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1996 DIGILAW 295 (ALL)

SIMBHAOLI SUGAR MILLS LIMITED v. STATE OF U P

1996-03-13

B.S.CHAUHAN, MARKANDEY KATJU

body1996
DR. B. S. CHAUHAN, J. The instant writ petition has been filed for quashing the order dated 19-10-1995 Annexure 5 to the writ petition, by which the respondent No. 2 included certain sugarcane purchase centres in the areas reserved for the respondent No. 3. Previously the ssame had been included in the area of the petitioner. , 2. The factual gamut of the case reveals that the petitioner is a very old sugar factory and respondent No. 3 established its sugar industry only in the year 1990 and since then there is a continuous litigation between the two sugar industries. The dispute for the purpose of the instant petition is in a very narrow compass, i. e. to give effect to the terms of Section 15 of the U. P. Sugar Cane (Regulations of Supply and Purchase) Act, 1953 (hereinafter called the Act) and the provisions of Rule 23 of the U. P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954, (hereinafter called the Rules ). 3. The petitioner had challenged the intent to establish the said factory by the respondent No. 3 before the Delhi High Court and it was disposed of by the judg ment dated 31-3-92. The Simbhaoli Sugar Mills Ltd. and others v. Union of India, AIR 1993 Delhi 219. The grievance of the petitioner was found to be premature at that time. However, it was held that area reserved for one factory under Section 15 of the Act cannot be transferred to another factory without affording an oppor tunity of hearing to the factory whose area was likely to be disturbed. It was further directed that in future whenever an area reserved for the petitioner is disturbed and given an effective hearing by the Cane Commissioner. There was further litigation between the parties in Delhi High Court and Writ Petition No. 3186 of 1991 was disposed of by the Delhi High Court vide Annexure 2 to the writ petition, wherein it was held that the respondents should not alter or transfer any portion of the reserved area allotted to the petitioner in favour of any other Mill owner without affording an opportunity of hearing to the petitioner. In the said writ petition the State of U. P. had filed the counter affidavit wherein it was admitted by the State that the petitioner had developed the cane area as required under the law and there was no complaint of any kind against the petitioner and if any area which had earlier been reserved for the petitioner is altered, it would not only interfere with the reserved area of the petitioner but also seriously prejudice and diminish the supply of sugarcane of the petitioner. 4. Directions issued by the Delhi High Court were not complied by the respondent No. 2 and certain area reserved for the petitioner earlier, was declared reserved in favour of the respondent No. 3. Petitioner, being aggrieved, preferred the appeal before the State Government under Section 15 (4) of the Act for the crushing season of 1993-94 which was disposed of by the appellate authority vide order dated 4-5- 94, Annexure 6 to the writ petition, holding that no substantive relief could be granted for the crushing season as the season had come to an end. However, it was directed that for the next crushing season, respondent No. 2, Cane Commissioner would give effective hearing to the petitioner before carving out any part from the area which had earlier been reserved for the petitioner. 5. For the crushing season of 1994-95 certain sugarcane purchase centres which had earlier been reserved for the petitioner were included in the area reserved for the respondent No. 3 and that too without giving any opportunity of hearing to the petitioner. Appeal filed by the petitioner before the State was dis posed of vide order dated 28-2-1995 and by that time it was found not feasible to grant any substantive relief in favour of the petitioner as a major part of the crush ing season had come to an end. 6. During the pendency of the appeal for the crushing season 1994-95, petitioner also filed the Writ Petition No. 7698 of 1995 before this Court which is still pending and no relief could be granted to the petitioner. 7. Dr. 6. During the pendency of the appeal for the crushing season 1994-95, petitioner also filed the Writ Petition No. 7698 of 1995 before this Court which is still pending and no relief could be granted to the petitioner. 7. Dr. A. M. Singhvi, learned counsel for the respondent No. 3 and learned Standing Counsel appearing for the State raised the preliminary objection that the petitioner must avail the statutory remedy by way of filing the appeal before the State Government and this writ petition should be dismissed only on the ground of availability of an alternative remedy. 8. Shri S. P. Gupta, learned Senior Advocate appearing for the petitioner has vehemently opposed it and articulatedly argued that for two consecutive years i. e. 1993-94 and 1994-95, petitioner filed the Statutory appeals before the State Government and the same were not disposed of by the State within time and petitioner could not get any effective relief from the appellate authority Appellate authority had dealt with the appeals of the petitioner in a most cavlier manner and the legitimate expectation of the petitioner to get his grievances redressed by the appellate authority stood frustrated and the remedy of statutory appeal can even by no stretch of imagination be termed as efficacious, adequate or speedy alternative remedy. It was further contended that petitioner had spent a sum of Rs. 2. 5 crores in developing the part of the area which has now been excluded from his area and while passing the impugned order respondent No. 2, Cane Commissioner had not considered the requirements of the factors (a) to (h) contained in the provisions of Rule 22 of the Rules. With this backdrop, we have examined the scope of various provisions of the said Act and Rules and decide this case as this problem occurs every year, and most of the sugarcane factories whether owned by the public sector or private sector within the State raise the same issue by filing the writ petitions before this Court. Section 2 (i) defines the crushing season as the period beginning on 1st October in any year. Section 15 reads as under : 15. Section 2 (i) defines the crushing season as the period beginning on 1st October in any year. Section 15 reads as under : 15. Declaration of reserved ared and assigned order.- (1) Without prejudice to any order made under clause (d) of sub-section (2) of Section 16 the Cane Commissioner may, after consulting the Factory and Canegrowers Co-operative Society in the manner to be prescribed.- (a) reserve any area (hereinafter called the reserved area ). . . . . . . . . . . . . . . . . . ************************* (4) An appeal shall lie to the State Government against the order of the Cane Com missioner passed under sub-section (1) Chapter VI of the Rules provides as under; 21. (1) The occupier of a factory shall by August 31, each year apply to the Cane Commissioner, in Form 1, Appendix III, for the reservation or assignment of an area for supply of cane to the factory during the ensuing crushing season. 22. In reserving an area for or assigning an area to a factory or determining the quantity of cane to be purchased from an area by a factory, under Section 15, the Cane Commissioner may take into consideration-fa) the distance of the area from the factory, (b) facilities for transport of cane from the area, (c) the quantity of cane supplied from the area to the factory in previous year, (d) previous reservation and assignment orders, (e) the quantity of cane to be crushed, in the factory, (f) the arrangements made by the factory in previous years for payment of cess, cane price and commission, (g) the views of the cane-growers Co-operative Society of the area, (h) efforts made by the factory in developing the reserved or assigned area. 23. Appeal against an order of the Cane Commissioner under Section 15 shall be to the State Government within 14 days of the publication of the order at the office of the Collector; provided that the State Government may, for any special reason, entertain an appeal made after the expiry of the above period. 9. There can be no dispute regarding the legal proposition that a party should ordinarily avail the statutory remedy instead of approaching this Court in writ juris diction, but the alternative remedy should be adequate, efficacious, speedy and not of burdensome or onerous character. 9. There can be no dispute regarding the legal proposition that a party should ordinarily avail the statutory remedy instead of approaching this Court in writ juris diction, but the alternative remedy should be adequate, efficacious, speedy and not of burdensome or onerous character. [himmat Lal Hari Lal Mehta v. State of Madhya Pradesh and others, AIR 1954 SC 403 , The State of Bombay and another v. The United Motors (India) Ltd. , AIR 1953 SC 252 , State of U. P. v. Mohd. Nooh, AIR 1958 SC 86 ]. 10. In Tika Ram Ji and others v. State of U. P, AIR 1956 SC 656, the Constitu tion Bench of the Apex Court observed that the powers conferred on the Cane Commissioner cannot be used by him in a discriminatory manner so as to violate the fundamental right guaranteed under Article 14 as the statute itself provides a right of appeal to the State Government and this right of appeal is a sufficient safeguard provided in the Acts and the Rules against any arbitrary exercise of powers by the Cane Commissioner and takes them out of the ban of Article 14. 11. In Purtabpur Company Limited v. Cane Commissioner of Bihar and others, AIR 1970 SC 1896 , the apex Court observed that the proceedings before the Cane Commissioner in respect of fixing the reserved area under the statute are quasi-judicial proceedings and if an area reserved for a particular Mill is modified, it amounts to revoking or modifying licence and further observed that such an order should be passed in compliance with the rules of natural justice. 12. While explaining the concept of quasi judicial decision, the Supreme Court in Sita Ram Sugar Company Limited v. Union of India, 1990 (3) SCC 223 , made the following observations:- "quasi-judicial decisions are also administrative decisions, but they are subject to some measure of judicial procedure, such as rules of natural justice" 13. Therefore, the compliance of the principle of natural justice is necessary to remove the arbitrariness of the authority. In State of Andhra Pradesh and another v. Nalla Raja Ready and others, AIR 1967 SC 1458 , the Constitution Bench of the Apex Court observed as under: "official arbitrariness is more subversive to the doctrine of equality than statutory discretion. Therefore, the compliance of the principle of natural justice is necessary to remove the arbitrariness of the authority. In State of Andhra Pradesh and another v. Nalla Raja Ready and others, AIR 1967 SC 1458 , the Constitution Bench of the Apex Court observed as under: "official arbitrariness is more subversive to the doctrine of equality than statutory discretion. In respect of a statutory discretion one knows where he stands, but the want of official arbitrariness can be waved in all directions indiscriminatory". 14. Similarly in S. G. Jaisinghani v. Union of India and others, AIR 1967 SC 1427 , the Constitution Bench of the Apex Court observed that the absence of arbitrary power is the first essential of the rule of law upon which our whole con stitution system is based. In a system governed by rule of law, discretion when con ferred upon executive authority must be confined within clearly defined limit. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decision should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is anti thesis of a decision taken in accordance with rule of law. 15. In M/s. R. B. Shreeram Durga Prasad and Fatehchand Nursing Das v. Settle ment Commission (IT & WT) and another, 1989 (I) SCC 628 , the Supreme Court relied upon its earlier judgment in State of Orissa v. Dr. (Miss.) Binapani Dei, AIR 1967 SC 1269 , and observed that "the act in violation of the principle of natural justice or a quasi judicial act in violation of the principle of natural justice is void". 16. Another concept of the administrative law is that the authority should not act unfairly and unjustly. Lord Denning in his Hamlyn Lecture made the following observations: "a judicial-decision is based on reason and is known to be so because it is supported by reason. An arbitrary decision may be based on personal feelings or even on whims, caprice or prejudice". (Lord Denning: The Judge and the Law, edited by J. L. Jowell 1984 at page 219 ). 17. An arbitrary decision may be based on personal feelings or even on whims, caprice or prejudice". (Lord Denning: The Judge and the Law, edited by J. L. Jowell 1984 at page 219 ). 17. In Abbott v. Sullivan, (1952) 1 K. B. 189, Lord Denning again made the following observations: "i should be sorry to think that, if a wrong has been done, the plaintiff is to go without a remedy simply because he has to peg to hand it on. . . . . . . . . . . where there is a right there should be a remedy. " 18. In Dr. Raslal Yadav v. State of Bihar, 1994 (5) SCC 267 , the Supreme Court emphasised on the principle of fairness and reasonableness and held that proce dural fairness is an implied mandatory requirement to protect arbitrary action where statutes confers wide power coupled with wide discretion on the authority. 19. Similarly in Kartar Singh v. State of Punjab, 1994 (3) SCC 569 at page 730, the Supreme Court observed that "if the procedure offends the fundamentals of fairness or established ethos or tradition or shocks the conscience of the court it is unconstitutional. " The Court further observed that "appearance of injustice is denial of justice, built in procedural safeguards assure a feeling of fairness. The procedure which smacks of the denial of fundamental fairness is an anathema to just, fair or reasonable procedure. " 20. The mandatory requirement of Section 15 (1) is that the Cane Commis sioner shall make the order for reserving the area- after consulting the factory, cane growers and the co-operative societies. No doubt the term may has been used in the said provision but if the scheme of the entire Act is examined with the Rules, the consultation is mandatory. Rule 22 has laid down certain conditions to be con sidered by the Cane Commissioner before passing the order, it includes the dis tance of the area from the factory, transport facilities, quantity of the cane supplied from the area to the factory in previous year, previous reservations, the quantity of the cane to be crushed in the factory, the condition of payment of cess, cane price etc. by the factory in the previous year and the efforts made by the factory in developing the reserved or assigned area. by the factory in the previous year and the efforts made by the factory in developing the reserved or assigned area. If in a particular case a factory had made full effort in developing the reserved area and provided all the facilities of road etc. and the same area is allotted to another factory without giving an opportunity of hearing to the said factory, it will be in contravention of the mandatory require ment of the provisions. 21. Section 15 (4) of the Act and Rule 23 of the Rules provide that if a Mill owner is aggrieved by the order of the Cane Commissioner passed under Section 15 of the Act, he can file an appeal before the State Government within 14 days of the publication of the order at the office of the Collector. If the statute requires that appeal is to be filed within 14 days and if an appeal is filed, the State Government is under obligation to decide the same within reasonable time, otherwise approaching the appellate forum would be a futile exer cise. 22. Thus, the unescapable conclusion is that the Cane Commissioner while exercising his power under Section 15 of the Act is duty bound to consult the Mill owners and if the aggrieved Mill owner files the appeal before the State Govern ment, it is to be disposed of within a reasonable period. 23. Consultation is a much wider term than hearing. In Supreme Court Advocates on Record Association v. Union of India, 1993 (4) SCC 441 , the Supreme Court examined the term consultation and after taking into account all possible definition of consultation observed that consultation is powerful and eloquent with meaning, loaded with undefined intonations. It also amounts to seek opinion, to confer, to discuss and to deliberate together. 24. In Ramchand v. Union of India, 1994 (1) SCC 25, the Supreme Court held that where no time-limit is prescribed for exercising of power, it should be exer cised within a reasonable time. 25. The same view was taken by the Apex Court in Yogeshwar Jaiswal v. State of U. P, AIR 1985 SC 516 . 26. In Commissioner of Police y. Gordhan Das, AIR 1952 SC 16 , the Apex Court observed that public authorities cannot play fast and loose with the powers vested in them*. 25. The same view was taken by the Apex Court in Yogeshwar Jaiswal v. State of U. P, AIR 1985 SC 516 . 26. In Commissioner of Police y. Gordhan Das, AIR 1952 SC 16 , the Apex Court observed that public authorities cannot play fast and loose with the powers vested in them*. It further relied upon the judgment of the House of Lord in Julius v, Lord Bishop of Oxford, (1980) 5 AC 214, wherein the following observations were made : "there may be something in the nature of the thing empowered to be done, some thing in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is be exercised, which may couple the power with a duty, and make it the duty of a person in whom the power is reposed, to exercise that power when called upon to do so". 27. The Court further observed that the duty to act as required by the statute cannot be shirked or shelved or evaded and performance of it can be compelled. 28. The same principle was reiterated in Ambica Quarry Works etc. v. State of Gujarat and others, AIR 1987 SC 1073 . 29. In Dwarka Nath v. Income Tax Officer, AIR 1966 SC 81 , the Supreme Court observed as under : ". . . The Income Tax Officer did not discharge his duty which he was bound to do under the Act, with the result he had become amenable to writ of mandamus directing him to do what he should have done under the Act. " 30. In Indian Nut Products and others v. Union of India and others, 1994 (4) SCC 269 , the Supreme Court observed that "if a statute requires an authority to exercise power, when such authority satisfies that condition exists for exercise of that power, the satisfaction has to be based on existence of grounds mentioned in the statute. The grounds must be made out on the basis of the relevant material. " 31. Thus, the Cane Commissioner has to pass an order based on sufficient material on the basis of the terms mentioned in the statutory provisions and the said rules. The grounds must be made out on the basis of the relevant material. " 31. Thus, the Cane Commissioner has to pass an order based on sufficient material on the basis of the terms mentioned in the statutory provisions and the said rules. It is settled law of interpretation that courts should strongly lean against any construction which tends to reduce a statute to futility. The provisions of a statute must be so construed as to make it effective and operative on the principle "ut res magis valeat quam pereat". [tinsukhia Electric Supply Co. Ltd. v. State of Assam and others, (1989) 3 SCC 709 ]. 32. It is also desirable that the Cane Commissioner or the appellate authority in a case like this must pass a reasoned order as the action even or the administra tive authority requires a State of transparency in it. , 33. In Krishna Swami v. Union of India, 1992 (4) SCC 605 , the Court observed as under: "undoubtedly, in a parliamentary democracy governed by rule of law, any action, decision or order of any statutory/public authority/functionary must be founded by the reasons stated in the order or starring from the record. Reasons are the links between the material, the foundation for their erection and the actual conclusion. They would also demonstrate how the mind of the maker was activated and actuated and their rational nexus and synthesis with the facts considered and the conclusions reached, lest it would be arbitrary, unfair, unjust, violating Article 14 or unfair procedure offending Article 21. " 34. In the case of Smt. Sudama Devi v. Commissioner and others, 1983 (2) SCC 1 , the Supreme Court has observed that there is no limitation for filing a writ petition under Article 226 of the Constitution and thus the court was not em powered to fix the limitation even by framing rules. 35. The instant case stands entirely on a different footing. If the scheme of the entire Act is examined, one reaches the unescapable conclusion that as the period of sugarcane crushing is limited, the appeal filed by the aggrieved party under the statute should be disposed of expeditiously, even if there is no statutory time-limit to dispose of the same. 36. The instant case stands entirely on a different footing. If the scheme of the entire Act is examined, one reaches the unescapable conclusion that as the period of sugarcane crushing is limited, the appeal filed by the aggrieved party under the statute should be disposed of expeditiously, even if there is no statutory time-limit to dispose of the same. 36. Thus, in view of the above, we are of the considered opinion that the Cane Commissioner must pass a reasoned order after having consultation with the Mill owners and the statutory appeal if any filed before the State Government must be disposed of finally within a reasonable time since at every stage the statute provides the parties concerned to act in a particular way, there is no reason why the parties should not be compelled by issuing a general mandamus to adhere to such require ments. 37. Section 2 (i) defines the crushing season which starts from 1st October of every year. Section 15 of the Act mandatorily requires the Cane Commissioner to reserve the area after consultation ,with the Mill owner. Rule 21 requires the oc cupier of the factory to make his demand for the reservation by 31st August. Rule 23 of the said Rules provides that if a Mill owner is aggrieved by the order passed by the Cane Commissioner, he can prefer an appeal to the State Government within a period of 14 days. The said provisions should be given life and to be understood in the context the said requirements have been provided in the statute and the rules. 38. We have given our serious consideration to the impugned order dated 19-10-95 which shows that the Cane Commissioner has decided the reserve areas issue for all the sugar Mills of the entire Meerut zone in one day. 38. We have given our serious consideration to the impugned order dated 19-10-95 which shows that the Cane Commissioner has decided the reserve areas issue for all the sugar Mills of the entire Meerut zone in one day. We asked the learned Standing Counsel as to how it was possible for him to consult/hear representatives of the sugar Mills and the cane growers association in one day in respect of Meerut region which includes several districts and where sugarcane is the main crop because it appeared to us that hearing so many representatives in one day would be humanly impossible and in that situation the consultation is nothing but has been made a farce which cannot be in consonance of the letter and spirit of the Act and the Rules applicable in this case, but learned Standing Counsel could not furnish any explanation whatsoever. 39. Thus, in view of the above, we are constrained to issue the following general directions for the State and its instrumentalities: (1) As the Sugar Cane Commissioner gets the demand proposal from the Mill owners by 31st August, he must scrutinise the same expeditiously and if he finds that there are contradictory claims for a particular part or area, all rival claimants should be informed about the same to enable them to make their effective repre sentation. (2) The Cane Commissioner must decide the reserve area after giving an effec tive earning to all concerned parties. (3) While passing the order for making reservation, the Cane Commissioner must pass a reasoned order after taking into consideration the factors mentioned in Rule 22, and the said order is to be passed by 30th September as the crushing season starts from 1st October, and the same should be published in the office of the Collector within a period of one week from the date of the order. (4) If statutory appeal is preferred before the State Government against the order of the Cane Commissioner, the appeal must be disposed of by giving oppor tunity of hearing to all the parties therein by a reasoned order expeditiously and preferably within a period of 30 days from the date of filing of the same and the order should be communicated immediately thereafter to the concerned parties. 40. 40. Though, the instant writ petition was filed for quashing the impugned order dated 10-10-1995, Annexure-5 to the writ petition, we are not inclined to go into the merits of the present controversy. However, if the petitioner files statutory appeal, before the State, the State is directed to dispose of the same positively within a period of four weeks from the date of presentation of the said appeal. 41. With the above observations, the writ petition is finally disposed of. However, there shall be no order as to costs. Petition disposed of. .