P. v. K. Distillery Ltd. VS State of Uttar Pradesh
1986-04-05
B.N.SAPRU, K.P.SINGH
body1986
DigiLaw.ai
JUDGMENT B.N. Sapru, J. - The petitioner is a Public Limited Company and holds a licence in Form PO-2 for the manufacture of both industrial and potable spirit in their distillery at Nandganj, district Ghazipur. A person holding a licence in form PO-2 can manufacture spirit (a) to supply it to a warehouse within their contract area and (b) for selling it to Government or to such licensed vendors and other persons as are entitled to purchase spirit direct from the distillery. The petitioner's distillery started production in November, 1981, and shortly thereafter was granted a CLI licence for the supply to the licensed vendors of Ghazipur, Mirzapur and Sultanpur for the excise year 1982-83. 2. The petitioner was allotted molesses for its manufacturing purposes by the Molasses Controller who incidently is the Excise Commissioner. 3. On February 8, 1978 the Excise Commissioner had issued a notification No. 10908/IX-241 A dated 8-2-1978. It prescribed the minimum recovery of alcohol at 52.5 litres of alcohol per quintal of fermentable sugar present in the molasses consumed for production of alcohol. This notification was issued under the rule making power vested in the Excise Commissioner under S. 14 of the Excise Act and the notification was referred to as the U.P. Excise Working Distilleries (Amendment) Rules, 1978, whereby the existing R. 15-B was substituted by a new R. 15-B containing the above provisions. 4. The petitioner's case is that the petitioner was able to comply with the requirement of the provisions of minimum recovery of alcohol in the years 1981-82 to 1983-84 as the petitioner was allotted good quality of molasses. However, the petitioner asserts that the molasses allotted during the year 1984-85 were of low grade and as such they were not able to produce 20 litres of alcohol per quintal from the allotted molasses. The petitioner asserts that during the year the petitioner was being supplied sub-grade molasses by the Sugar Factories who produced the molasses during the course of their manufacture of sugar. The petitioner repeatedly complained to the Excise Authority but to no avail. The petitioner then asserts that while the other distilleries have been allotted molasses for the first quarter of the molasses year 1985-86, beginning from November, 1985. No molasses for this quarter have been allotted to the petitioner.
The petitioner repeatedly complained to the Excise Authority but to no avail. The petitioner then asserts that while the other distilleries have been allotted molasses for the first quarter of the molasses year 1985-86, beginning from November, 1985. No molasses for this quarter have been allotted to the petitioner. The petitioner's grievance is that a meeting of the Monitering Committee on Molasses was held on 16-12-1985 under the Chairmanship of the Molasses Controller where the Molasses Controller informed that a policy for the current molasses year had been laid down by the Government. The policy as laid down by the State Government and as recorded in the minutes, were as follows: " vk;qDr us crk;k fd o"kZ 'khjs dh uhfr 'kklu }kjk fu/kkZfjr dh xbZ gS vkSj og ;g gS fd fdlh vklouh }kjk fiNys 10 o"kksZa esa vf/kdre mBk;s x;s 'khjs dh ek=k vkSj mldh vf/k"Bkfir {kerk o vuqekfur 'khjs dh ek=k fudky yh tk; vkSj ftl vk/kkj ij nksuksa esa ls de vkrk gks 'khjs dh ek=k mlh o"kZ esa ns; gksxhA bl ds vfrfjDr vklofu;ksa dh 1984&85 dh vydksgy dh fjdojh Hkh ns[kh xbZA ftu vklofu;ksa dh fjdojh 22&5&vydksgy fyVj izfr dqaVy 'khjs ls vf/kd gS] mUgsa mijksDr izdkj ls ns; 'khjs dh ek=k ls 15 izfr'kr vf/kd 'khjk fn;k x;k gSA ftu vklofu;ksa dh fjdojh 20 ls 22&5 vydksgy fyVj rd gS] mUgsa mruk gh 'khjk fn;k tk; ftruk mudk vf/k"Bkfir {kerk vFkok fiNys 10 o"kksZa ds mBku ij vk/kkj ij vk jgk gSA nksuksa esa ls tks de gks ftu vklofu;ksa dh vydksgy dh 15 ls 20 vydksgy fyVj izfdrdqaVy 'khjs dh vk jgh gS mudh 15 izfr'kr 'khjk de fn;k tk;s vkSj ftu vklofu;ksa dh fjdojh 15 vydksgy fyVj izfr dqaVy 'khjs ls Hkh de vk jgh gS mu vklofu;ksa dh tkap dh tk; vkSj tkap ds ckn 'kklu dh iwoZ vuqefr ls 'khjs dk vkcaVu fd;k tk;A blds vfrfjDr 'kklu us ;g Hkh funsZ'k fn;s gS fd tks vklofu;k vk;qDr }kjk vkcafVr vydksgy dh ek=k nwljh bdkb;ksa dks nsrh gS] mUgsa crkSj izksRlkgu ds 2 izfr'kr 'khjk vf/kd fn;k tk; vkSj tks vklofu;ka vk;qDr ds vkcaVu vkns'k dh vogsyuk djrh gS muds dkaVk esa ls 2 izfr'kr dkV fy;k tk; mijksDr ij o"kZ dk;Zokgh dh tk;sxhA " 5.
The petitioner states that the petitioner was informed that the petitioner had not been allotted any molasses as the petitioner's recovery during the year 1984-85 had been below 15 litres of alcohol per quintal of molasses. The petitioner then asserts that that they made representations in this regard to the Molasses Controller dated 3-12-1985 and a representation to the Chief Minister dated 1-12-1985 and also to Minister of Excise to release the quota of molasses so that the petitioner distillery could start production. The petitioner then states that the petitioner made an application to the Excise Commissioner on 23-12-1985 that the petitioner be allotted 2,50,000 bulk litres of rectified spirit from the distilleries but no order has been made so far. 6. In the Counter-affidavit filed by Sri Ram Saran Varshney, Joint Secretary to the Government, U.P. Excise Department it has been stated that the State Government had received complaints that actual production by some distilleries was even less than 50 per cent of their licensed capacity even during years of Molasses surplus, but such distilleries used to take, in years of Molasses scarcity, larger share of molasses on the basis of their Licensed capacity. There were complaints that some distilleries were showing less production of alcohol than the actual production and they were concealing and diverting the alcohol for their gain and showing poor recovery in their records. There were complaints that some distilleries were demanding very high price in excess of the price fixed under the Ethyl Alcohol Price Control Order and for that purpose they were delaying the supply of alcohol to alcohol consuming industries. In order to check malpractices, the State Government convened a meeting in which Molasses Controller was also present. After discussions in that meeting certain guidelines were agreed to and adopted by the Molesses Controller. The State Government have not usurped any power or powers of the Molasses Controller. The authority and discretion of the Molasses Controller remains unaffected under the Act. The purpose of the meeting and the guidelines (which were agreed to by the Molasses Controller) was only with a view to draw the attention of the Molasses Controller towards malpractices of the distilleries and to find out away to prevent such malpractices. This was only in order to implement and achieve the objectives of the Act. 7.
The purpose of the meeting and the guidelines (which were agreed to by the Molasses Controller) was only with a view to draw the attention of the Molasses Controller towards malpractices of the distilleries and to find out away to prevent such malpractices. This was only in order to implement and achieve the objectives of the Act. 7. As regards the quality of molasses supplied to the petitioner, the respondents' case is that the petitioner is the only distillery, in Uttar Pradesh which could not achieve the minimum production of 15 Litres of alcohol per quintal of molasses allotted to it. 8. According to the supplementary counter-affidavit of Har Narain Singh, the Excise Inspector, the petitioner was allotted 1,22,821.40 quintals of molasses during the period beginning from January to September, 1986 (Sic) out of which 80,077.1 quintals were of Grade A, 26,707.4 quintals of Grade B, 12,294.8 quintals of Grade C and only a small quantity of 3742.1 quintals of below grade molasses. In other words, the respondents are denying the petitioner's case that the petitioner was receiving such bad quality of molasses that it could not achieve even the minimum prescribed level of recovery of alcohol litres per quintal of the molasses allotted. The respondents' position, therefore, is that since the petitioner failed to achieve the minimum level of production of alcohol litre per quintal of molasses allotted, it has been denied the allotment of molasses during the current year. 9. These is U.P. Sheera Niyantran Adhiniyam, 1964 (hereinafter to be referred to as `the Act') in force in Uttar Pradesh being U.P. Act No.XXIV of 1964. The Act was passed to provide for control of storage, gradation and price of the molasses produced by the Sugar Factories in the Uttar Pradesh and the regulation of supply and distribution thereof. Under S. 7-A of the Act any person who requires molasses for his distillery or for any purpose of industrial development may apply in the prescribed manner to the Controller specifying the purpose for which it is required. Sub-sec. (2) thereof provides that on the receipt of an application under sub-sec. (1) the Controller may after making such enquiry as he thinks fit, make an order under S. 8 for allotment. Thereafter sub-sec. (3) thereof provides that in disposing of an application under sub-sec.
Sub-sec. (2) thereof provides that on the receipt of an application under sub-sec. (1) the Controller may after making such enquiry as he thinks fit, make an order under S. 8 for allotment. Thereafter sub-sec. (3) thereof provides that in disposing of an application under sub-sec. (1), the Controller shall consider :- (a) the general availability of molasses; (b) various requirements of molasses; (c) the better utilisation to which molasses may be put in the public interest; (d) the extent to which the requirements of the applicant are genuine; (e) reasonable likelihood or otherwise of the molasses that may be obtained by the applicant being diverted to purposes other than those specified in the application. 10. Sub-sec. (3) further provides that where an application for allotment of molasses is rejected, either in whole or in part, the Controller shall record the reason therefor. 11. S. 8 enables the Controller to make an order requiring the occupier of any sugar factory to sell and supply in the prescribed manner such quantity of molasses to such person, as may be specified in the order, and the occupier shall, notwithstanding any contract, comply with the order. 12. S. 9 of the Act provides that any person aggrieved by an order of the Controller under sub-sec. (1) or sub-sec. (3) of S. 8 may appeal to the State Government. 13. Sri Raja Ram Agrawal appearing on behalf of the petitioner has contended that the State Government had no authority to lay down the guidelines which were announced at the meeting of the Monitoring Committee on Molasses held on 16-12-1985. Those guidelines have been quoted earlier. The submission is that the guidelines for disposing of an application for allotment of Molasses has already been laid down under S. 7-A(3) of the Act. It is submitted here that the State Government can neither add nor subtract from the guidelines laid down in the aforesaid sub-sec. (3) of S. 7-A of the Act. It is further submitted that where a statutory discretion has been conferred on a particular officer then the higher authority cannot interfere with that discretion and fetter it in any manner.
It is submitted here that the State Government can neither add nor subtract from the guidelines laid down in the aforesaid sub-sec. (3) of S. 7-A of the Act. It is further submitted that where a statutory discretion has been conferred on a particular officer then the higher authority cannot interfere with that discretion and fetter it in any manner. In this connection, the learned counsel for the petitioner has relied upon two decisions of the Supreme Court reported in AIR 1970 SC 1896 , The Purtabpur Company Limited v. The Cane Commissioner of Bihar and State of Punjab v. Hari Kishan Sharma, AIR 1966 SC 1081 . 14. Sri V. B. Upadhaya, the learned Standing Counsel, had urged that the decision of the Government announced at the meeting of the Monitoring Committee on Molasses held on 16-12-1985 did not in any manner fetter the discretion of the Molasses Controller who was the Excise Commissioner. It only brought the prevailing malpractices to his notice. 15. It is then submitted that under cl. (c) of sub-sec. (3) of S. 7-A it is provided that in disposing of an application under sub-sec. (1) thereof, the Controller shall consider the better utilisation to which molasses may be put to use in the public interest. It is submitted that it is competent under this provision for the State Government to define the `public interest' so that the Controller has definite guidelines in ascertaining the meaning of the words `public order'. This power in the State Government, Sri V. B. Upadhaya spells out, vests from Article 162 of the Constitution of India. Under Article 162 of the Constitution of India the executive power of the State Government extends to all spheres to which the legislative powers of the State Government extends and it is only subject to the laws made by the State Legislature. It is submitted that since the State Legislature has not defined the words `public interest', therefore, what public interest means in cl. (c) of sub-sec. (3) of S. 7-A of the Act, the State Government shall have the power, under Article 162 of the Constitution of India, to lay down the relevant guidelines. 16. In the instant case under S. 7-A(3)(1) of the Act, an application for allotment of molasses has to be disposed of by the Controller. He has to be guided by the criterion laid down in sub-sec.
16. In the instant case under S. 7-A(3)(1) of the Act, an application for allotment of molasses has to be disposed of by the Controller. He has to be guided by the criterion laid down in sub-sec. (3) while disposing of an application. Sub-sec. (3) to S. 7-A of the Act, which mentions `public interest' in the better utilisation of the molasses, does not define what `public interest' is, but reading S. 7-A(3) as a whole and in particular cl. (c) thereof it is clear that in view of the Legislature the `public interest' is better served by that action on the part of the Controller which results in better utilisation of the molasses. 17. Now if we turn to the minutes of the meeting of the Monitering Committee held on 16-12-1985 we find that the guideline broadly is that those distilleries which produce more Alcohol out of the molasses allotted to them, will be given much larger allotment of molasses in the current year than the less efficient. The most inefficient in which category the petitioner falls, can only get allotment after an enquiry and a report by the Molasses Controller to the State Government under the authority of the State Government. The Molasses Controller, it appears, was present in the meeting at which the decision was taken and can be said to be a party to the decision. An authority in whom administrative discretion is vested, can inform its mind from various sources as to how a discretion is to be exercised. If the Molasses Controller consults any person or even the Government to inform his mind about the exercise of the discretion, the exercise of discretion would not be bad unless the Molasses Controller surrenders his discretion. A self-imposed guideline for the exercise of the discretion which is publicly announced, would not necessarily be bad. The petitioner has failed to positively prove that the guidelines quoted above had been prepared by the State Government and imposed on the Molasses Controller. In any case, the guidelines broadly conform to the criterion laid down in S. 7-A(3) of the Act and in particular cl. (c) thereof. 18. In the result, the argument of Sri R.R. Agrawal against the validity of the quidelines announced at the meeting of the Monitering Committee on Molasses held on 16-12-1985 fails and cannot be accepted. 19.
In any case, the guidelines broadly conform to the criterion laid down in S. 7-A(3) of the Act and in particular cl. (c) thereof. 18. In the result, the argument of Sri R.R. Agrawal against the validity of the quidelines announced at the meeting of the Monitering Committee on Molasses held on 16-12-1985 fails and cannot be accepted. 19. Sri Raja Ram Agrawal then argues that the last part of the guidelines announced at the meeting of the Monitering Committee of Molasses held on 16-12-1985 is bad in so far as it restricts the power of the Molasses Controller in making an allotment. This part provides that where the recovery of the distillery is less than 15 litres of alcohol per quintal of molasses, the allotment can be made with the permission of the State Government and only after an enquiry. This part of the policy decision is not a guideline for the exercise of power of allotment by the Molasses Controller but a restriction on his power of making an allotment. There are no provisions in the Act which permit the State Government to direct the Molasses Controller not to make an allotment without the prior approval of the Government. This part of the guideline is illegal, inconsistent and will have to be quashed. 20. However, we are satisfied that this part of the policy decision is severable from the rest of the policy announcement in the meeting held on 16-12-1985. The requirement of prior approval of the Government before the allotment is made by the Molasses Controller, can be separated from the rest. It cannot be said that the policy would not have been announced if this clause had not been incorporated therein. The Molasses Controller can himself make an enquiry before making an allotment where the recovery of molasses is below 15 litres of alcohol per quintal of molasses allotted. 21. Sri Raja Ram Agrawal has also urged that the amount of alcohol in molasses is correlated to the fermentable sugar present in the molasses consumed for the production of the alcohol. This fact is recognised in the U.P. Excise Working of Distillery (Amendment) Rules, 1978, in particular by R. 15-B framed by the Excise Commissioner. This fact cannot be disputed by the Standing Counsel. 22.
This fact is recognised in the U.P. Excise Working of Distillery (Amendment) Rules, 1978, in particular by R. 15-B framed by the Excise Commissioner. This fact cannot be disputed by the Standing Counsel. 22. Sri Raja Ram Agrawal submits that the production of alcohol by a distillery is directly related to the quantity of molasses allotted to a distillery. Under the policy decision taken in the meeting held on 16-12-1985 under the Chairmanship of the Molasses Controller the fermentable sugar present in the molasses allotted has been ignored. The molasses are of various grades and fermentable sugar in different grades of molasses varies. While making the policy announcement, this aspect of the matter has been ignored. Any policy decision relating to the allotment of molasses to a distillery has necessarily to take into account the volume of fermentable sugar which is to be found in the molasses allotted which are ultimately consumed for the production of alcohol. 23. We are dealing with a policy announcement and not with the provisions of a statute or a rule framed under the Statute which may not be possible for this Court to re-write. This Court can and should in order to save the policy laying down guidelines for the exercise of the discretion of the Molasses Controller lay down that in disposing of an application for allotment of molasses to take into account not only the quantity of molasses allotted to a distillery and its production of alcohol but also the quantum of fermentable, sugar present in the molasses which have been allotted to a particular distillery while applying the guidelines announced at the meeting held on 16-12-1985. 24. Sri V.B. Upadhaya, the learned Standing Counsel argues that R. 15-B was not relevant where the Molasses Controller deals with an application under S. 7-A of the Act. It is true that the molasses may be allotted for the purposes other than for the purposes of manufacture of alcohol by a distillery but where we are concerned with the allotment of molasses to the distillery for the production and manufacture of alcohol, the specific conditions of the industry, namely the distillery business, have to be taken into account. As seen above, the quantum of alcohol produced from the molasses is directly related to the quantum of fermentable sugar present in the molasses.
As seen above, the quantum of alcohol produced from the molasses is directly related to the quantum of fermentable sugar present in the molasses. This fact cannot be ignored while formulating a policy such as the policy which has formulated and will govern the present case. 25. The argument of the learned Standing Counsel, therefore, that the policy is not bad because it does not take into account the fermentable sugar present in the molasses allotted to a distillery under the Act cannot be bad on the ground that there is no reference to fermentable sugar present in the molasses, cannot be accepted. 26. There is a serious dispute between the parties and others as to the quality of molasses allotted to the petitioner during the previous year. The petitioner avers that it was so inferior that the minimum quantum of alcohol required to be produced from per quintal of molasses allotted, could not have been possibly produced from that molasses while the State asserts that it was perfectly possible for the petitioner to do so. It is not possible for this Court to go into a very detailed enquiry as it will entail taking of evidence and the matter cannot be decided on the basis of the affidavits. 27. There is another argument by Sri Raja Ram Agrawal which has to be noticed. The guidelines announced in the meeting held on 16-12-1985 are rather unhappily worded. The Molasses Controller while making an allotment to a distillery is required to look into the recovery of alcohol from the molasses allotted for the current year i.e. 1985-86. Sri Raja Ram Agrawal argues that he record of 10 years previous to 1984-85 as also for the year 1984-85 will have to be taken into account by the Molasses Controller while making the allotment. The learned Standing Counsel argues that it is only the recovery of alcohol from the molasses allotted for the year 1984-85 has to be seen. 28. Having very carefully looked into rather ambiguous language in the policy statement, it appears that the allotment will be governed normally on the basis of the recovery of alcohol from the molasses allotted in the year 1984-85 but this may be departed from if for some special reason the recovery in the year 1984-85 is at variance with the average recovery in the previous ten years.
There may be some special circumstances in the year 1984-85 because of which recovery of alcohol from the molasses allotted is extremely low and possibly too high. This matter has to be examined in the case of each distillery by the Molasses Controller while making an order under S. 8 of the Act allotting molasses to a particular distillery. 29. In the result the writ petition is partly allowed. The requirement in the policy statement issued in the meeting held on 16-12-1985 that where the recovery of alcohol is below 15 litres of alcohol per quintal of molasses allotted, the Molasses Controller shall only allot the molasses under S. 8(1) of the Act after the approval of the State Government is quashed and this portion is deleted from the policy statement contained in Annexure VIII to the petition. The Molasses Controller is directed to pass orders on the petitioner's application under S. 7 A(1) of the Act for allotment of the molasses in the light of the observations made in this judgment. While disposing of the petitioner's application, the Molasses Controller shall consider the quantum of fermentable sugar contained in the molasses allotted to the petitioner without referring the matter to the Government. He shall do so within a period of ten days from the date of presentation of a copy of this order before him. The parties will bear their own costs.