, Senior Advocate submitted that question of repugnancy arises when
there is clear and direct inconsistency in between the two i.e. Central Law and State Law and such
inconsistency is irreconcilable, and here Sugar Control Order, 1966 has been framed in exercise of
authority conferred under Section 3 of Essential Commodities Act, then there is no occasion for
existence of any repugnancy , as such arguments advanced has no substance.

24. Apex Court in the case of Belsund Sugar Company Ltd. Vs. State of Bihar 1999 (9)
SCC 620, while considering akin provisions vis.a.vis. Sugarcane (Control) Order, 1966 as well as
Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981 took the view that both are
harmoniously operating in same field and complement each other. View to the similar effect has
once again been taken in the case of Krishi Upaj Mandi Samiti Vs. Shiv Shankar Khandsari
Udyog 2012 (9) SCC 368 wherein the provisions of M.P. Sugarcane (Regulation of Supply and
Purchase) Act, 1958 alongwith the provisions of Sugarcane (Control) Order, 1966 was being dealt
with and Apex Court has found and ruled that entire field of sale and purchase of sugarcane is
covered by Sugarcane Act and Control Order, which are special provisions. In the case of U.P.
Cooperative Cane Union Federation Vs. West U.P. Sugar Mill Association 2004 (5) SCC 430,
Apex Court though in the matter of fixation of price took the view that there will be no
inconsistency or repugnancy as it is possible for both the orders that is Sugarcane (Control) Order,
1966 and the provisions of U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 to
operate simultaneously and to comply with both of them.

25. In the present case, what we find that there is no repugnancy arising for the simple
reason that under the provision of Sugarcane (Control) Order, 1966, there is no provision that
empowers the authorities to waive the interest, whereas under sub-section (3) of Section 17 the
State Government is empowered to waive the interest on the recommendation of the Cane
Commissioner.

26. Apex Court in the case of Yogendra Kumar Jaiswal and others Vs. State of Bihar
2016(3) SCC 183 has clearly mentioned that repugnancy would arise when there is clear and direct
inconsistency between Central Law and State Law and such inconsistency irreconcilable. Question
of repugnancy can arise only with reference to legislation made by Parliament falling under the
Concurrent list or an existing law with reference to one of the matter enumerated in Concurrent list.
If a law made by the State Legislature covered by an entry in the State List incidentally touches any
of the entries in the Concurrent List. Article 254 is not attracted. But where a law covered by an
entry in the State List (or an amendment to a law covered by an entry in the State List) made by the
State Legislature contains a provision, which directly and substantially relates to a matter
enumerated in the Concurrent List and is repugnant to any provision of an existing law with respect
to that matter in the Concurrent List then such repugnant provision of the State law will be void.
Such a provision of law made by the State Legislature touching upon a matter covered by the
Concurrent List, will not be void if it can co-exist and operate without repugnancy with the
provisions of the existing law. It needs no special emphasis to state that the issue of repugnancy
would also arise where the law made by Parliament and the law made by the State Legislature
occupy the same field.
1246 INDIAN LAW REPORTS ALLAHABAD SERIES
27. On such parameters, the question of repugnancy would not at all arise and to the
contrary both the provisions would co-exist for the simple reason that under the scheme of things
provided for interest has been made admissible on delayed payment under both the statutory
provisions and in addition to it under State Act, State has inhered in itself authority to waive the
interest on the recommendation of Cane Commissioner.

28. Exercise of authority of waving the interest has also been subject matter of challenge in
Public Interest Litigation (PIL) No.64933 of 2013 (Rashtriya Kisan Mazdoor Sangathan
Versus Union of India and 2 others), decided on 09.01.2014, wherein this Court has clearly
mentioned that interest in question should not be waived in a routine manner, Section 17(3) of the
U.P. Sugar Cane (Regulation of Supply and Purchase) Act 1953 provides for payment of interest on
the delayed payment of sugarcane price same is subservient to the wisdom of the Cane
Commissioner with the approval of the State Government for waving interest. At the said point of
time wisdom of the Cane Commissioner has to be fair and equitable, factory owners are not entitled
to seek waiver of interest on delayed payment of sugarcane price as a matter of right, only in
exceptional cases such an authority could be exercised and that too after providing opportunity to
the Cane Growers, as any order of waiver of interest would be effecting the rights of Cane
Growers. Such an order of waiving of interest can always be subject matter of judicial review at the
behest of Cane growers.

29. Once such is the factual situation that is so emerging in the present case that till today,
the request for waiver has not at all been considered and no order has been passed in black and
white, then net effect of the same is that liability in question is there and citation in question has
been prepared in the said direction, then no fault could be found in the same. But we make it clear
that it is always open to the Cane Commissioner and State Government to consider the request of
the petitioners for waiving of the interest on the parameters noted above and, even if, citation has
been issued and process of recovery is on but same has not been brought to its logical conclusion,
then said amount if request is accepted by State Government could be adjusted, but as till date no
orders for waiver has been passed, then liability is to be accepted as it is and recovery of amount
cannot be faulted on this score.

30. Much emphasis has been laid on the fact that recovery of 10% as recovery charges is
bad as law on the subject has been clarified in the case of Mahrajwa Versus State of U.P. and
others 2013(1) ADJ 426.

31. Here recovery citation is inclusive of interest amount plus 10% of the recovery charges.
Recovery charges certainly has to be charged as per the law laid down in the case of Mahrajwa
(Supra). We cannot anticipate number of things, as has been suggested by petitioner, for the reason
that as on date there is no deficiency in citation nor there is any short coming in recovery
proceeding. Depending on the status of payment made, and the steps undertaken for recovery of the
amount, State Authorities would take a final call qua the extent of recovery charges to be charged
from petitioners company, keeping in view the parameters settled in the case of Mahrajwa (Supra).
5 All. Bhagelu & Anr. Vs Deputy Director of Consolidation & Ors.

1247
32. With these observations/directions, writ petition stands disposed of.
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ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.05.2016

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.

Writ B No.- 980 Of 1974

Bhagelu & Anr. ...Petitioners
Versus
Deputy Director of Consolidation & Ors. ...Respondents

Counsel for the Petitioners:
P.P. Chaudhary, Awadhesh Kumar Singh, S.L. Yadav

Counsel for the Respondents:
A.K. Srivastava, Dinesh Pathak, Rakesh Pathak, S.C.

Consolidation of Holdings - Revisional jurisdiction - Scope - Deputy Director of Consolidation.
Revisional power cannot be exercised in favour of a party whose appeal had already been dismissed by
Settlement Officer (Consolidation) and who had not preferred any revision thereagainst - Revisional authority
exceeded jurisdiction in entertaining and allowing such revision. (Paras 19-23)

Consolidation proceedings - Remand - Limited scope--Where remand by appellate authority is
confined to rights of a particular party - Consolidation Officer cannot reopen or adjudicate rights of other
parties whose appeals had attained finality - Jurisdiction confined strictly to scope of remand. (Paras 20-21)

U.P. Zamindari Abolition and Land Reforms Act, 1950 - Section 229-B - Ex parte decree -
Abatement on consolidation.
Where proceedings relating to setting aside ex parte decree were pending and decree had not attained finality
- On commencement of consolidation, proceedings abate - Such decree cannot be treated as final or
binding against contesting co-tenure holder. (Paras 16-18)

Compromise - Legal effect - Survival independent of decree.
Compromise entered between parties does not become extinct merely because decree based thereon is set
aside or proceedings abate - Unless compromise itself is set aside on grounds of fraud, misrepresentation or
illegality, it continues to bind parties. (Paras 26-28, 32-33)

Consolidation proceedings - Sale by tenure holder - Effect.
Execution of undisputed sale deed transferring substantial portion of holding - Vendor cannot subsequently
claim exclusive title contrary to transfer - Rights of transferee and co-sharers required to be recognised.
(Para 18)

Family settlement - Co-sharers - Share determination.