# SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES LTD v. LOKNETE MARUTRAO GHULE PATIL DNYANESHWAR SAHAKARI SAKHAR KARKHANA LTD & ORS

- **Citation:** [2022] 17 S.C.R. 54
- **Court:** Supreme Court of India
- **Decided:** 2022-07-13
- **Case number:** Civil Appeal Nos. 4021of 2022
- **Bench:** Hemant Gupta, V. Ramasubramanian
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/swami-samarth-sugars-and-agro-industries-ltd-v-loknete-marutrao-ghule-patil-35548
- **Pages:** 38

## Headnote

Essential Commodities Act, 1955:s. 3 - Sugarcane(Control)
Order, 1966 - clause 6A, 6C & 6D -Restriction on setting two sugar
factories - Time limit for implementing Industrial Entrepreneur
Memorandum (IEM) - In 2010, the appellant applied for IEM which
was acknowledged by Govt. of India on the basis of a certificate
regarding aerial distance between the existing sugar factory
(Respondent no. 1) set up in 1974 and the nearby proposed sugar
factory -Writ petitions were filed challenging the grant of IEM to
the Appellant, one on the ground of aerial distance of proposed
sugar factory and existing factory was more than 15 kms and that
the proposed sugar factory falls within the radius of 500 meters
from the bank of river thereby falling under no development zone -
High Court held that the appellant is required to comply with all
laws including the anti-pollution, environmental protection and
ecology; and that the issue of aerial distance certificate cannot be
reopened again-Subsequently the State of Maharashtra directed
that in terms of proviso to Clause 6A of the Control Order, 1966 no
new sugar factory would be set up within the radius of 25 kms of
any existing sugar factory or any other new factory- Thereafter,
the time limit for implementing industrial entrepreneur memorandum
was amended - Appellant then sought NOC in view of the order of
the High Court which was not granted by State authorities -
Consequently, the appellant applied for extension of time and
change of location due to earlier location being no development
zone and was accepted - Writ petition by the existing sugar factory
challenging grant of extension and change of location- Government
allowed the extension a couple to times till 2020- Another writ
petition filed by the existing sugar factory challenging grant of
extension and change of location - High Court held that the
appellant had not taken any effective steps within the period of two
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years from the date of the acknowledgement of EMI; that the IEM
stood de-recognized before the Sugar Control Order was amended
on 26.08.2016 which extended the period of implementation;that
extensions were granted in violation to the provisions of the Rules
and the Statute; and that as per the amendment, the new sugar
factory had to be at a distance of not less than 25 kms-Issue arose
as regards, whether in the absence of any interim order against the
appellant in the first round of litigation, the period during which
writ petitions were pending are liable to be excluded; whether the
State/ Central Government was justified in excluding such period
while granting extension of IEM; whether the lis initiated against
the appellant is a sufficient reason to exclude the period spent in
such litigation and was a reasonable ground for the State/Central
Government to extend IEM; whether the amended Control Order in
terms of proviso to Clause 6C as amended by the State of
Maharashtra on 03.12.2011 would be applicable when the High
Court in the earlier writ petition has held that the issue of Aerial
Distance Certificate cannot be reopened at the instance of the
appellant or any other party again, and whether the IEM stands
lapsed on the failure on the part of entrepreneur to set up the sugar
factory and start production within the time specified in Clause 6C
or such lapsing would be only after an order in terms of Clause 6D
of the Control Order is passed - Held: Latin maxim 'Actus Curiae
Neminem Gravabit', states that the act of the Court will not prejudice
anyone - During the whole litigation history, the appellant was at
the receiving end of the writ petitions, thus, the period spent in such
lis cannot be used against him - Though there was no interim order
passed in the writ petitions, such petitions created a cloud on the
right of the appellant to set up a sugar factory at the location
earmarked and to commence commercial production - Writ petitions
remained pending for a period of four years, the period spent i

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 [2022] 17 S.C.R. 54
54
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES LTD.
v.
LOKNETE MARUTRAO GHULE PATIL DNYANESHWAR
SAHAKARI SAKHAR KARKHANA LTD & ORS.
(Civil Appeal Nos. 4021of 2022)
JULY 13, 2022
[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]
Essential Commodities Act, 1955:s. 3 - Sugarcane(Control)
Order, 1966 - clause 6A, 6C & 6D -Restriction on setting two sugar
factories - Time limit for implementing Industrial Entrepreneur
Memorandum (IEM) - In 2010, the appellant applied for IEM which
was acknowledged by Govt. of India on the basis of a certificate
regarding aerial distance between the existing sugar factory
(Respondent no. 1) set up in 1974 and the nearby proposed sugar
factory -Writ petitions were filed challenging the grant of IEM to
the Appellant, one on the ground of aerial distance of proposed
sugar factory and existing factory was more than 15 kms and that
the proposed sugar factory falls within the radius of 500 meters
from the bank of river thereby falling under no development zone -
High Court held that the appellant is required to comply with all
laws including the anti-pollution, environmental protection and
ecology; and that the issue of aerial distance certificate cannot be
reopened again-Subsequently the State of Maharashtra directed
that in terms of proviso to Clause 6A of the Control Order, 1966 no
new sugar factory would be set up within the radius of 25 kms of
any existing sugar factory or any other new factory- Thereafter,
the time limit for implementing industrial entrepreneur memorandum
was amended - Appellant then sought NOC in view of the order of
the High Court which was not granted by State authorities -
Consequently, the appellant applied for extension of time and
change of location due to earlier location being no development
zone and was accepted - Writ petition by the existing sugar factory
challenging grant of extension and change of location- Government
allowed the extension a couple to times till 2020- Another writ
petition filed by the existing sugar factory challenging grant of
extension and change of location - High Court held that the
appellant had not taken any effective steps within the period of two
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years from the date of the acknowledgement of EMI; that the IEM
stood de-recognized before the Sugar Control Order was amended
on 26.08.2016 which extended the period of implementation;that
extensions were granted in violation to the provisions of the Rules
and the Statute; and that as per the amendment, the new sugar
factory had to be at a distance of not less than 25 kms-Issue arose
as regards, whether in the absence of any interim order against the
appellant in the first round of litigation, the period during which
writ petitions were pending are liable to be excluded; whether the
State/ Central Government was justified in excluding such period
while granting extension of IEM; whether the lis initiated against
the appellant is a sufficient reason to exclude the period spent in
such litigation and was a reasonable ground for the State/Central
Government to extend IEM; whether the amended Control Order in
terms of proviso to Clause 6C as amended by the State of
Maharashtra on 03.12.2011 would be applicable when the High
Court in the earlier writ petition has held that the issue of Aerial
Distance Certificate cannot be reopened at the instance of the
appellant or any other party again, and whether the IEM stands
lapsed on the failure on the part of entrepreneur to set up the sugar
factory and start production within the time specified in Clause 6C
or such lapsing would be only after an order in terms of Clause 6D
of the Control Order is passed - Held: Latin maxim 'Actus Curiae
Neminem Gravabit', states that the act of the Court will not prejudice
anyone - During the whole litigation history, the appellant was at
the receiving end of the writ petitions, thus, the period spent in such
lis cannot be used against him - Though there was no interim order
passed in the writ petitions, such petitions created a cloud on the
right of the appellant to set up a sugar factory at the location
earmarked and to commence commercial production - Writ petitions
remained pending for a period of four years, the period spent in
defending such writ petitions was validly taken into consideration
by the State/Central Government to grant extension of time limit
fixed in the Control Order - Extensions were given when the second
round of litigation was pending before the High Court due to which
the appellant was not able to take effective steps- Decision of the
competent authority to grant extensions of time was a proper exercise
of the powers- the subsequent amendment in the Control Order would
not have any application towards the IEM already issued-Unless
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
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the performance guarantee is forfeited, there is no lapsing of IEM
-Twin conditions have to be fulfilled, (i) failure to set up plant and
to commence production and then (ii) the forfeiture of the
performance guarantee - Second will not arise unless the first is
satisfied and the second step cannot be undertaken, without
complying with an opportunity of personal hearing in terms of
Clause 6D of the Control Order - Unless the necessary
consequences of de- recognition of IEM are undertaken, there is
no automatic lapsing of IEM - Appellant had furnished a
performance guarantee of Rs. 1 crore, however, no steps taken either
by State Government or by the Central Government to forfeit such
performance guarantee inasmuch as not even a show cause notice
was issued - Thus, a conclusion cannot be drawn that the IEM is
deemed to be lapsed automatically only on account of lapsing of
time -Order passed by the High Court, is unsustainable and is set
aside.
Allowing the appeal, the Court
HELD: 1.1. The latin maxim 'Actus Curiae Neminem
Gravabit' i.e., the act of the Court will not prejudice anyone, is
well known, but the applicability of the same to the facts of the
present circumstances need to be examined. The appellant was
justified in not taking any effective steps pending such lis, as
contemplated under Explanation 4 to Clause 6A of the Control
Order. The arial distance is one of the foremost requirements
for a valid IEM. Injury, if any, caused by the act of the Court shall
be undone and the gain which the party would have earned, unless
it was interdicted by the order of the Court would be restored to
or conferred on the party by suitably commanding the party liable
to do so. The Court noticed that the litigation may turn into a
fruitful industry. Though litigation is not gambling yet there is an
element of chance in every litigation. Unscrupulous litigants may
feel encouraged to approach the courts, persuading the court to
pass interlocutory orders favourable to them by making out a
prima facie case when the issues are yet to be heard and
determined on merits and if the concept of restitution is excluded
from application. [Para 23][74-G-H; 75-A-D]
1.2. The appellant was at the receiving end of the writ
petitions filed and was at the receiving end of such litigation and
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the period spent in such lis cannot be used against the appellant
[Para 24][76-F]
1.3. Though there was no interim order passed in the writ
petitions, such petitions created a cloud on the right of the
appellant to set up a sugar factory at the location earmarked and
to commence commercial production. The writ petitions remained
pending for a period of four years. Therefore, the period spent in
defending such writ petitions was validly taken into consideration
by the State/Central Government to grant extension of time limit
fixed in the Control Order. Government of India granted
extension on 14.11.2018 when the Control Order as amended on
12.08.2018 was operative and effective. The amendments carried
out in Control Order were for the benefit of the entrepreneurs,
therefore, the Control Order as it existed on the date of the
extension would be applicable. It is in terms of such Clause that
the appellant was called upon to furnish additional bank guarantee
of Rs. 50 Lakhs. Hence, the power exercised by the Central
Government is in terms of the statutory Control Order as
amended on 14.11.2018. [Para 26][78-B-D]
1.4 The Aerial Distance Certificate was categorically
declared to be not open to challenge even though the State had
amended the Control Order on 03.11.2011 to increase the
distance between the existing sugar factory and the new factory
was increased to 25 kilometers. Even though the Control Order
was already amended by the State, but the High Court held that
the aerial distance would be as applicable on the date of IEM
acknowledged by the Central Government. It is to be noted that
there is no challenge to the order passed by the High Court in
the first round of the litigation. Therefore, even the High Court
in the second round of litigation was not within its jurisdiction to
hold that the amended distance regulations would be applicable.
[Para 27][78-G-H; 79-A]
1.5. The language of the Control Order has been amended
time and again with a view to enable the competent authority to
grant extension of time due to "unforeseen circumstances". The
Control Order amended on 12.08.2018 contemplates more than
one unforeseen circumstance beyond the control of the person
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
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concerned. It also empowers the competent authority to extend
the validity of IEM where the delay is due to any court case
relating to land use, environment or "such other reason". Subclause (c) of Clause 6C empowers the competent authority to
grant further extension for a period of not exceeding a year at a
time subject to furnishing of a bank guarantee. Therefore, the
objective and purpose of such amended Control Order is that a
sugar mill should commence production by excluding the period
spent in the court cases. Though the appellant was the defender
of the IEM granted and there was no stay in the first round of
litigation, but the extension granted would fall under the category
of "such other reason". In the first round of litigation, challenge
was to the Aerial Distance Certificate, the writ petitioners have
failed in such challenge but the High Court rightly interdicted
that the appellant is required to comply with the anti- pollution
laws in the field and the laws relating to preservation of ecology
and environment. Such order led to the appellant looking for
alternative location in view of the denial of no-objection certificate
by Godawari Marathwada Irrigation Development Corporation.
Therefore, the period spent in litigation for the years 2010-2014
has been rightly excluded by the competent authority. [Para
29][79-D-H; 80-A-B]
1.6. In the absence of any finding by the High Court to the
effect that the decision of the Central Government is so arbitrary,
irrational or unjust. The High Court has gravely erred in taking
into consideration that appellant was remiss in not implementing
IEM during the pendency of the writ petitions in the first round
of litigation. [Para 31][82-D-E]
1.7. The scheme of the Control Order shows that once IEM
is granted, the timeline has to be determined keeping in view
the date of the issuance of the IEM. Therefore, subsequent
amendment would be applicable in respect of new sugar factory
which may be proposed to be set up. IEM fixes the timeline from
the date of issuance of the same and the subsequent amendment
in the Control Order would not have any application towards the
IEM already issued.[Para 32][82-F-G; 83-A]
1.8. All the extensions were granted when the matter was
still pending before the High Court and were subject to the
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outcome of the writ petitions. Therefore, the objections regarding
frequent grant of extension of IEM are not of much substance.
[Para 40][86-A-B]
1.9. The Decision of the competent authority to grant
extension of time is proper exercise of the powers conferred on
it and cannot be said to be illegal, irrational or suffering from
procedural impropriety [Para 41][86-C]
1.10. Though Clause 6C as applicable on 10.11.2006 as well
as on 24.08.2016 and 12.08.2018 contemplates the IEM shall
stand de- recognised and the performance guarantee shall be
forfeited, the performance guarantee is to be forfeited in terms
of Clause 6D after providing the reasonable opportunity of being
heard. The twin conditions have to be fulfilled- (i) failure to set
up plant and to commence production and then (ii) the forfeiture
of the performance guarantee. Second will not arise unless the
first is satisfied and the second step cannot be undertaken, without
complying with an opportunity of personal hearing in terms of
Clause 6D of the Control Order. Unless the performance
guarantee is forfeited, there is no lapsing of IEM. Thus, unless
the necessary consequences of de- recognition of IEM are
undertaken, there is no automatic lapsing of IEM. Such is the
language in the subsequent amended Control Orders as well.
The appellant had furnished a performance guarantee of Rs. 1
crore, however no steps were taken either by the State
Government or by the Central Government to forfeit such
performance guarantee inasmuch as not even a show cause notice
was issued. Thus, a conclusion cannot be drawn that the IEM is
deemed to be lapsed automatically only on account of lapsing of
time. [Para 44][86-G-H; 87-A-D]
1.11.The appellant cannot be denied the benefit of setting
up of a sugar mill only on the basis of resistance from the
competitor, who had only financial interest in mind. In case of a
competition, it is the consumer (farmer) who is the beneficiary.
In the present case, the farmers are not getting the advantage of
competition which could fetch them timely payment and better
services [Para 45][87-G]
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
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1.12. The reasoning given by the Central Government that
in order to avoid unhealthy competition, the licensing under the
Industries (Development and Regulation) Act, 1951 was done
away with on 31.08.1998. Unhealthy competition has two major
aspects- one relating to the existing and new sugar factory, and
second in the context of the farmers. On account of competition
between the existing and new sugar factory, it would be the
farmers who will be the beneficiary as they would have an option
to select the sugar mill which provides better service in the
manner of payment of price. Keeping in view the
recommendations of the Rangarajan Committee and the fact that
the Central Government has exercised its jurisdiction to grant
extension in time, the ultimate beneficiary would be the farmer
and not the existing or the new sugar factory. [Para 50][91-D-E]
1.13. The order of the High Court was held to be
unsustainable. The writ petitions are dismissed. The period spent
in the second round of litigation shall also be excluded while
determining the period during which the plant had to be set up
and to commence commercial production. [Para 51][91-F]
South Eastern Coalfields Ltd. v. State of M.P. and Others
(2003) 8 SCC 648 : [2003] 4 Suppl. SCR 651, Beg Raj
Singh v. State of U.P. and Others (2003) 1 SCC 726 :
[2002 ] 5 Suppl. SCR 530 - relied on.
M/s Ojas Industries (P) Ltd v. M/s Oudh Sugar Mills
Ltd. AIR 2007 SC 1619 : [2007] 4 SCR 661, Tata
Cellular v. Union of India (1994) 6 SCC 651: [1994] 2
Suppl. SCR 122, Babaji Kondaji Garad v. Nasik
Merchants Co-operative Bank Ltd., Nasik and Others
(1984) 2 SCC 50 : [1984 ] 1 SCR 767, Dhananjaya
Reddy v. State of Karnataka (2001) 4 SCC 9 : [2001] 2
SCR 399 - referred to.
Case Law Reference
[2007] 4 SCR 661
referred to
Para 18& 33
[2003] 4 Suppl. SCR 651
relied on
Para 23,28 & 29
[2002] 5 Suppl. SCR 530
referred to
Para 25
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[1994] 2 Suppl. SCR 122
relied to
Para 30
[1984 ]1 SCR 767
referred to
Para 38
2001] 2 SCR 399
referred to
Para 38
CIVIL APPELLATE JURISDICTION : Civil Appeal No.4021
of 2022.
From the Judgment and Order dated 23.07.2021 of the High Court
of Judicature at Bombay Bench at Aurangabad in Writ Petition No.6754
of 2020.
With
Civil appeal nos.4022 and 4023 of 2022.
Mukul Rohatgi, C. A. Sundaram, Anil Y. Sakhare, Harish Salve,
P. Chidambaram, Ms. Sonia Mathur, R. N. Dhorde, Sr. Advs., Dilip
Annasaheb Taur, Nikhil Rohatgi, Rohan S. Mirpury, Shashank Khurana,
Ms. Manjeet Kirpal, Nand Kumar Deshmukh, M. Y. Deshmukh,
Adweetiya, Durga Dutt, Harish Pandey, Shailesh Madiyal, Sharath
Nambiar, Vinayak Sharma, Mohd. Akhil, P. V. Yogeswaran, Amrish
Kumar, Raj Bahadur Yadav, Manan Verma, Ms. Shubhangi Tuli, Ms.
Tanya Agarwal, Ms. Mridula Singh Chauhan, Hitesh Kumar Sharma, S.
K. Rajora, Akhileshwar Jha, E. Vinay Kumar, Ms. Manju Jetley,
Anshuman Ashok, Rahul Chitnis, Sachin Patil, Aaditya P. Pande, Geo
Joseph, Ms. Shwetal Shepal, Advs. for the appearing parties.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.
1. The present appeals arise out of the three writ petitions which
were decided by a common order dated 23.07.2021. Two of the writ
petitions were filed by the respondent herein - Loknete Marutrao Ghule
Patil Dnyaneshwar Sahakari Sakhar Karkhana Ltd.1, whereas the third
one was filed by the members of the existing sugar factory. Since the
issue raised in all the three writ petitions was common, therefore, the
same was decided by the High Court by a common order.
2. In the writ petitions, direction was sought that the Industrial
Entrepreneur Memorandum2 dated 8.9.2010 be de-recognised/cancelled
in view of the provisions of Clause 6C of the Sugarcane (Control) Order,
1 Existing Sugar Factory
2 For short, 'IEM'
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
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19663. The challenge was inter alia on the ground that the time limit for
a new factory to be set up was 2 years and to commence production
was within 4 years (2+4), but the appellant failed to take any effective
steps to set up and commence production within such time frame
contemplated by the Control Order. Another ground was that the State
of Maharashtra had issued a circular on 03.12.2011 under Clause 6A of
the Control Order that no sugar factory shall be set up within the radius
of 25 kms of any existing sugar factory or any other new factory
substituting the provisions that the minimum distance was for 15 kms
existing on the date of grant of IEM, therefore, the proposed sugar factory
does not meet the norm of 25 kilometers. Finally, it was contended that
in the absence of steps for setting up of a sugar factory and
commencement of the commercial production, the IEM stands derecognised by operation of the provision of the Control Order. Therefore,
the grant of extensions to set up the sugar factory issued on 14.11.2018
followed by another extension of time and to change the location on
17.10.2019 by the Central Government was contrary to the Control Order.
3. The brief facts leading to the present appeals are that the existing
sugar factory was set up in the year 1974, claiming to have more than
15000 members with crushing capacity as 1250 M.T. in the year 197475 which was increased to 7000 M.T. per day in the year 2014-15. The
said sugar factory had also set up a Distillery Plant, Co-generation Plant,
Ethanol Plant and enhanced its crushing capacity of 6000 M.T. per day
after a fresh IEM was issued on 01.05.2012.
4. The appellant applied for IEM on 08.09.2010, the same was
acknowledged by Government of India after Commissioner of Sugar,
Maharashtra issued a certificate regarding aerial distance between the
existing sugar factory and the nearby proposed sugar factory in Ramdoh
(Warkhed), Tehsil- Newasa, District- Ahmednagar. It was reported that
aerial distance between the sites of other sugar factories adjacent to the
proposed sugar factory at Ramdoh (Warkhed), Tehsil- Newasa, DistrictAhmednagar was more than 15 kms. On the basis of such certificate,
IEM was acknowledged after the appellant furnished a bank guarantee
of the sum of Rs. 1 crore which was to remain in force up to 04.04.2016.
5. However, a writ petition was filed soon thereafter on 23.09.2010,
challenging the IEM granted to the appellant on the ground of aerial
distance of proposed sugar factory and existing sugar factory. Another
writ petition was filed on 17.03.2011 challenging the IEM on the ground
3 For short, 'Control Order'
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that the proposed sugar factory was not complying with the provisions
of Environmental Protection Act, 1986. Both the writ petitions were
decided on 27.01.2014 wherein the High Court passed the following
order:
"4. Bare perusal thereof indicates that no new sugar factory shall
be set up within the radius of 15 kms of any existing sugar factory
or another new sugar factory in a State or two or more States.
The proviso has also been inserted in the Control Order to ensure
that the restriction on setting up of two sugar factories within the
radius of 15 kms is complied with.
5. The petitioners have pointed out, and in all fairness, that a
certificate has been issued by the Commissioner of Sugar,
Maharashtra State, Pune pointing out that the aerial distance
between the sites of other sugar factories, adjacent to respondent
No.8 is more than 15 kms.
6. This certificate, dated 17.08.2010, therefore, is in compliance
with the requirement in Clause 6-A reproduced above. That is the
only aspect with which this Court is concerned so far as the
petitioners in this petition are concerned.
7. Now, the Writ petitioners and the PIL petitioners are raising
another issue, namely, the proposed sugar factory not complying
with the provisions of the Environmental Protection Act, 1986
and it would indicate as to how the same falls within the radius of
500 meters from the bank of river and therefore, it is falling within
no development zone and hence it cannot be set up.
8. After hearing the petitioners on this point, merely because
Clause 6-A has been complied with, it does not mean that the
sugar factory or the proposed sugar factory have not to comply
with other laws. They are obliged to comply with the anti-pollution
laws in the field and the laws relating to preservation of ecology
and environment as well. It is only thereafter and other laws and
Rules in the field being complied with that any question arises of
these sugar factories becoming functional. For the present, the
stand taken in the affidavit by the authorities need not be probed
further. In the event, respondent No.6 carries out construction
and development, then needless to clarify that the said respondent
will have to comply with all laws including the anti-pollution,
environmental protection and ecology.
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
P. D. SAHAKARI SAKHAR KARKHANA [HEMANT GUPTA, J.]
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9. In such circumstances, the petitions need not be kept pending.
They are disposed of. However, the issue of aerial distance
certificate cannot be reopened at the instance of the petitioner or
any other party again."
6. The sugar industry was deleted from the list of industries
requiring compulsory licensing under the provisions of the Industries
(Development and Regulation) Act, 1951 on 31.08.1998. However, the
condition of minimum distance of 15 kms as provided by the Control
Order issued under Section 3 of the Essential Commodities Act, 19554
was ordered to continue in order to avoid unhealthy competition amongst
sugar factories.
7. The Control Order was issued in exercise of the powers
conferred under Section 3 of the 1955 Act. Some of the relevant
conditions, as amended on 10.11.2006, read thus:
"6A. Restriction on setting of two sugar factories with in
the radius of 15 kms:-
Notwithstanding anything contained in Clause 6, no new
sugar factory shall be set up within the radius of 15 kms of any
existing sugar factory or another new sugar factory in a State or
two or more States:
Provided that State Government may with the prior approval
of the Central Government where it considers necessary and
expedient on public interest notify such minimum distance higher
than 15 kms or different minimum distances not less than 15 kms
for different regions in their respective States.
Xxx
xxx
xxx
Explanation 4: The effective steps shall mean the following steps
taken by the concerned person to implement than Industrial
Entrepreneur Memorandum for setting up of sugar factory:-
(a) Purchase of required land in the name of the factory.
(b) Placement of firm order for purchase of plant and machinery
for the factory and payment requisite advanced and opening of
irrevocable letter of credit with suppliers.
€ Commencement of civil works and construction of building for
the factory.
4 1955 Act
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(d) Sanction of requisite terms loans from bank or financial
institutio€(e) Any others steps prescribed by the Central
Government in this regard through a notification.
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6C. Time limit to implement Industrial Entrepreneur
Memorandum
The stipulated time for taking effective steps shall be two years
and commercial production shall commence within four years with
effect from the date of filing of Industrial Entrepreneur
Memorandum with the Central Government, failing which the
Industrial Entrepreneur Memorandum shall stand derecognized
as far as provisions of this Order are concerned and the
performance guarantee shall be forfeited.
Provided that the Chief Director (Sugar), Department of Food &
Public Distribution, Ministry of Consumer Affairs, Food & Public
Distribution, on the recommendation of the concerned State
Government, may give extension of one year not exceeding six
months at a time, for implementing the Industrial Entrepreneur
Memorandum and commencement of commercial production
thereof.
6D. Consequences of non-implementation of the provision
laid down in clauses 6B and 6C:-
If an Industrial Entrepreneur Memorandum remains
unimplemented within the time specified in clause 6C, the
performance guarantee furnished for its implementation shall be
forfeited after giving the concerned person a reasonable
opportunity of being heard."
8. The Government of Maharashtra, after approval of the Central
Government, directed on 03.12.2011 that in terms of proviso to Clause
6A, no new sugar factory shall be set up within the radius of 25 kms of
any existing sugar factory or any other new factory.
9. On 24.08.2016, the Control Order was amended, when Clause
6C was substituted and a proviso was inserted after Clause 6D. Such
amendment reads thus:
"6C. Time limit for implementing Industrial Entrepreneur
Memorandum- The stipulated time for taking effective steps
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
P. D. SAHAKARI SAKHAR KARKHANA [HEMANT GUPTA, J.]
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shall be three years and commercial production shall commence
within five years with effect from the date of filing the Industrial
Entrepreneur Memorandum with the Central Government, failing
which the Industrial Entrepreneur Memorandum shall stand derecognised as far as provisions of this Order are concerned and
the performance guarantee shall be forfeited:
Provided that the Chief Director (Sugar), Department of
Food and Public Distribution, Ministry of Consumer Affairs, Food
and Public Distribution may, after the expiry of the aforesaid period,
give extension of maximum two years, not exceeding more than a
year at a time, in cases involving delay due to any unforeseen
circumstances beyond control, such as natural calamities, drought
or non-availability of sugarcane (raw material) during off season
in a year wherein the extended validity period terminates, nonfinancing of sugar sectors, stay on permission for land use by the
courts due to environmental or other reason. In all such cases
extension shall be granted in consultation with respective State
Governments, if necessary, either for taking effective steps or for
commencement of sugar production.
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6D.
Provided that the performance guarantee shall be returned if-
(i) the commercial production is commenced within the
stipulated period of seven years including two years of
extension;
(ii) the commercial production is not commenced even after
seven years for reasons not attributable to the project proponent
and the same is fully established on merit and be recorded in
writing;
(iii) the project proponent suomotu, opts to forego its Industrial
Entrepreneur Memorandum within two years from the date of
its filing and requests for return of performance guarantee with
due justification."
10. The Control Order was subsequently amended on 12.08.2018,
again substituting Clause 6C which reads as thus:
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"6C. Time limit for implementing Industrial Entrepreneur
Memorandum-
(1) The stipulated time for taking effective steps as specified in
explanation 4 to clause 6A shall be three years and the commercial
production of sugar shall commence within five years from the
date of filing of the industrial entrepreneur memorandum with the
Central Government under sub-clause (1) of clause 6B failing
which the Industrial Entrepreneur Memorandum shall stand
Defendant-recognized as provided in sub-clause (2) thereof, and
the performance guarantee furnished thereunder shall be forfeited:
(2) The time limit specified under sub-clause (1) may be extended
in the following manner, namely:-
(a) Where the delay is due to any unforeseen circumstances beyond
the control of the person concerned such as natural calamities
including drought, non-availability of sugarcane (raw material)
during off season in the year in which the stipulated period
terminates and non-financing of sugar sectors, the Chief Director
(Sugar), Department of Food and Public Distribution, Ministry of
Consumer Affairs, Food and Public Distribution may, after the
expiry of five years' period stipulated under sub-clause (1) extend
the period stipulated under sub-clause (1) for a further period of
two years, not exceeding more than a year at a time;
Provided that such extension may be granted for taking
effective steps or for the commencement of commercial production
of sugar, in consultation with the State Government concerned, if
considered necessary.
Provided further that in case the commercial production
does not commence within such extended period, the bank
guarantee furnished under sub-clause (2) of clause 6B shall be
forfeited;
(b) Where the delay is due to any court case relating to land use,
environment or such other reason, that may have arisen within
five year from the date of filing of Industrial Entrepreneur
Memorandum, the Chief Director (Sugar), Department of Food
and Public Distribution, Ministry of Consumer Affairs, Food and
Public Distribution may, after the expiry of five years' period
stipulated under sub-clause (1), extend the period stipulated under
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
P. D. SAHAKARI SAKHAR KARKHANA [HEMANT GUPTA, J.]
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sub-clause (1) initially for a further period of two years, not
exceeding more than a year at a time;
Provided that such extension may be granted for taking effective
steps or for the commencement of commercial production of sugar,
in consultation with the State Government concerned and the
Department of Legal Affairs in the Ministry of Law and Justice,
if considered necessary.
(c) in case where such delay due to Court case relating to land
use, environment or such other reason, continues beyond the period
extended under item (b), the Chief Director (Sugar), Department
of Food and Public Distribution, Ministry of Consumer Affairs,
Food and Public Distribution may grant extension of such further
period, as he deems fit, no exceeding more than a year at a time,
subject to furnishing of a bank guarantee of rupees fifty lakhs for
each year for which the extension is sought, which shall be in
addition to the bank guarantee furnished under sub-clause (2) of
clause 6B;
Provided that such extension may be granted for taking effective
steps or for the commencement of commercial production of sugar,
in consultation with the State Government concerned and the
Department of Legal Affairs in the Ministry of Law and Justice,
if considered necessary;
Provided further that in case the commercial production does not
commence within any such extended period of one year, such
bank guarantee of rupees fifty lakhs so furnished for that one
year of extension shall be forfeited and if commercial production
does not commence within any of such extended period, the bank
guarantee furnished under sub-clause 6B shall also be forfeited."
11. The appellant sought no-objection certificate on 14.04.2014 in
view of the order of the High Court that if the appellant (respondent
No.6 in the writ petition) wishes to carry out construction and
development, then the appellant would have to comply with all laws,
including anti-pollution, environmental protection and ecology but the
Godawari Marathwada Irrigation Development Corporation refused to
grant no objection certificate on 22.04.2014.
12. Hence, the appellant applied for extension of time and for
change of location within the same taluka and same group of gram
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panchayat due to earlier location being no development zone, as noted
by the High Court in its order dated 27.01.2014 that the proposed sugar
factory falls within the radius of 500 meters from the bank of river. Such
request was submitted on 16.06.2014, soon after the order of the High
Court dated 27.1.2014. The appellant sought change of location inter
alia on the following grounds:
"6. ......... I state that as now the G.M.I.D.C. refused to issue
N.O.C this undersigned now to take steps to search other land/
location as per the earlier I.E.M and within the Aerial Distance
Certificate and therefore to take search for another land which
complies all the conditions and this undersigned requires more
time and therefore, the time as stipulated as per the Sugarcane
Control Order needs to be extended and also considering the time
spent on all the legal proceeding the validity of the bank guarantee
also considering the time spent on all the legal proceeding the
validity of the bank guarantee also needs to be extended.
7. I further state that the proposed location complies all the norms
of the survey of India as well as Aerial Distance as prescribed all
the authorities including the GNIDC Pollution Control Board and
other State Authorities may take time to issue necessary
permission and no objection certificates that's the reason, the time
needs to be extended to set up the sugar factory as per the I.E.M."
13. Even while the matter was pending with the State/Central
Government for amendment and extension of the IEM, the first writ
petition was filed in 2017 after the appellant had approached State
Authorities to measure aerial distance of the proposed location (Writ
Petition No. 13836 of 2017). The second writ petition was filed on or
about 26.2.2018 by the existing sugar factory after Aerial Distance
Certificate was issued to the appellant and report dated 02.01.2018 was
submitted by the State of Maharashtra to the Union recommending grant
of extension and change of location. The State in its comments to the
Central Government in response to the appellant's seeking extension
and to change of location, stated as under:
"1. Extension of IEM
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Recently Shri Eknath Bhanudas Barge & Ors has filed writ petition
no. 13836/2017 on 27.11.2017 in Hon'ble High Court Bench
SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES v. LOKNETE M. G.
P. D. SAHAKARI SAKHAR KARKHANA [HEMANT GUPTA, J.]
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Aurangabad regarding location. This office has no objection for
extension of IEM considering the intervening period of litigation.
2. Change in Location
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According to your office letter dated 15 September, 2015, this
office has intimated to Survey of India vide letter dated 17 October
2015 to measure the aerial/redial distance for the location
Malewadi Dumala, Tal. Newasa, Dist Ahmednagar of M/s Swami
Samarth Sugar & Agro Industries Ltd., the Survey of India has
submitted aerial distance report between pillars of proposed sugar
factory and chimney of existing sugar factories vide letter dated
01 January, 2018. The copy of this letter is also enclosed for
reference. In this regard a Writ Petition No. 13836/2017 has filed
on 27.11.2017 before Hon'ble High Court Bench Aurangabad.
The request of factory regarding change in location may be duly
considered at your level."
14. The Government of India on 14.11.2018, after considering the
comments of the State Government dated 2.1.2018, allowed the extension
by observing as under:
"4. The sugar factory of M/s. Swami Samarth Sugar & Agro
Industries Ltd. ( M/s. SSSAIL) was taken on record as New
Sugar Factory as provided in explanation 2 to clause 6A of
Sugarcane (Control) Order 1966, vide order dated 14.11.2018 in
reference of IEM No. 3033/SIA/IMO 2010 dated 08.09.2010 for
establishment of new sugar mill at Warkhed (Ramdoh) Tal.
Newasa, Distt. Ahmednagar, Maharashtra.
5. M/s. SSAIL vide their letters dated 04.01.2018 and 06.11.2018
have mentioned that they could not take effective steps, primarily,
due to involvement of court cases, severe drought condition and
reluctance of bank/financial institutions to finance the project.
Delay appears beyond the control of project proponent.
6. Moreover, Commissioner of Sugar, Maharashtra State vide their
letter dated 02.01.2018 have, in principal, given permission for
extension of IEM No. 3033/SIA/IMO/2010 dated 08.09.2010 for
establishment of new sugar mill at Warkhed (Ramdoh), Tal.
Newasa, Distt. Ahmednagar, Maharashtra."
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15. Further extensions were given in similar background on
15.11.2018, 12.04.2019 and 09.05.2019. The appellant submitted bank
guarantees of Rs.50,00,000/- on 09.09.2019 and of Rs.37,30,000/- on
10.10.2019. Request for extension of time and for change of location
was accepted on 17.10.2019 and one year further extension was granted
up to 07.09.2020 to implement the IEM dated 08.09.2010. On 14.08.2020,
the request for change of location was accepted and the existing location
was deleted and the new location, "Gat No. 18, Malewadi Dumala, Tal.
Newasa, Ahmednagar, Maharashtra" was inserted.
16. The third writ petition was filed on or about 1.10.2020 by the
existing sugar factory challenging the extension granted and change of
location permitted by the Central Government on 14.08.2020. It was
averred in the writ petition that the area of operation of the said existing
sugar factory is 92 villages in Newasa Taluka and 122 villages in Shevgaon
Taluka. In the counter affidavit filed on behalf of the appellant, it was
inter alia averred that the existing sugar factory is trying to create its
monopoly in respect of its geographical zone while there is ample
sugarcane available in the said area. The existing sugar factories are not
in a position to harvest the entire sugarcane cultivated in the area on
account of which the helpless farmers are forced to approach other
sugar factories in the district for getting their sugarcane harvested. The
existing sugar factory had even opposed the setting up of a Gangamai
Industries and Construction Limited in Taluka Shevgaon by filing a Writ
Petition No. 3063 of 2009.