# MIS. DHAMPUR SUGAR (KASHIPUR) LTD v. STATE OF UTTARANCHAL AND ORS

- **Citation:** [2007] 10 S.C.R. 199
- **Court:** Supreme Court of India
- **Decided:** 2007-09-21
- **Case number:** Civil Appeal No. 4425 of 2007
- **Bench:** C.K. Thakker, Al Tamas Kabir
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-dhampur-sugar-kashipur-ltd-v-state-of-uttaranchal-and-ors-22012
- **Pages:** 46

## Headnote

B
Administrative Law:
Sugarcane (Control) Order, 1966; Clauses 3, 4, 6, 7and11/Uttar c
Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953;
Clauses 3, 4, 6 and 7 and Ss. 12, 14 and 15:
Sugar Policy-Authorities rejecting the application for grant of
Licence filed by respondent No. 4-Manufacturer of rah from
sugarcane-State Government modified the policy relaxing certain D
limitations-Fresh application filed by the respondent was allowed by
the Licensing Authority-Challenged by appellant-manufacturer of
Sugar on ground that the Unit of respondent fell in reserved area where
his Sugar mill is located-Dismissed by High Court-On appeal, Held:
Grant of Licence is 'rule' and rejection 'exception '-Since the policy E
was modified, grant of Licence to respondent No. 4 by imposing several
conditions by the authority could not be objected by the appellantBy imposing conditions, Authorities have protected interests of all
parties/Sugar manufacturers-Neither statutory provisions violated
•
nor Policy guidelines were infringed-Authorities as well as the F
>-
Government after satisfying themselves that the new Unit of the
respondent would not affect adequate supply of Sugar to appellant's
Sugar mill-Then only exercise power of relaxation and granted
Licence-Authorities granted Licence in terms of provisions of LawThe Order was confirmed by the State Government-The Order so G
confirmed by the State Government is final -Thus, statutory finality
is attached to the Order-Though, such a statutory finality does not
oust the jurisdiction of the High Court /Supreme Court-But by
exercising such power, High Court/Supreme Court would not substitute
its own decision for th~ decision taken by the authorities, which is final
199
H
200
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A under the relevant law-Once it is held that the Government has power
to frame and reframe; charge/recharge, such action cannot be declared
illegal, arbitrary or ultra vires the Constitution-Allegations of mala
fide by appellant raises a question of fact, therefore, should be
supported by material particulars -In the instant case, no such
B material has been placed on record-Hence the contention of mala
fide, as alleged by the appellant, cannot be upheld--High Court was
right in dismissing the petition of the appellant by observing that the
change of Policy was not limited to the case of respondent No.4 in
granting Licence since it was applied uniformly to one and all--Hence,
C on the facts and in the circumstances of the case, High Court was right
in not interfering with the order passed by the authorities and as
confirmed by the State Government-Essential Commodities Act,
1955-S.3-Gur (Regulations of Use) Order, 1968; Clause 3.
D
E
Constitution of India, 1950; Articles 136 or 226:
Grant of Licence to respondent No. 4-manufacturer of rah from
sugarcane-Interest of applicant-manufacturer of sugar-Effect onHeld: It is a question of fact, which could be raised by the appellant
before the authorities-It cannot be decided in proceedings under
Article 136 or Article 226 of the Constitution.
Words and Phrases:
'Sugar cane '-Meaning of in the context ofS 2(b) of the Essential
Commodities Act, 1955_
F
'Controlled industries '-Meaning of in the context of the
G
Industries (Development and Regulation) Act, 1951.
'Factory', Khandsari sugar', Khandsari unit', 'Crusher', 'Power
Crusher', 'Procedure of Khandsari sugar' and 'Reserved area'-
Meaning of in the context of Sugar cane (Control) Order, 1966.
'Assigned area '-Meaning of in the context of the Licensing Order,
)'
196?
AppcHant-Company is engaged in the manufacture, sale and
supply of sugar. One Mis. Indian Glycols Limited-respondent no. 4
H
y
M/S.DHAMPURSUGAR(KASHIPUR)LTD.v. STATEOF 201
UTTARANCHAL
submitted an application for grant of licence for Power Driven A
Crusher to start a new Unit for the manufacture of rah from
sugarcane. The application was rejected by the authorities. The
State Governmentvide its order dated Novem he

## Text

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f
MIS. DHAMPUR SUGAR (KASHIPUR) LTD.
A
y
v.
STATE OF UTTARANCHAL AND ORS.
SEPTEMBER 21, 2007
[C.K. THAKKER AND AL TAMAS KABIR, JJ.]
B
Administrative Law:
Sugarcane (Control) Order, 1966; Clauses 3, 4, 6, 7and11/Uttar c
Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1953;
Clauses 3, 4, 6 and 7 and Ss. 12, 14 and 15:
Sugar Policy-Authorities rejecting the application for grant of
Licence filed by respondent No. 4-Manufacturer of rah from
sugarcane-State Government modified the policy relaxing certain D
limitations-Fresh application filed by the respondent was allowed by
the Licensing Authority-Challenged by appellant-manufacturer of
Sugar on ground that the Unit of respondent fell in reserved area where
his Sugar mill is located-Dismissed by High Court-On appeal, Held:
Grant of Licence is 'rule' and rejection 'exception '-Since the policy E
was modified, grant of Licence to respondent No. 4 by imposing several
conditions by the authority could not be objected by the appellantBy imposing conditions, Authorities have protected interests of all
parties/Sugar manufacturers-Neither statutory provisions violated
•
nor Policy guidelines were infringed-Authorities as well as the F
>-
Government after satisfying themselves that the new Unit of the
respondent would not affect adequate supply of Sugar to appellant's
Sugar mill-Then only exercise power of relaxation and granted
Licence-Authorities granted Licence in terms of provisions of LawThe Order was confirmed by the State Government-The Order so G
confirmed by the State Government is final -Thus, statutory finality
is attached to the Order-Though, such a statutory finality does not
oust the jurisdiction of the High Court /Supreme Court-But by
exercising such power, High Court/Supreme Court would not substitute
its own decision for th~ decision taken by the authorities, which is final
199
H
200
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A under the relevant law-Once it is held that the Government has power
to frame and reframe; charge/recharge, such action cannot be declared
illegal, arbitrary or ultra vires the Constitution-Allegations of mala
fide by appellant raises a question of fact, therefore, should be
supported by material particulars -In the instant case, no such
B material has been placed on record-Hence the contention of mala
fide, as alleged by the appellant, cannot be upheld--High Court was
right in dismissing the petition of the appellant by observing that the
change of Policy was not limited to the case of respondent No.4 in
granting Licence since it was applied uniformly to one and all--Hence,
C on the facts and in the circumstances of the case, High Court was right
in not interfering with the order passed by the authorities and as
confirmed by the State Government-Essential Commodities Act,
1955-S.3-Gur (Regulations of Use) Order, 1968; Clause 3.
D
E
Constitution of India, 1950; Articles 136 or 226:
Grant of Licence to respondent No. 4-manufacturer of rah from
sugarcane-Interest of applicant-manufacturer of sugar-Effect onHeld: It is a question of fact, which could be raised by the appellant
before the authorities-It cannot be decided in proceedings under
Article 136 or Article 226 of the Constitution.
Words and Phrases:
'Sugar cane '-Meaning of in the context ofS 2(b) of the Essential
Commodities Act, 1955_
F
'Controlled industries '-Meaning of in the context of the
G
Industries (Development and Regulation) Act, 1951.
'Factory', Khandsari sugar', Khandsari unit', 'Crusher', 'Power
Crusher', 'Procedure of Khandsari sugar' and 'Reserved area'-
Meaning of in the context of Sugar cane (Control) Order, 1966.
'Assigned area '-Meaning of in the context of the Licensing Order,
)'
196?
AppcHant-Company is engaged in the manufacture, sale and
supply of sugar. One Mis. Indian Glycols Limited-respondent no. 4
H
y
M/S.DHAMPURSUGAR(KASHIPUR)LTD.v. STATEOF 201
UTTARANCHAL
submitted an application for grant of licence for Power Driven A
Crusher to start a new Unit for the manufacture of rah from
sugarcane. The application was rejected by the authorities. The
State Governmentvide its order dated Novem her 15, 2003 modified
its earlier sugar policy empowering the Government to relax the
limitation laid down in para (ka) of the Government Order in certain B
cases. Respondent No. 4 submitted a fresh application for grant of
licence for rah manufacturing unit, which was allowed by the
Licencing Authority observing that the new unit of respondent No.
4 would not adversely affect adequate and sufficient supplies of
sugarcane to the sugar mills of the appellant in the reserved area C
and hence, limitation in para (ka) could be relaxed to grant the
Licence to respondent No. 4. Appellant challenged the order of the
Licencing authority by filing a writ petition in the High Court, which
was dismissed by the High Court inter alia holding that all the
contentions raised by the appellant were ill-founded. Hence the ID
present appeal.
Appellant contended that the change in licencing policy effected
by the Authorities was arbitrary, unreasonable and contrary to law;
that no licence could have been granted to respondent No. 4- and
the said action of the authorities was ma la fide and had been taken E
by then in colourable exercise of power with a view to extend
undeserving benefit to respondent No.4; that the High Court was
wholly in error in dismissing the petition filed by the appellant on
the ground that the entire sugarcane produced in the reserved area
of sugar factory of the appellant was available and no prejudice would
be caused to it; that moreover, under 1961 Act, the Authorities were F
obliged to consider as to whether relaxation of conditions were
necessary and expedient in 'public interest'. Since, there is no such
satisfaction which is reflected in the order, there is total nonapplicatiou of mind on the part of the authorities and the order is
liable to be quashed; and that the authorities considered availability G
of sugarcane in the 'whole State' as against availability of sugarcane
in the' reserved area'. What was relevant was not availability of
sugarcane in the State, but availability in the reserved areas which
was material. If the said fact is considered, it is clearly established '
that though the appellant was in need of much more quantity of H
202
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A sugarcane, it was not made available and the appellant had to close
down certain units due to non-availability of sugarcane.
Respondent-State submitted that in accordance with the
changed policy of the State Government, respondent No. 4 applied
for licence, which was granted and there is no illegality therein; that
B all actions were taken by the Authorities after considering the
relevant laws applicable to the case on hand and a decision was taken;
that in the order issued in favour of respondent No. 4, it was
expressly stated that the unit ofrespondent No. 4 will not purchase
'bonded cane'; that there would be no possibility of adverse effect
c of cane supply to the sugar mill of the appellant; that so far as
availability of sugarcane to appellant-Company is concerned, it is
ensured that there is no violation of any provision oflaw on the basis
of which appellant can object grant of licence in its favour; that a
condition has been imposed that respondent No. 4 has to cater its
D need without disturbing and/or curtailing sugarcane supply to the
appellant-Company. Precisely because of that condition, respondent
No. 4 was allowed to purchase sugarcane from other areas; that
correct reading of relevant provisions of1961 Act clearly indicate
that normally licence should be granted unless a finding is recorded
E that it would not be in public interest to grant such licence. No such
finding has been recorded and it could not be said that grant of
licence to respondent No. 4, had adversely affected public interest;·
and that if by taking into consideration all the facts and circumstances
in their entirety, the relevant provisions oflaw and change of policy,
F a licence is granted by the authorities in favour of respondent No. 4
without disturbing supply of sugarcane to the appellant, it cannot be
said that the action taken by respondent-Authorities was illegal,
unlawful or otherwise objectionable.
Dismissing the appeal, the Court
G
HELD: 1.l. 'Sugarcane' is an essential commodity as defined
in Section 2(b) of the Essential Commodities Act, 1955.
[Para 10] [215-E)
Ch. Tika Ramji & Ors. etc. v. State of Uttar Pradesh & Ors.,
H [1956] 1SCR393: AIR (1956) SC 676 and A.K. Jain v. Union of
~
•
~
r
~-
MIS. DHAMPUR SUGAR (KASHIPUR) LTD. v. STATE OF 203
UTIARANCHAL
India & Ors., [1970) 1SCR673: AIR (1970) SC 267, relied on.
A
1.2. 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 B
as one of the controlled industries. [Para 11] [215-H; 216-A-B]
Mis. Triveni Engineering Works Ltd. & Anr. v. Union of India &
Ors., AIR (1996) All 420, referred to.
2.1. No manufacturer, without obtaining from the licensing C
authority a licence in the prescribed form, can undertake or carry
on any process concerned with the manufacture of khandsari sugar
by means of a power crusher, bel or centrifugal. [Para 13) [219-D)
2.2. An application for the grant of licence by the licensing D
authority cannot be rejected except where (i) such application has
not been made in the prescribed form, or (ii) is incomplete, or (iii) is
not accompanied with the payment of requisite f~e, or (iv) the
licensing authority is of the opinion that it is necessary or expedient
so to do in the public interest. The Licensing Authority is also
enjoined to take into consideration the directions of the State E
Government issued from time to time. The provision also keeps in
view principles of natural justice and expressly states that no
application for grant of licence can be rejected without giving the
applicant reasonable opportunity of being heard. Sub-clause (5) of
Clause 3 confers a right of appeal on the aggrieved applicant and F
makes the decision of the State Government on such appeal final.
[Para 14) [220-A-B-C]
3.1. The High Court was right in considering the facts and
circumstances in their entirety and in holding that the action of G
respondent Nos. 1 to 3 could not be said to be illegal or otherwise
objectionable. It is, no doubt, true that earlier an application made
by respondent No. 4 came to be rejected but it was because of the
policy then in force. Since the policy was thereafter changed, grant
of licence in favour of respondent No. 4 could not be objected by H
204
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A the appellant. (Para 23] [226-E-F]
3.2. From the conditions, so imposed by the authorities in
granting Licence to respondent No. 4, it is abundantly clear that the
authorities have protected interests of all parties. So far as the
appellant is concerned, condition No. 3 expressly states that the unit
B of respondent No. 4 shall purchase additional balance cane other
than bonded cane from the reserved area of the sugar mills of the
State. It further stated that "there shall be no permission to purchase
bonded cane". Cane producers were also protected by imposing a
condition on the respondent No. 4 that "the cane price to be paid by
c the Unit shall not be less than Minimum Statutory Price fixed by the
Government oflndia". Probably, taking into account the aforesaid
situation and interest of all concerned, the crushing capacity of •
respondent No.4's Unit was made limited to 1250 CTT. The
authorities also considered the overall industrial growth and in
D condition No. 5 it was stated that "prior to 2004-05 crushing season,
the Unit shall take action to produce additional cane and do
development as per undertaking given in the application".
[Para 25] (227-C-D-E-F]
3.3. The respondents are also right in submitting that subE section (3) of Section 4 ofU.P. Sugar cane (Purchase Tax) Act, 1961
as also sub-clause (4) of Clause 3 of the Licensing Order, 1967
require the Licensing Authority not to reject application for grant
or renewal of licence unless the conditions laid down therein are
satisfied. The respondents, therefore, rightly urged that grant of
F licence is 'rule' and rejection 'exception'. If keeping in view the
provisions of law, the power has been exercised by the Licensing
Authority by granting licence in favour of respondent No. 4, and
confirmed by the State Government and the High Court did not
consider the case to interfere with the exercise of power by Statutory
G Authorities, no grievance can be made by the appellant that the High
Court Committed an error oflaw or of jurisdiction which deserves
interference by this Court in exercise of power under Article 136 of
the Constitution. [Para 26] [226-A-B; 227-G-H]
3.4. The High Court is right in holding that whether or not the
H sugar factory of the appellant has been adversely affected is
~
MIS. DHAMPURSUGAR(KASHIPUR)LTD. v. STATE OF 205
UTTARANCHAL
y
essentially a question of fact. Such question can be raised by the A
appellant before the Authorities under the Act, and it cannot be
decided in proceedings under Article 226 or Article 136 of the
Constitution. [Para 27] [228-B-C-D]
3.5. Neither statutory provisions were violated nor policy
guidelines were infringed. By adhering to provisions of substantive B
laws as also delegated legislation, if the Authorities had taken into
consideration that the farmers would have one more option to get
their crops sold at an appropriate price, it cannot successfully be
contended that such consideration was irrelevant, extraneous or
otherwise unreasonable. On the contrary, one of the considerations c
which must be kept in mind by the Authorities while exercising poweni
under various provisions oflaw would be as to whether exercise of
such power would also protect interest of sugarcane growers. In the
case on hand, that is precisely done by the respondent-authorities
and no infirmity is found therein. [Para 29] [228-F-G-H; 229-A]
D
4.1. It is not in dispute that the proposed site of the new unit o,f
respondent No. 4 falls in the reserved area of the Sugar Mill of the
appellant. But both the Sugar Commissioner as well as the
Government were satisfied that the new Unit will not affect adequat~
supply of sugarcane to Appellant's Sugar Mill and on such E
satisfaction, the power ofrelaxation under clause (a) of Para-1 was
exercised. Moreover, a specific condition was imposed on the
respondent No. 4 that it would not purchase bonded cane of the Sugar
..
Mills of the State. The High Court, taking note of all these
:1safeguards upheld the order of the authorities and no illegality is F
found therein. [Para 32] [229-F-G]
I
4.2. It is clear from the order passed by the Sugarcane
Commissioner and by the State Government that the Unit bf
respondent No. 4 is not given any specific reserved area earmark~d
for any specific sugar factory and it can purchase sugarcane from G
-f
reserved/assigned area of any sugar factory in the State. But even
otherwise, in view of additional condition No. 3 imposed ~n
respondent No. 4, the appellant is not adversely affected by grant
oflicence in favour of respondent No. 4. The said condition allows
the Unit to purchase 'other than bonded cane'. lfit is so, no prejudice H
206
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A can be said to have been caused to the appellant.
[Para 34] [230-D-E)
5. The order passed by the State Government in appeal is
'fmal'. Thus, statutory finality is attached to the order passed by the
State Government. It cannot be gainsaid that such 'statutory fmality'
B does not oust the jurisdiction of a High Court under Article 226/227
of the Constitution nor of this Court under Article 32/136 of the
Constitution. But it is well settled that while exercising extraordinary
power, a High Court or this Court will be conscious and mindful of
such provisions and will not substitute its decision for the decision
C taken by the Authority which is 'final' under the relevant law. The
respondents are right in submitting that the Original Authority as
well as Appellate Authority considered the facts and circumstances
iand exercised the power by granting licence to respondent No. 4 and
if the High Court did not think it proper to interfere with such order,
D it cannot be said that by doing so, the High Court has failed to
exercise jurisdiction or exceeded its power in dismissing the petition.
[Para 36) [230-H; 231-A-B-C]
6.1. The High Court was right in observing that this Court
decided the case of Ganesh Sugar Works v. State of Haryana in the
E light of fact-situation before the Court. The respondents are right
in submitting that even in that case, this Court has indicated that
the Government ought to take into consideration interest of
sugarcane growers also. In the present case, the Sugarcane
Commissioner has precisely performed that function when he
F observed that the sugarcane growers had one more option available
for realizing proper return. Apart from the fact that it cannot be said
to be an irrelevant consideration, the Authorities are enjoined to keep
in view this aspect as one of the considerations and no infirmity is
G
found therein. [Para 39) [233.;E-F-GJ
Shri Ganesh Sugar Works v. State o/Haryana, [1987) 4 SCC 604,
ref erred to.
6.2. It is also pertinent to note that when licence was granted
to respondent No. 4 by the Sugarcane Commissioner for one Power
H Crusher of a capacity of 1250 TCD, the appellant as also respondent
~-
MIS. DHAMPUR SUGAR (KASHIPUR) LTD. v. ST A TE OF 207
UTTARANCHAL
No. 4 challenged that order. The grievance of the appe!lantwas that A
no such licence could have been granted by the Sugarcane
Commissioner in favour ofrespondent No. 4. The complaint made
by respondent No. 4, on the other hand, was that the Licensing
Authority ought to have granted licence for 1500 TCD as applied.
The State Government disposed of both the matters by upholding .B
the order passed by the Sugarcane Commissioner observing that the
action taken by the Licensing Authority could not be said to be illegal
or improper. In the light of the considerations and findings by the
authorities and appellate authorities, no interference with the order was
called for and the High Court was right in confirming the orders passed C
by the Authorities. [Paras 40, 41and44] [233-H; 234-B; 235-B]
6.3. The High Court considered the contention of the appellant
that that Clause 3 of the Gur (Regulation of Use) Order, 1968 bars·
use of gur for any purpose other than as specified in sub-clauses (a)
to (c). Therefore, grant of licence by respondent Nos. 1 to 3 to D
respondent No. 4 for preparation of alcoholic liquor is in violation
of the provision oflaw and observed that the application submitted.
by respondent No. 4 was limited to manufacture of rah and no use
was indicated at all. From the counter-affidavit filed in the High
Court, no such indication was exhibited. But in any case, if there E
was violation of provision oflaw relating to use of rah for a purpose
other than permitted by law, the remedy was not to challenge licence
but to question the use ofrab. An appropriate direction in such an
eventuality can always be issued by the Authority.
[Paras 45 and 46] [235~B-C-D-E] F
7.1. It is well-settled that public authorities must have libertr
and freedom in framing policies. No doubt, the discretion is not
absolute, unqualified, unfettered or uncanalised and judiciary has
control over all executive actions. At the same time, however, it is
well-established that courts are ill-equipped to deal with these G
matters. In complex social, economic and commercial matt~s,
decisions have to be taken by governmental authorities keeping in
view several factors, and it is not possible for courts to consider
competing claims and conflicting interests and to conclude which w,ay
the balance tilts. There are no objective, justiciable or manageable H
208
SUPREME COURT REPORTS
[2007] 10 S.C.K
A standards to judge the issues nor s~ch questions can be decided on
'a priori' consid~rations. (Para 48] (236-A-B-C]
Bennett Coleman v. Union of India, (1972] 2 SCC 788: AIR
(1973) SC 106; State of Maharashtra v. Lok Shiksha Sanstha, [1971]
2 SCC 410: AIR(1973); R.K. Gargv. Union of India, [1981] 4 SCC
B 675 : AIR (1981) SC 2138 : (1982] 1 SCR 947; Liberty Oil Mills v.
Union of India,_ (1984] 3 SCC 465; State of MP. v. Nandlal, (1986] 4
SCC 566: AIR (1987) SC 25: JT (1986) SC 701; Shri Sitaram Sugar
Co. Ltd v. Union of India, (1990] 3 SCC 223 : AIR (1990) SC 1277
: JT (1990) 1SC462; Ugar Sugar Works Ltd. v. Delhi Administration,
c (2001] 3 sec 635: AIR (2001) SC 1447: JT (2001) 4 SC 31, BALCO
Employees' Union v. Union of India, (2002] 2 SCC 333 : AIR (2002)
SC 350 : JT (2001) 10 SC 466; Sangwanv. Union of India, (1980] Supp
SCC 559 : AIR (1981) SC 1545 and Union of India v. S.L. Dutta, (1991]
1SCC505: AIR (1991) SC 363: JT (1990) 4 SC 741, referred to.
D
'
E
- State of Bombay v. Laxmidas Ranchhoddas, AIR (1952) Born
468, approved.
Metropolis Theatre Companyv. State of Chicago, 57 L Ed. 730,
ref erred to.
8.1. It is well-settled and needs no authority for holding that
every power must be exercised bona fide and in good faith. Every
action of a public authority must be based on utmost good faith,
genuine satisfaction and ought to be supported by reason and
rationale. It is, therefore, not only the power but the duty of the Court
F to ensure that all authorities exercise their powers properly, lawfully
and in good faith. If powers are exercised with oblique motive, bad
faith or for extraneous or irrelevant considerations, there is no
exercise of power known to law and the action cannot be termed as
action in accordance with law. [Para 67] (243-B-C-D]
G
General Assembly of Free Church of Scotland v. Overtaum,
(1904) AC 515 : 20 TLR 370, referred to.
8.2. Once it is held that the Government has power to frame
and reframe, change and rechange, adjust and readjust policy, the
H said action cannot be declared illegal, arbitrary or ultra vires the
-¥
\
y
•
tMIS. DHAMPUR SUGAR (KASHIPUR) LTD. v. STA TE OF 209
UTTARANCHAL
provisions of the Constitution only on the ground that the earlier
policy had been given up, changed or not adhered to. It also cannot
be attacked on the plea that the earlier policy was better and suited
to the prevailing situation. [Para 68) [243-E-F]
• ~ > !
9.1. Allegations of ma/a fide are serious in nature and they
essentially raise a question of fact. It is, therefore, necessary for
the person making such allegations to supply full particulan in the
petition. If sufficient averments and requisite materials are not on
record, the court would not make 'fishing' or roving inquiry. Mere
assertion, vague averment or bald statement is not enough to hold
the action to be ma/a fide. It must be demonstrated by facts.
Moreover, the burden of proving malafide is on the person levelling.
such allegations and the. burden is 'very heavy'.
[Para 69) [243-G-H]
E.P. Royappa v. State of Tamil Nadu, [1974] 4 SCC 4: [1974] 2
SCR 348; Gulam Mustafa v. State of Maharashtra, [1976] 1 SCC 800
: AIR (1977) SC 448 and Ajit Kumar v. Indian Oil Corporation, (2005)
7 sec 764, referred to.
9.2. In the case on hand, except alleging that the policy was
altered by the Government, to extend the benefit to respondent No~
4, no material whatsoever has been placed on record by the
appellant. Therefore, the contention of the appellant that the
impugned action is malafide or malicious cannot be upheld.
[Para 69] [244-B-C]
9.3. The High Court was right in observing that the change of
policy was not limited to the case of respondent No. 4 but it was
uniformly applied to one and all. Therefore, it cannot be contend~d
that the High Court committed an error in arriving at the sa,d
conclusion which requires interference under Article 136 of the
Constitution. [Para 70) [244-C-D)
9.4. Keeping in view statutory provisions, the policy decisihn
taken by the respondent-authorities and interest of all parties
including existing sugar factories, a decision has been taken by the
respondent Nos. 1 to 3 granting licence in favour ofrespondent No.4.
A
B
c
D
E
F
G
H
--\
210
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A The said decision wm confirmed by the State in exercise of appellate
B
power and the High Court was not convinced that the decision was
~
illegal, arbitrary or otherwise unreasonable. In such circumstances,
it cannot be held that all the decisions suffer from any error oflaw
or of jurisdiction and they should be set aside. [Para 71] [244-E-F]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4425 of
2007.
-From the Judgment and Order dated 23.12.2005 of the High Court
ofUttaranchal at Nainital in Writ Petition No. 564 of2004(M/B).
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Sudhir Chandra, Nikhil Nayyar, Dayan Krishnan, Gautam Narayan,
Bhagwathi Prasad and Ankit Singal for the Appellant.
Rakesh Dwivedi and Dinesh Dwivedi, Abhishek Chaudhary,
Niranjana Singh, Gaurav Bhatia and D. Bharathi for the Respondents.
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The Judgment of the Court was delivered by
C.K. THAKKER, J. 1. Leave granted.
2. The present appeal is filed by the ap~llant-original petitioner
against the judgment and final order dated December 23, 2005 passed
E by the High Court of Uttranchal at Nainital in Writ Petition No. 564 of
2004 (MIB) by which the Division Bench of the High Court dismissed
the petition filed by the vvrit-petitioner.
3. The appellant-writ-petitioner filed a petition in the High Court of
F Uttranchal at Nainital by invoking Article 226 of the Constitution against
the respondents for an appropriate writ, direction or order quashing and
setting aside relaxation in Clause (ka) of Notification dated November
15, 2003 issued by the Cane Development & Sugar Industries
·Development, Government ofUttranchal, also quashing an order issuing
licence for Power Crusher dated February 17, 2004 issued in favour of
G respondent No. 4; as also quashing an order dated January 22, 2004
issued by Secretary (Ganna Cheeni), Government ofUttranchal. A Writ
of Mandamus was also sought by the appeIIant directing respondent Nos.
1 to 3 to estimate the requirement of sugarcane of the appellant on the
basis of 6250 Tonnes Crushing Capacity (TCC). A further prayer was
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M/S.DHAMPURSUGAR(KASHIPUR)LTD.v. STATEOF 211
UTTARANCHAL [THAKKER, J.]
made to quash and set aside the order dated September 25, 2004 passed A
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by the Government of Uttranchal dismissing the appeal filed by the
appellant herein.
FACTUAL MATRIX
4. To appreciate the controversy raised in the present appeal, few B
relevant facts may be noted. The appellant is a Company registered under ·
the Companies Act, 1956. It owns a sugar factory at Kashipur in the
State of Uttranchal. It was set up in the year 1936. The Company is
engaged in the manufacture, sale and supply of sugar. It is the case of'
the appellant that Mis Indian Glycols Limited ("IGL" for short) submitted c
an application in the year 2003 for grant of licence for Power Driven
Crusher for the manufacture of rah from sugarcane. The application was,'
however, rejected by the Sugarcane Commissioner. According to the
appellant, the Sugarcane Com.'llissioner took the said decision as per the
Licencing Policy of the Government whereunder a new licence to D
Khandsari Unit could not be granted in the reserved area afthe existing
sugar mills. Since the application ofIGL was in the reserved area of the
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appellant, it could not be granted. According to the appellant, however,
the State Government vide its order dated November 15, 2003, modified
its earlier sugar policy and the Government was empowered to relax the E
limitation laid down in para (ka) of the Government Order in certain cases'.
Immediately after the amendment in the policy, IGL submitted fresh
application on November 18, 2003 for grant of licence for rab
manufacturing unit. IGL intended to manufacture rah from
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sugarcane juice. The said application was allowed by the Licencing
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Authority, i.e. Sugarcane Commissioner by an order dated February 17,
2004. According to the appellant, the proposed site of the new unit of
respondent No. 4-IGL fell in the reserved area of sugar mill of the
appellant. No such licence, therefore, could have been granted to JG~.
The Sugarcane Commissioner as well as the State Government observed G
that the new unit would not adversely affect adequate and sufficient
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supplies of sugarcane to the sugar mills in the reserved area and hence,
limitation in para (ka) could be relaxed. According to the appellant, the
factual position was totally ignored by respondent Nos. 1 to 3 and the
action was illegal, unlawful, arbitrary and ma/a fide since the respondents
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[2007] 10 S.C.R.
A wanted to oblige IGL at the cost of interest of the appellant.
DECISION OF HIGH COURT
5. The High Court dismissed the petition inter alia holding that all .
the contentions raised by the appellant were ill-founded. According to
B the Court, sugarcane produced in the reserved area was available to the
sugar factory. It was also observed by the Court that as per the bonding
policy, adequate supply was ensured so far as the appellant factory was
concerned and hence, it had no occasion to make any grievance against
grant o~li,cence in favour of Respondent No. 4 u IGL. The Court observed
c that it ~~-a matter of policy and when there was change of policy on
the part of the Government in granting licence, it could not have been
interfered with since the ·appellant failed to convince the Court that such
policy was arbitrary, unreasonable or violative of statutory provisions. The
Court also held that under the U.P. Sugarcane (Purchase Tax) Act, 1961,
D grant oflicence was the rule and rejection an exception. As tlie relevant
conditions of law had been observed and the application was made by
respondent No. 4 for grant of licence, by allowing the application and
granting licence, no illegality was committed by respondent-Authorities and
such order could not be set aside. On the basis of the above findings,
E the High Court dismissed the writ petition filed by the appellant. The said
order passed by the High Court is challenged by the appellant by filing
the present appeal.
6. On March 24, 2006, notice was issued by this Court. The matter
was thereafter adjourned from time to time. Affidavits and further affidavits
F were filed. On December 4, 2006, the matter was ordered to be placed
for hearing. On May 3, 2007, we have heard the learned counsel for
the parties.
CONTENTIONS OF PARTIES
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7. The learned counsel for the appellant contended that the change
in licencing policy effected by the Authorities was arbitraJ.y, unreasonable
and contrary to law. It was submitted that no licence could have been
granted to respondent.No. 4- IGL and the said action was malafide
and had been taken by the authorities in colourable exercise of power
H with a view to extend undeserving benefit to IGL. It was also submitted
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M/S.DHAMPURSUGAR(KASHIPUR)LTD. v. STATE OF 213
UTTARANCHAL [THAKKER, J .]
that the High Court was wholly in error in dismissing the petition filed by A
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the appellant on the ground that the entire sugarcane produced in the
reserved area of sugar factory of the appellant was available and no
prejudice would be caused to it It was the case of the appellant-Company
from the beginning that in the area reserved for appellant-factory, no licence
could have been granted to any other factory particularly when it had B
adversely affected supply of sugarcane to the appellant-factory. The High
Court was not right in holding that the appellant did not make strong
demand for more than 51 lakh tones and supply of requisite quantity was
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ensured. Looking to the figures supplied by the appellant, it was clearly
proved that establishment of new unit of respondent No. 4 would c
prejudicially affect the appellant and the Company would not be able to
get adequate and sufficient sugarcane from sugarcane growers. It was
urged that even if it is assumed for the sake of argument that policy could
be changed and exemption could be granted by the authorities to any unit,
such exemption and/or relaxation could not be allowed only with a view D
to favour a particular party and no such action could be sustained in law.
,........
On that ground also, the action is liable to be set aside. Moreover, under
1961 Act, the Authorities were obliged to consider as to whether relaxation
of conditions were necessary and expedient in 'public interest'. Since,
there is no such satisfaction which is reflected in the order, there is total E
non-application of mind on the part of the authorities and the order is liable
to be quashed. According to the learned counsel, the approach of the
authorities was not correct in granting licence to respondent No. 4. The
authorities considered availability of sugarcane in the 'whole State' as
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against availability of sugarcane in the "area". What was relevant was
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not availability of sugarC;ane in the State, but availability in the respective
areas which was material. If the said fact is considered, it is clearly
established that though the appellant was in need of much more quantity
of sugarcane, it was not made available and the appellant had to close
down certain units due to non-availability of sugarcane. Unfortunately,
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however, the said consideration was totally overlooked by the authorities
and even the High Court did not consider that aspect in its proper
perspective. On all these grounds, it was submitted that the appeal
deserves to be allowed and all actions taken by the State Authorities are
liable to be set aside by ordering cancellation oflicence granted in favour
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SUPREME COURT REPORTS
[2007] 10 S.C.R.
A of respondent No. 4-IGL.
8. The learned counsel for the respondents supported the order
passed by the Authorities-respondent Nos. 1 to 3 and the decision of
the High Court. So far as the State Authorities are concerned, it was
submitted that policy decisions were taken by the State from time to time
B as regards sugarcane policy. Earlier, as per the policy in existence,
respondent Nos. 4 could not be granted licence since the object mentioned
in the application was manufacture of rab and for manufacture of alcohol,
and as per the policy, no licence could be granted for the said purpose.
The application was, therefore, rejected. Thereafter the policy was
C changed and in accordance with the changed policy, respondent No. 4
applied for licence which was granted and there is no illegality therein.
Allegations of ma/a fide and/or colourable exercise of power on the part
of respondent Nos. 1 to 3 were emphatically denied by the respondents
and it was submitted that all actions were taken by the Authorities after
D considering the relevant laws applicable to the case on hand and a decision
was taken. It was also submitted that in the order issued in favour of
respondent No. 4-IGL, it was expressly stated that the unit (respondent
No. 4) will not purchase 'bonded cane'. It was also stated that there
would be no possibility of adverse effect of cane supply to the sugar mill
E of the appellant. On the contrary, one more option would be available
to the farmers of cane supplied. It was thus in larger public interest,
submitted the learned counsel, that such a decision was taken. The High
Court was satisfied as to the legality of such action and rightly did not
interfere with it in exercise of power of judicial review and no case has
F been made out to interfere with the said order. The appeal, therefore,
deserves to be dismissed.
9. The learned counsel for respondent No. 4--IGL supported the
arguments advanced by the learned counsel for the State. He further
submitted that if a licence has been granted to respondent No. 4, appellant
G had no ground to make grievance that no such licence could have been
granted to IGL. So far as availability of sugarcane to appellant-Company
is concerned, it is ensured. If it is so, no prejudice would be caused to
the company. There is no violation of any provision oflaw on the basis
of which appellant can object grant of licence in favour of respondent No.
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M/S.DHAMPURSUGAR(KASHIPUR)LTD. v. STATEOF 215
UTTARANCHAL [THAKKER, J.]
4. IGL has not been given or allowed any specific area. On the contrary, A
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it was expressly stated that respondent No. 4 has to cater its need without
disturbing and/or curtailing sugarcane supply to the appellant-Company.
Precisely because of that condition, respondent No: 4 was allowed to
purchase sugarcane from other areas. It was also submitted that correct
reading of relevant provisions of 1961 Act clearly indicate that normally B
licence should be granted unless a finding is recorded that it would not
be in public interest to grant such licence. No such finding has been
recorded and it could not be said that grant of licence to respondent No.
4, had adversely affected public interest. If by taking into consideration
all the facts and circumstances in their entirety, the relevant provisions of C
law and change of policy, a licence is granted by the authorities in favour
of respondent No. 4 without disturbing supply of sugarcane to the
appellant, it cannot be said that the action taken by respondent-Authorities
was illegal, unlawful or otherwise objectionable. The High Court was,
therefore, fully justified in dismissing the petition and the said order requires D
no interference by this Court in exercise of discretionary and equitable
jurisdiction under Article 136 of the Constitution.
STATUTORY SCHEME GOVERNING SUGAR AND
SUGARCANE
10. Before we deal with contentions raised by the parties before
us, it would be appropriate if we peruse relevant statutory provisions
relating to sugar and sugarcane. 'Sugarcane' is an essential commodity
as defined in Section 2(b) of the Essential Commodities Act, 1955. In
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the leading decision Ch. Tika Ramji & Ors. etc. v. State of Uttar . F
Pradesh & Ors., [1956] 1 SCR 393 : AIR (1956) SC 676, this 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, the Court held that Section 2 of the
Essential Commodities Act provided that sugarcane would be an 'essential G
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 H
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SUPREME COURT REPORTS
[2007] 10 S.C.R.
A 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. In Mis Triveni Engineering Works Ltd & Anr. v.
Union of India & Ors., AIR [1996] All 420, the High Court of Allahabad
B 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: There are certain Central and State Legislations and
Control Orders relating to sugar and sugarcane. The first one is the
c Sugarcane Act, 1934 (Act No. XV of 1934) which is a Central Act. It
regulates the price of sugarcane intended for the use of sugar factories. It
empowers the State Government to declare any area as controlled area
and to fix a minimum price for purchase of sugarcane in that area.