1

AFR

In Chamber

Case :- WRIT - C No. - 9616 of 2022

Petitioner :- Dhampur Sugar Mills Limited And Another

Respondent :- State Of U.P. And 3 Others

Counsel for Petitioner :- Rahul Agarwal

Counsel for Respondent :- C.S.C.,A.S.G.I.,Aditiya Kumar

Singh,Ayush Garg,K.K.Rao,Rakesh Pande (Senior

Adv.),Ravindra Singh

Hon'ble Siddhartha Varma, J.

Hon'ble Ajit Singh, J.

This writ petition has been filed for the issuance of a writ

of certiorari quashing the 'No Objection Certificate'

1

dated

14.9.2021 which has been issued by the Cane Commissioner to

the respondent no.4 and also for the quashing of the "Industrial

Entrepreneur Memorandum"

2

which has been filed by the

respondent no.4 on 12.10.2021 and has been acknowledged by

the Department of Promotion of Industry and Internal Trade on

the same date.

It appears that for the installation of a sugar factory when

the respondent no.4-M/s. Bindal Paper Limited on 7.9.2021 had

asked for an NOC, then after considering the case of respondent

no.4, the Cane Commissioner, Government of Uttar Pradesh,

Lucknow had on 14.9.2021 issued the NOC and had detailed in

the NOC that from the proposed sugar factory, as per the Indian

Survey Department, Dehradun, the nearest sugar mills were as

follows :-

1hereinafter referred to as NOC

2hereinafter referred to as IEM

NeutraleHitationeNo(ekec)cqF;&HFqb4jkJ'

2

i.Wave Industries Pvt. Ltd., village Maleshiya Dhanaura,

District Amroha (24.6 kms.)

ii.Deewan Sugar Mills Ltd., District Moradabad (31.3 kms.)

iii.Dhampur Sugar Mills Ltd., Unit Dhampur, District Bijnor

(21.1 kms.)

iv.P.B.S. Foods Pvt. Ltd., Chandanpur, District Bijnor (17.5

kms.)

v.Upper Ganges Sugar and Industries Ltd., Seohara, District

Bijnor (16.9 kms.).

Thereafter, the Commissioner had stated that NOC was

being issued to M/s. Bindal Papers Ltd. for the issuing of the IEM

to M/s. Bindal Papers Ltd.

The petitioner no.1 which is Dhampur Sugar Mills Limited,

as per the survey report of the Indian Survey Department,

Dehradun was 21.1 kilometers away from the proposed sugar mill

and the petitioner no.2-Avadh Sugar and Energy Limited which

has been mentioned as Upper Ganges Sugar and Industries Ltd.,

Seohara, District Bijnor in the NOC was 16.9 kilometers away

from the proposed sugar mill of the respondent no.4. The

establishment of sugar factories is regulated by both the Central

and the State Government. The Government of India by its

notification published in the Gazette of India (Extraordinary)

1966 had issued the Sugarcane (Control) Order, 1966

3

and as

3hereinafter referred to as 1966 Order

3

per Order 6-A, there was a restriction of setting up of two sugar

factories within the radius of fifteen kilometers.

For convenience, Order 6-A of the 1966 Order is being

reproduced here as under :-

"6-A. Restriction on setting up of two sugar

factories within 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 the State Government may with the

prior approval of the Central Government, where it

considers necessary and expedient in 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.

Explanation 1.—An existing sugar factory shall

mean a sugar factory in operation and shall also

include a sugar factory that has taken all effective

steps as specified in Explanation 4 to set up a sugar

factory but excludes a sugar factory that has not

carried out its crushing operations for last five sugar

seasons.

Explanation 2.—A new sugar factory shall mean a

sugar factory, which is not an existing sugar factory,

but has filed the Industrial Entrepreneur

Memorandum as prescribed by the Department of

Industrial Policy and Promotion, Ministry of

Commerce and Industry in the Central Government

and has submitted a performance guarantee of rupees

one crore to the Chief Director (Sugar), Department

of Food and Public Distribution, Ministry of

Consumer Affairs, Food and Public Distribution for

implementation of the Industrial Entrepreneur

Memorandum within the stipulated time or extended

time as specified in Clause 6-C.

4

Explanation 3.—The minimum distance shall be

determined as measured by the Survey of India.

Explanation 4.—The effective steps shall mean the

following steps taken by the concerned person to

implement the 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 of

requisite advance or opening of irrevocable

letter of credit with suppliers;

(c) commencement of civil work and construction

of building for the factory;

(d) sanction of requisite term loans from banks or

financial institutions;

(e) any other step prescribed by the Central

Government, in this regard through a

notification."

As per Order 6-B of the 1966 Order, when a new unit of

any sugar factory was to be established, it had to get an NOC

from the Cane Commissioner or Director (Sugar) or the specified

authority of the concerned State Government specifically stating

that the distance between the site where the proposed factory was

to be set-up and the adjacent sugar factory was not in any manner

lesser than the minimum distance prescribed by the Central

Government or the State Government. After the NOC was given

by the concerned Cane Commissioner, the new factory had to

give its IEM to the Central Government within a month of the

issuance of such certificate. As and when the IEM was submitted,

5

the industrial concern which was to open the new factory had to

submit a performance guarantee of Rs.1 crore to the Chief

Director (Sugar), Ministry of Consumer Affairs, Food and Public

Distribution, New Delhi and Public Distribution within 30 days

of the filing of the IEM which was to be a surety for the

implementation of the IEM. The requirement of getting the NOC

with regard to the distance and the requirement of submitting the

IEM and the submission of the performance guarantee have been

provided in Order 6-B of the 1966 Order.

For convenience, Order 6-B of the 1966 Order is being

reproduced here as under :-

"6-B. Requirements for filing the Industrial

Entrepreneur Memorandum.—(1) Before filing

the Industrial Entrepreneur Memorandum with the

Central Government, the concerned person shall

obtain a certificate from the Cane Commissioner or

Director (Sugar) or Specified Authority of the

concerned State Government that the distance

between the site where he proposes to set up sugar

factory and adjacent existing sugar factories and new

sugar factories is not less than the minimum distance

prescribed by the Central Government or the State

Government, as the case may be, and the concerned

person shall file the Industrial Entrepreneur

Memorandum with the Central Government within

one month of issue of such certificate failing which

validity of the certificate shall expire.

(2) After filing the Industrial Entrepreneur

Memorandum, the concerned person shall submit a

performance guarantee of rupees one crore to Chief

Director (Sugar), Department of Food and Public

Distribution, Ministry of Consumer Affairs, Food

and Public Distribution within thirty days of filing

the Industrial Entrepreneur Memorandum as a surety

for implementation of the Industrial Entrepreneur

Memorandum within the stipulated time or extended

6

time as specified in Clause 6-C failing which

Industrial Entrepreneur Memorandum shall stand de-

recognized as far as provisions of this Order are

concerned."

Thereafter under Order 6-C of the 1966 Order, time limit

has been provided as to by when commercial production had to

start etc.

In the instant case when the respondent no.4 had got the

NOC as was to be obtained as per the provisions of Order 6-B of

the 1966 Order and had also submitted its IEM which was

acknowledged by the Central Government, the petitioners

apprehending that the opening of the new factory would result in

a shortage of sugarcane to their factories, filed an

objection/representation jointly against the grant of the NOC and

the acknowledgment of the IEM in favour of respondent no.4

before the Chief Director (Sugar), Government of India, Ministry

of Consumer Affairs, Food and Public Distribution, Krishi

Bhawan, New Delhi on 4.2.2022.

It is the case of the petitioners that the Ministry of

Consumer Affairs communicated to the Cane Commissioner,

State of Uttar Pradesh requiring the Cane Commissioner to

furnish his comments on the representation submitted by the

petitioners on 24.2.2022. The Cane Commissioner, however,

when did not take any action on the representation of the

petitioners, the instant writ petition was filed.

7

Learned counsel for the petitioners has assailed the

granting of the NOC dated 14.9.2021 and the subsequent issuance

of the IEM dated 12.10.2021 essentially on the ground that before

issuing of the NOC and the IEM, the respondents, more

specifically the Cane Commissioner did not look into the fact that

once when the new sugar factory would be established, would

there be enough sugarcane available for the running of the

petitioners' sugar factory.

Learned counsel for the petitioners has argued that when

there is a sugar factory, it has to be supplied sugarcane so that the

factory may not be starved of the raw material which is

sugarcane. He submits that the State has regulated the supply of

sugarcane to the various sugar factories and for this purpose,

learned counsel submitted that "reserved area" and "assigned

area" are declared before the commencement of the "crushing

season". Learned counsel informed that a 'crushing season' starts,

as per the definition given in section 2(i) of U.P. Sugarcane

(Regulation of Supply and Purchase) Act, 1953

4

, on the 1st of

October every year and ends on 15th of July of the following

year. Learned counsel for the petitioners submitted that a

'reserved area' would mean, as per section 2(n) of the U.P. Act

1953, an area reserved for a factory under an order for reservation

of sugarcane areas made under Rule 125-B of the Defence of

India Rules, 1962 and when no such order is in force, the area

4hereinafter referred to as the U.P. Act 1953

8

specified in an order made under section 15 of the U.P. Act 1953

and an 'assigned area' means, as per definition clause of section

2(a) of the U.P. Act 1953, an area assigned to a factory under

section 15 of the U.P. Act 1953.

Learned counsel for the petitioners submitted that as per

section 15 of the U.P. Act 1953, the Cane Commissioner shall,

after consulting the factory and the cane growers' Cooperative

Society reserve any area for the purposes of supply of sugarcane

to a factory in accordance with the provisions of section 16

during one or more crushing seasons as may be specified. For

proper understanding, section 15 of the 1953 Act is being

reproduced here as under :-

"15. Declaration of reserved area and

assigned area.--(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 cane growers' Co-operative Society in

the manner to be prescribed :

(a)reserve any area (hereinafter called the

reserved area); and

(b)assign any area (hereinafter call an

assigned area).

for the purposes of the supply of cane to a factory in

accordance with the provisions of Section 16 during

one or more crushing seasons as may be specified

and may likewise at any time cancel such order or

alter the boundaries of an area so reserved or

assigned.

(2) Where any area has been declared as

reserved area for a factory, the occupier of such

factory shall, if so directed by the Cane

Commissioner, purchase all the cane grown in that

area, which is offered for sale to the factory.

(3)Where any area has been declared as

assigned area for a factory, the occupier of such

factory shall purchase such quantity of cane grown

9

in that area and offered for sale to the factory as may

be determined by the Cane Commissioner.

(4) An appeal shall lie to the State

Government against the order of the Cane

Commissioner passed under sub-section (1)."

Learned counsel for the petitioners further submitted that

before declaring of a 'reserved area' and an 'assigned area', the

State through a 'bonding policy', which was a document by which

the Cane Commissioner (Purchase) would assess as to what was

the area in which the sugarcane was being grown; which farmers

were to supply to which sugarcane Cooperative Society and

which all sugarcane Cooperative were to supply cane to a

particular factory. Learned counsel, therefore, submitted that, as

per the 'bonding policy', the reserved area was declared. In the

instant case, learned counsel for the petitioners submitted, when

the 'reservation order' was issued for the year 2020-21 then after

looking into the area adjoining the petitioner no.1-factory, it was

ascertained that 47464 hectare of land which would provided

414.76 lac quintals of cane would be reserved for the petitioner

no.1 and this area would include the reserved area and the

assigned area. For the petitioner no.2, it was declared that 42958

hectare would be reserved for it and it would include the reserved

area and the assigned area and this would give 366.45 lac quintals

of sugarcane to the petitioner no.2. Learned counsel for the

petitioners further informed the Court that at the time when the

bonding policy is issued by the Cane Commissioner, a "drawl

10

percentage" of the total sugarcane was also determined. He

explained that the 'drawl percentage' is the percentage of

sugarcane which would be reaching the factory despite the

reservation. As per learned counsel for the petitioners, drawl

percentage of the petitioner no.1 for the year 2020-21 was

61.77% and for the petitioner no.2 it was 53.76% for the year

2020-21.

Learned counsel for the petitioners further informed that

every factory had a "crushing capacity" and he informed that the

cane which the petitioner no.1 could crush per day was to the

extent of 14000 tonnes per day and similarly for the petitioner

no.2 it was 13000 tonnes per day. Learned counsel for the

petitioners also informed the Court that when the reservation

order was issued under section 15 of the U.P. Act 1953 then the

area which was reserved and assigned took into account the

sugarcane which would reach the factory and whether that would

suffice the crushing capacity. It was the duty of the authorities to

see to it that as per the drawl capacity the factory had the crushing

capacity. Learned counsel therefore, submitted that whenever an

NOC is granted by the Cane Commissioner viz.-a-viz. the

distance and whenever there is an issuance of an IEM then the

criteria as is given in Rule 22 of the U.P. Sugarcane (Regulation

of Supply and Purchase) Rules, 1954

5

had to be looked into.

Still further, he has submitted that before the NOC was given, the

5hereinafter referred to as the 1954 Rules

11

Commissioner had to give a personal hearing to the neighbouring

factories. What is more, he has argued that the issuance of the

IEM and the NOC ought to have been preceded by an active

exercise wherein it could be seen that there was actual application

of mind with regard to the fact that there would be enough

sugarcane available to the neighbouring existing sugar factories.

Learned counsel for the petitioners further submitted that if the

drawl capacity was as low as had been taken note of in the

bonding policies etc. then even if the petitioner no.1 was

allocated 414.76 lac quintals of sugarcane from an area 47464

hectares of land and the petitioner no.2 was assured sugarcane to

the tune of 366.45 lac quintals from an area of 42958 hectares of

land, the cane which actually was to reach to the petitioners could

be much less than the assured sugarcane.

Learned counsel for the petitioners in the rejoinder

affidavit filed in reply to the counter affidavit filed by respondent

no.4 dated 21.9.2022 has given on page 38, the details of how

much area was reserved for the petitioner nos.1 and 2 in the year

2019-20, 2020-21 and 2021-22. The relevant portion of the table

is being reproduced here as under :-

Year 2019-20

S.No.Factory Name Cane Area

(In Hect.)

Allotted

Production

(Lac. Qtls)

Crushing

(Lac Qtls)

Drawl %

1.Dhampur 46705 401.20 231.63 57.73

2.Seohara 40034 336.24 214.50 63.79

12

Year 2020-21

S.No.Factory Name Cane Area

(In Hect.)

Allotted

Production

(Lac. Qtls)

Crushing

(Lac Qtls)

Drawl %

1.Dhampur 44786 386.76 238.92 61.77

2.Seohara 48139 406.00 218.25 53.76

Year 2021-22

S.No.Factory Name Cane Area

(In Hect.)

Allotted

Production

(Lac. Qtls)

Crushing

(Lac Qtls)

Drawl %

1.Dhampur 47464 414.76 244.29 58.90

2.Seohara 31878 366.45 216.96 59.21

Learned counsel for the petitioners has, therefore, argued

that in all the three crushing seasons even though the allotted

sugarcane used to be much more the actual sugarcane which

reached the petitioners' factory was much less. He submits that

for the petitioner no.1 in the year 2019-20 though 401.20 lac

quintals of sugarcane was reserved, only 231.63 lac quintals of

sugarcane was actually crushed. Similarly in the year 2020-21,

the petitioner no.1 was allotted 386.76 lac quintals but it could

crush only 238.92 lac quintals and in the year 2021-22 though

414.76 lac quintals of sugarcane was allotted but it could crush

only 244.29 lac quintals. It was further submitted by learned

counsel for the petitioners that similarly for the petitioner no.2

even though the allotted sugarcane was much more but the actual

sugarcane which came to the factory was of a lesser quantity i.e.

to say that the petitioners had crushed lesser quantity of

sugarcane than the quantity allotted to them. Learned counsel for

13

the petitioners submitted that this occurred on account of the fact

that out of the 100% quantity of the sugarcane which was allotted

to the petitioners, about 20% of the total sugarcane was normally

sold off by the farmers to Kolhu or to the Jaggery units; 5% of it

was retained by them for cattle fodders and 10-15% was retained

for using as seed for the next crops.

Learned counsel for the petitioners further submitted that if

the daily crushing capacity of the respondent no.4 was of 10000

tonnes and if for the 180 days it crushed sugarcane, it would

require a minimum of 180 lac quintals of sugarcane and if there

was a drawl percentage which had to be seen for the new factory,

then the allotment which would have to be made for it would

reach 360 lac quintals and, therefore, for an area which had an

average yield of 875.25 per hectare, an area of 41140 hectares

would be required to satisfy the requirement of the proposed

sugar mill itself. Learned counsel submitted that the additional

area of 41140 hectares for growing sugarcane was not available

either in the district of Bijnor or in the district of Amroha or in

any other surrounding districts as the fields in the surrounding

districts had reached the point of saturation so far as the growing

of sugarcane was concerned. Learned counsel for the petitioners

submitted that if 41140 hectares of cultivable land were to be

reserved for the respondent no.4 then it would lead to diversion of

the sugarcane from the existing sugar mills and their sugarcane

supply would be reduced. In effect, learned counsel for the

14

petitioners argued that if there was a diversion of sugarcane

growing areas to the reserved area of respondent no.4 then it

would lead to lessening of the reserved area for the petitioners.

Learned counsel for the petitioners submitted that the allocation

of land proposed for the respondent no.4 was earlier for M/s.

Laxmi Sugar Mill for the establishment of a sugar mill which was

challenged in a suit and when no injunction was granted, a First

Appeal From Order being First Appeal From Order No.1077 of

2010 was filed in the High Court. In that case when the injunction

was granted by the High Court, the matter reached the Supreme

Court where it was pending as Civil Appeal No.3281 of 2011. In

the order of the Supreme Court it was directed that the

constructions done by M/s. Laxmi Sugar Mill would be subject to

the outcome of the appeal in the Supreme Court. Learned counsel

for the petitioners, therefore, argued that the efforts of the

respondent no.4 to establish its sugar mill in the same location

was nothing else but a dubious method for circumventing the

orders of the Supreme Court. Still further, learned counsel for the

petitioners argued that the IEM issued to the respondent no.4 was

without any application of mind and on the basis of just the fact

that NOC had been issued on 14.9.2021. He submitted that no

evaluation of the availability of cane in the area for the purposes

of respondent no.4 and the petitioner was made. Learned counsel

for the petitioners has heavily relied upon the judgment of the

Supreme Court in the case of Ojas Industries Pvt. Ltd. vs. Oudh

15

Sugar Mills Ltd.

6

and specifically relied upon paragraph 30 of the

judgment, which is being reproduced here as under :-

"The Sugarcane (Control) (Amendment) Order, 2006

inserts Clauses 6-A to 6-E in Clause 6 of the

Sugarcane (Control) Order, 1966. It retains the

concept of "distance". This concept of "distance"

has got to be retained for economic reasons. This

concept is based on demand and supply. This

concept has to be retained because the resource

namely, sugarcane, is limited. Sugarcane is not an

unlimited resource "Distance" stands for available

quantity of sugarcane to be supplied by the farmer to

the sugar mill. On the other hand, filing of bank

guarantee for Rs. 1 crore is only as a matter of proof

of bona fides. An entrepreneur who is genuinely

interested in setting up a sugar mill has to prove his

bona fides by giving bank guarantee of Rs. 1 crore.

Further, giving of bank guarantee is also a proof that

the businessman has the financial ability to set up a

sugar mill (factory). Therefore, giving of bank

guarantee has nothing to do with the distance

certificate."

(emphasis supplied)

Sri Manish Goyal, learned Additional Advocate General

assisted by Sri A.K. Goyal, learned counsel appearing for the

State-respondents submitted that there was enough sugarcane

available in the region and, therefore, there was no harm if a new

sugar mill was established. He submitted that when the

petitioners could not crush the sugarcane which was to be made

available to them from the reserved/assigned areas then they

could not complain against the establishment of a new factory. He

further submitted that despite the fact that there was an increase

in the cane areas for the three consecutive years for the petitioners

but the drawl percentage for both the petitioners had been

6(2007) 4 SCC 723

16

reduced. He in fact submits that even the crushing capacity was

reduced every year.

Learned Additional Advocate General further submitted

that as always there was an increase in the area where sugarcane

was being grown, it was in the interest of the public in general

that more sugar factories be established. He drew the attention of

the Court to "The Uttar Pradesh Sugarcane Supply and

Purchase Order, 1954". More specifically, he drew the attention

of the Court to Form-C which was an agreement between the

cane growers' Cooperative Society and the occupier of the factory

and submitted that the occupier of the factory entered into an

agreement only to the extent that the factory could crush.

Definitely, the factory would not enter into an agreement by

which there would be surplus sugarcane. He, therefore, submitted

that the concept of "drawl capacity" was brought into existence

because the sugarcane which was being utilized by a particular

sugar factory was only limited to its crushing capacity.

Learned Additional Advocate General further submitted

that nowhere have the petitioners come up with any case that their

sugarcane crushing capacities were more than the sugarcane

which was being made available to them. He also submitted that

if more factories would be established, the sugarcane which was

available in the reserved areas of the petitioners and which was

not being utilized by them on account of their low drawl capacity,

could be diverted to fresh factories in public interest. He further

17

submitted that even if the drawl capacity was not seen and only

the reservation order was seen then also there was sufficient land

available for the supply of sugarcane to the existing as well as for

the new factories.

Learned Additional Advocate General while replying to the

non-consideration of the objection of the petitioners, submitted

that there was sufficient consideration by the authorities

concerned with regard to the availability of sugarcane to the

petitioners and also to the new factory. He argued that the

Government had taken into account the figures of additional

sugarcane which was available in the last so many years and

which could not be utilized by the existing factories and also he

submitted that the Government had taken into account the regular

trend of the increasing sugarcane production.

Learned Additional Advocate General submitted that if all

the Forms "C", which had been signed by the petitioners under

the 1954 Rules were seen, it would become evident that much

more sugarcane was being allotted to them in the reservation

orders issued under section 15 of the 1953 Act than was being

actually consumed by the two petitioners. For this purpose he

pointed out to the various Forms "C" which have been filed along

with the Supplementary Rejoinder Affidavit by the petitioners on

29.11.2022.

Learned Additional Advocate General specifically

submitted that the order of the Supreme Court passed in Civil

18

Appeal No.3281 of 2022 was not of any help to the petitioners as

the same was no longer applicable in the case at hand. He submits

that the respondent no.4 had acquired almost 400 bighas of land

to establish its mill. He further submitted that the IEM which was

issued to the earlier factory namely M/s. Laxmi Sugar Mill Pvt.

Ltd. was cancelled vide communication dated 1.10.2021 and the

respondent no.4 was granted the IEM on 12.10.2021 and,

therefore, it may not be said that the respondent no.4 was in any

way trying to get what was not given to M/s. Laxmi Sugar Mills

Pvt. Ltd. surreptitiously.

Learned Additional Advocate General argued that once

when it was found that there was sufficient material for taking a

particular policy decision by the State Government and the

Government of India within the rights guaranteed by the Statutes

then the High Court may not under its powers of judicial review

go into the correctness of such policy decision so as to find out

better alternatives. In this regard he relied upon the following

decisions of the Supreme Court :-

1.Federation of Railway Officers Association & Others. vs.

Union of India

7

2.BALCO Employees Union vs. Union of India (UOI) &

Others.

8

3.P.T.R. Exports (Madras) Pvt. Ltd. & Other vs. Union of

India (UOI) & Others

9

.

4.Prag Ice and Oil Mills & Others vs. Union of India (UOI)

10

5.R.K. Garg & Others vs. Union of India (UOI) & Others

11

7(2003) 4 SCC 289

8(2002) 2 SCC 333

9(1996) 5 SCC 268

10(1978) 3 SCC 459

11(1981) 4 SCC 675

19

6.Dhampur Sugar (Kashipur) Ltd. vs. State of Uttaranchal &

Others

12

.

7.Ugar Sugar Works Ltd. vs. Delhi Administration &

Others

13

.

8.Shri Sitarm Sugar Company Limited & Another vs. Union

of India & Others

14

.

Learned Additional Advocate General has specifically

relied upon paragraphs 18, 19 and 20 of the judgment of the

Supreme Court in Ugar Sugar Works Ltd. (supra) and

therefore, the same is being reproduced here as under :-

"18. The challenge, thus, in effect, is to the

executive policy regulating trade in liquor in Delhi.

It is well settled that the Courts, in exercise of their

power of judicial review, do not ordinarily interfere

with the policy decisions of the executive unless the

policy can be faulted on grounds of mala fide,

unreasonableness, arbitrariness or unfairness etc.

Indeed, arbitrariness, irrationality, perversity and

mala fide will render the policy unconstitutional.

However, if the policy cannot be faulted on any of

these grounds, the mere fact that it would hurt

business interests of a party, does not justify

invalidating the policy. In tax and economic

regulation cases, there are good reasons for judicial

restraint, if not judicial deference, to judgment of the

executive. The Courts are not expected to express

their opinion as to whether at a particular point of

time or in a particular situation any such policy

should have been adopted or not. It is best left to the

discretion of the State.

"19. In T.N. Education Deptt. Ministerial and

General Subordinate Services Assn. vs. State of T.

N. (1980) 3 SCC 97, noticing the jurisdictional

limitations to analyse and fault a policy, this Court

opined that:

"The court cannot strike down a G.O., or a

policy merely because there is a variation or

contradiction. Life is sometimes contradiction

and even consistency is not always a virtue.

What is important is to know whether mala

12(2007) 8 SCC 418

13(2001) 3 SCC 635

14(1990) 3 SCC 223

20

fides vitiates or irrational and extraneous

factor fouls."

20. It would also be prudent to recall the following

observations of Lord Justice Lawton in Laker

Airways Ltd. vs. Deptt. of Trade, (1977) 2 WLR

234, while considering the parameters of judicial

review in matters involving policy decisions of the

executive :

"In the United Kingdom aviation policy is

determined by ministers within the legal

framework set out by Parliament. Judges have

nothing to do with either policy-making or the

carrying out of policy. Their function is to

decide whether a minister has acted within the

powers given to him by statute or the common

law. If he is declared by a court, after due

process of law, to have acted outside his

powers, he must stop doing what he has done

until such time as Parliament gives him the

powers he wants. In a case such as this I

regard myself as a referee. I can blow my

judicial whistle when the ball goes out of play;

but when the game restarts I must neither take

part in it nor tell the players how to play."

(emphasis supplied)

He also relied upon paragraph 12 of the the judgment of

the Supreme Court in Federation of Railway Officers

Association (supra) and the same is also being reproduced here

as under :-

"12. In examining a question of this nature where a

policy is evolved by the Government judicial review

thereof is limited. When policy according to which

or the purpose for which discretion is to be exercised

is clearly expressed in the statute, it cannot be said to

be an unrestricted discretion. On matters affecting

policy and requiring technical expertise the Court

would leave the matter for decision of those who are

qualified to address the issues. Unless the policy or

action is inconsistent with the Constitution and the

laws or arbitrary or irrational or abuse of power, the

Court will not interfere with such matters."

21

Learned Additional Advocate General further submitted

that the ratio in the case of Ojas Industries Pvt. Ltd. (supra)

would not help the petitioners as that was a case where two sugar

mills were proposed to be established within a distance of 7.2

kilometers and he submitted that when the Supreme Court

observed that the distance was to be an economic concept then he

submitted that the Supreme Court held that when the State was

wanting one unit to be separated by another unit by 15 kilometers

then it was for "economic reasons". Learned Additional Advocate

General, therefore, submitted that the judgment cited by the

petitioners in the case of Ojas Industries Pvt. Ltd. (supra)

would not in any manner help the petitioners. He also submitted

that no monopolistic approach, as was being desired by the

petitioners, could be given sanctity to by a Constitutional Court.

In this regard reliance has been placed on the judgments of the

Supreme Court in APM Terminals BV vs. Union of India

15

;

Dhampur Sugar (Kashipur) Ltd. vs. State of Uttaranchal &

Ors.

16

and Sunil Kumar Sharma & Anr. vs. State of U.P.

17

.

Learned Additional Advocate General relying upon the judgment

of the Supreme Court in Dhampur Sugar (Kashipur) Ltd. (supra)

categorically stated that in a policy matter where the Government

had come up with a policy, the Court could not annul the same

only on the ground that earlier there was a lesser number of

factories and now there would be more factories and, therefore,

152011 (6) SCC 756

162007 (8) SCC 418

172018 (9) ADJ 806 (DB)

22

sugarcane supplied to the factories would be restricted. He

submitted that whenever the Government takes a policy decision,

it looks into every aspect of the matter. Learned Additional

Advocate General submitted that if the respondent no.4 becomes

functional and when reserved areas are to be allotted to different

factories, then reservation orders would be drawn under section

15 of the 1953 Act as per the sugarcane availability; the drawl

capacity and the crushing capacity. Here again, learned

Additional Advocate General submitted that if in any manner the

petitioners were not satisfied, at a future date, with the reservation

order, then they could always file a statutory appeal.

Learned Additional Advocate General again relying upon

the judgment of the Supreme Court in Dhampur Sugar

(Kashipur) Ltd. (supra) submitted that before the Supreme

Court the petitioner no.1 was the the appellant in that case with

regard to its Kashipur Unit. In that case a Rab unit was coming up

and the petitioner had opposed by filing a writ petition in the

High Court that only a few days back the Government was

reluctant to give licence to the Rab unit and, therefore, it could

not give the licence on a later date. The High Court had dismissed

the writ petition of the petitioner therein and the Supreme Court

had also dismissed the appeal with a definite observation that

matters of public policy could not be interfered with lightly.

Learned Additional Advocate General submitted that the case at

hand had also been filed virtually on the same grounds. The

23

petitioners were only apprehending, he submits, that there would

be a shortage in the supply of sugarcane to the petitioners. It had

not been considered while filing the writ petition, learned

Additional Advocate General submits, that no writ lies on the

basis of apprehension. He submitted that absolutely no writ lay on

the basis of apprehension.

Learned Additional Advocate General submitted that the

filing of the instant writ petition was with an oblique motive to

stifle competition. He submits that Rule 22 of the 1954 Rules had

sufficient provisions for seeing that reservation is done in a

proper fashion.

He also submitted that the establishment of a new unit

would be in the larger public interest and in the interest of the

cane growers. He, therefore, submitted that a holistic view of the

Constitution ought to be taken. In this regard, he placed heavy

reliance upon the decision of the Supreme Court in Shivshakti

Sugars Ltd. vs. Shree Renuka Sugar Ltd.

18

In the end, learned Additional Advocate General submitted

that when there was a limited crushing capacity of a sugar factory

and the drawl percentage was also lesser than the tonnage of

sugarcane allotted, then the only conclusion was that the farmers

were diverting their sugarcane produce to Khandsari units which

were being run by Kolhus. Learned Additional Advocate General

also submitted that not only was there more wastage but the profit

18(2017) 7 SCC 729

24

margin was also minimal. He, therefore, submitted that if a new

factory comes up then even farmers would be benefited from the

new factory as they would definitely get more money by selling

their sugarcane to sugar factories.

Sri Aditya Kumar Singh, learned counsel appearing for

respondent nos.3, 5 and 6 also made arguments virtually on the

same lines.

Sri Rakesh Pande, Senior Advocate assisted by Sri K.K.

Rao, learned counsel appearing for respondent no.4 submitted

that the petitioners' argument that the NOC ought to be issued

after taking a broader view was absolutely fallacious. He

submitted that under the provisions of Clauses 6-A to 6-B of the

1966 Order, the NOC was issued and they only stipulated that the

NOC would be given on the basis of distance which ought not to

be lesser than 15 kilometers from one factory and the other.

Learned Senior Counsel submitted that if the petitioners

contended that the availability of sugarcane had also to be looked

into then they should have challenged the vires of Orders 6-A and

6-B of the 1966 Order which they have not done in the instant

writ petition. He submits that while issuing an NOC no other

parameter ought to be looked into. Learned counsel for

respondent no.4 further submitted that reservation area which was

the domain of the Cane Commissioner under section 15 of the

1953 Act read with Rule 22 of the 1954 Rules definitely catered

for providing of a reserved area and if there was a factory, he

25

submits, the reserved area had to be there for it as per its drawl

capacity and crushing capacity. Learned counsel, therefore,

submits that the writ petition was filed on the basis of absolute

apprehension and no writ could be issued on the basis of

apprehension. Learned counsel submitted that even before there

was any shortfall in the reserved area, the writ petition had been

filed. This showed that the writ petition was a premature one.

Learned counsel for respondent no.4 further submitted that

so far as the procedure for considering the grant of NOC by the

Commissioner, Cane and Sugar Department dated 12.9.2022 was

concerned (the policy dated 12.9.2022 had been attached along

with the Supplementary Affidavit filed by the petitioner on

9.11.2022), when the NOC was granted and the IEM was

accepted by the Central Government, then it was presumed that

all factors must have been taken into consideration.

Having heard Sri Shashi Nandan, learned Senior Counsel

assisted by Sri Rahul Agarwal, learned counsel for the

petitioners; Sri Manish Goyal, learned Additional Advocate

General assisted by Sri A.K. Goyal, learned counsel for

respondent nos.1 and 2; Sri Rakesh Pande, learned Senior

Counsel assisted by Sri K.K. Rao, learned counsel appearing for

the respondent no.4 and Sri Aditya Kumar Singh, learned counsel

appearing for the respondent nos.3, 5 and 6, the Court is of the

view that no interference is warranted in the instant writ petition

and, therefore, the same deserves to be dismissed.

26

The petitioners have challenged the NOC dated 14.9.2021

issued by the respondent no.2-Cane Commissioner to the

respondent no.4-M/s. Bindal Paper Limited and the IEM bearing

Acknowledgment No.IEM/A/ACK/595/2021 dated 12.10.2021

issued by the Department of Promotion of Industry and Internal

Trade, Ministry of Commerce and Industry, Government of India.

The first ground which the petitioners have taken is that the

grant of the NOC and the issuance of the IEM thereof was done

merely on the basis of the distance between the proposed sugar

mill and the existing sugar mills and the learned counsel for the

petitioners submitted that this contravened the scheme as

provided in the U.P. Act 1953 and the 1954 Rules. Learned

counsel for the petitioners had submitted that the factor of

distance between the proposed mill and the existing sugar mill

was only one of the many factors which was to be considered as

per the Act and the Rules framed. He had submitted that when the

procurement of the sugarcane and manufacturing of sugar was

regulated by U.P. Act 1953 and the 1954 Rules then as per

section 15 of the U.P. Act 1953 and as per Rule 22 of the 1954

Rules, power was there with the Cane Commissioner to

determine the reserved area and the assigned area for each sugar

mill from which the sugar mill was required to procure sugarcane

for its crushing season. Learned counsel for the petitioners had

stated that the quantity of the sugarcane supplied from the

reserved and assigned areas to the sugar factory in the previous

27

years and the quantity of the cane which was required to be

crushed by the factory were the main criteria under Rule 22 of the

1954 Rules. He had, therefore, submitted that as per the 1966

Control Order, specifically clauses 6-A to 6-E, the Authority had

to see that whenever a sugar factory was to be established then

the availability of sugarcane had to be looked into. By referring to

the judgment of the Supreme Court reported in (2007) 4 SCC

723, learned counsel for the petitioners had argued that the

distance alone was not the criteria on the basis of which the NOC

ought to have been issued. He submitted that when an NOC was

to be issued then the impact on the availability of the sugarcane

for the already existing sugar mills had to be examined with

reference to their crushing capacity; total cultivable area of sugar

cane which was there in the reserved area and the assigned area

and the drawl percentage had definitely to be considered.

However, from the arguments heard, the Court is of the

view that under Clause 6-A of the 1966 Control Order the Cane

Commissioner had to only look into the fact as to whether there

was a distance of 15 kilometers from the proposed site of a fresh

factory and the pre-existing factories. If that was the statutory

obligation on the Cane Commissioner then he could not have

gone beyond that statutory obligation. The Court has also

examined section 15 of the U.P. Act 1953 and Rule 22 of the

1954 Rules and it has found that if a factory had been established

then it was the bounden duty of the Authorities to see that it had

28

to attach a reserved area and an assigned area to every sugar

factory. The Court is also of the view that as and when a fresh

factory is given the permission to establish itself the Authorities

were under an obligation to see that the fresh sugar factory as also

the pre-existing sugar factories get enough sugarcane for the

purposes of crushing in a particular crushing year. Also the Court

finds that when the reserved area and the assigned area is

allocated to a particular sugar factory then the following amongst

other aspects are taken into consideration :-

i.the drawl capacity;

ii.the crushing capacity; and

iii.the past performance of the sugar factory.

Also when the reserved area and the assigned area is

allocated to a particular sugar factory then the Cane

Commissioner definitely sees to it that the area and the sugarcane

allotted is more than is required for a particular sugar factory.

Also the Court finds that when the crushing year commences, the

sugar factory enters into an agreement with the Cane Growers

Cooperative Society in Form-C provided under the U.P.

Sugarcane Supply and Purchase Order, 1954. All this leads to an

inevitable conclusion that when a sugar factory, despite the fact

that it has got much more land as reserved area or assigned area,

enters into an agreement in Form-C with the Cane Growers

Cooperative Society for the supply of sugarcane then it has in

29

mind the extent of crushing it shall be able to do in a particular

crushing year. It definitely keeps in mind the drawl percentage.

From the record we find that the petitioner no.1 was

allocated 46705 hectares of land in the year 2019-20 and was

allocated 401.20 lakh quintals of sugarcane but it actually crushed

only 231.63 lakh quintals. Also we find that in the year 2019-20

the petitioner no.2 had been allocated 40034 hectares of land with

the sugarcane crop to the extent of 336.24 lakh quintals but it had

actually crushed only 214.50 lakh quintals. This was also the case

in the year 2020-21 and in the year 2021-22.

The above discussion, therefore, clearly illustrates that

when the Government gave its no objection and had also

acknowledged the IEM, it had taken into consideration the

availability of sugarcane viz.-a-viz. the existing factories and the

factory which was proposed to be established i.e. the respondent

no.4.

Sugar industry is a controlled industry. Government has a

control on the sugarcane production, distribution, prices as also

on the production and marketing of the finished product which is

sugar. Whenever a new factory comes up with the earlier existing

factories, it is the responsibility of the State to see that sugarcane,

which is the raw material for the factories - old and new, is made

available to all the factories.

The other aspect which was argued by the learned counsel

for the petitioners was that whether the setting-up of a new sugar

30

mill would impact the availability of the sugarcane to the existing

sugar mill in the reserved area/assigned area.

From the various arguments we have heard we are

definitely of the view that the argument was misplaced.

Whenever there is a reservation order or an assignment order, it is

done after taking into consideration as to what would be the

sugarcane grown in that area and as to how much of the

sugarcane was actually required for any particular sugar factory.

In the case at hand we definitely find that much more sugarcane

crop was allocated to the existing factories i.e. the petitioners but

out of that allocated sugarcane only a certain portion of it was

actually purchased by the petitioners. This definitely means that

the Cane Commissioner had in mind the capacity of the sugar

factory and accordingly he allocates the reserved area and the

assigned area. For the petitioners to think that the availability of

sugarcane would not be there upon coming up of a new sugar

factory, is only an apprehension on the basis of which the Court

cannot adjudicate the matter.

The Court, therefore, is of the view that whenever the

Government proposes to set-up a new factory, it always takes into

consideration the availability of sugarcane. Before every crushing

season the reserved area and the assigned area shall be allocated

to every factory and every factory would be entering into an

agreement with the Cane Growers Cooperative Society in Form-

C under the U.P. Sugarcane Supply and Purchase Order, 1954.

31

What is more, the Court finds that if, by the reservation

order any particular factory, is in any manner dissatisfied then it

can always file a statutory appeal. Therefore, the Court is

definitely of the view that when the new/proposed sugar factory

was being brought into existence, the State Authorities which had

all the data before them, considered the availability of sugarcane

and the impact of a new factory on all the existing factories.

Further the Court finds that the setting-up of a new sugar factory

at the same location, which is the subject matter of the dispute in

Civil Appeal no.3281 of 2011 before the Supreme Court, would

not in any manner violate the orders passed by the Supreme Court

as well as the High Court. The Court also finds that in fact the

respondent no.4 had acquired 400 bighas of land to establish its

mill and the IEM which was issued to the earlier factory i.e. M/s.

Laxmi Sugar Mill was cancelled vide order/communication dated

1.10.2021 and only thereafter the respondent no.4 was granted the

IEM on 12.10.2021.

Further the Court is of the view that by allowing the

respondent no.4 to set-up a fresh factory was well within the

realm of the powers of the Government and we would refrain

from interfering in the matter.

We are also of the view that definitely the coming up of a

fresh factory would not in any manner hurt the business interests

of the existing sugar factories including the business interests of

the petitioners. Therefore, when the petitioners argued that

32

economic reasons had to be looked into while giving the consent

by the Government for the establishment of a fresh factory, the

argument was fallacious. The economic reasons while

establishing a fresh sugar factory were looked into. Every pre-

existing factory and the new factory would get its own

reserved/assigned area and every factory would get its raw

material in the form of sugarcane for crushing. The policy

decision taken by the Government for setting-up of a fresh sugar

factory, therefore, does not, in any manner, calls for any

interference by this Court. As and when the fresh sugar factory

comes in, definitely the percentage of sale of sugarcane to the

existing sugar factories along with the new factory would

increase and thus more sugarcane would go to sugar factories. In

this manner the local farmers would also be encouraged to

produce more sugarcane and sell their produce to the sugar

factories. This would bring in more prosperity in the area for the

sugarcane growers.

For the reasons stated above, the writ petition stands

dismissed

Order Date :-06.01.2023

GS

(Siddhartha Varma, J.)

(Ajit Singh, J.)