1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD WRIT PETITION NO.5240 OF 2010 Devarjan Laxmai Sugars Ltd., At Devarjan, Taluka Udgir, District Latur, through its Managing Director Shri Madhavrao Hanmantrao Patil Age 43 years ..PETITIONER VERSUS 1. The State of Maharashtra, Through the Principal Secretary, Co-operation and Textile Department, Maharashtra State, Mantralaya, Mumbai 2. The Commissioner for Sugar, Maharashtra State, Sakhar Sankul, Shivaji Nagar, Pune 3. Shri Rajendra Chavan, The Commissioner for Sugar, Maharashtra State, Sakhar Sankul, Shivaji Nagar, Pune 4. The Union of India, Through Ministry of Industries, Government of India, New Delhi 5. The Ministry of Consumer Affairs, Food and Public Distribution, Government of India, Krishi Bhavan, New Delhi 6. Additional Surveyor General/ Director, Office of Additional Surveyor General, Maharashtra and Goa, G.D.C. Survey of India, Phule Nagar, Alandi Road, Pune 2 7. Jagruti Sugars and Allied Industries Ltd., at Talegaon, Taluka Deoni, District Latur, through its Managing Director Miss.Gauravi Diliprao Deshmukh, registered office at “Lifestyle”, Building, Rajiv Gandhi Chowk, Ausa Road, Latur 8. Annasaheb s/o Manikrao Patil, Age 45 years, Occu.Agril., R/o Chabarga, Taluka Devni, District Latur 9. Raghunath s/o Vaijnath Biradar, Age 35 years, Occu.Agri., R/o Village Gangapur, Taluka Udgir, District Latur 10. Dattatraya s/o Bhagwat Pethe, Age 30 years, Occu.Agri., R/o At Pethewadi, Post Devarjan, Taluka Devni, District Latur 11. Madhav Shankarappa Punje, Age 35 years, Occu.Agri., R/o Village Helamb, Taluka Devni, District Latur 12. Chandrarao s/o Bhimrao Patil, Age 60 years, Occu.Agri., R/o Gangapur, Taluka Udgir, District Latur 13. Baburao s/o Madhavrao Dhanore, Age 75 years, Occu.Agri., R/o Kauthala, Taluka Devni, District Latur 14. Hari Kishanrao Yedle, Age 36 years, Occu.Agri., R/o Hisan Nagar, Taluka Devni, District Latur 15. Pandharinath s/o Gangaram Biradar, Age 70 years, Occu.Agri., R/o Davanhipparga, Taluka Devni, District Latur 3 16. Bhagwat Hansena Pethe, Age 65 years, Occu.Agri., R/o Pethewadi, Post Devarjan, Taluka Devni, District Latur ..RESPONDENTS (Respondent Nos.8 to 16 are intervenors) Mr.N.P.Patil Jamalpurkar, Advocate for petitioner Mr.N.B.Khandare,Government Pleader for respondents 1 and 2 Mr.Alok Sharma, Assistant Solicitor General for respondents 4 to 6 Mr.V.D.Hon, Advocate holding for Mr. S.S.Deshmukh, Advocate for respondent No.7 Mr.V.D.Salunke, Advocate for respondents 8 to 16 (intervenors) Respondent No.3 served CORAM : P.V. HARDAS AND N.D. DESHPANDE, JJ DATE OF RESERVING THE JUDGMENT : 28.7.2010 DATE OF PRONOUNCING THE JUDGMENT : 13.8.2010 JUDGMENT (PER P.V.HARDAS, J.) 1. Rule. Rule returnable forthwith. With the consent of learned Counsel for the parties, this petition is heard finally at the stage of admission. 2. By this petition under Article 226 of the Constitution of India, the petitioner prays for issuance of a writ of certiorari for quashing and setting aside the order dated 21.5.2010 issued by respondent No.2, Commissioner of Sugar and also prays for issuance of a writ of mandamus directing respondent No.2 4 Commissioner of Sugar to issue Aerial Distance Certificate to the petitioner. By virtue of prayer clause (D) to the petition the petitioner prays for issuance of a writ of mandamus directing respondent No.6 to issue certificate showing the distance between the site of sugar factory of the petitioner at Hanumantwadi, Devarjan, Taluka Udgir, District Latur and the site of the proposed sugar factory of respondent No.7 at Talegaon, Taluka Udgir, District Latur. The petitioner also prays for quashing and setting aside the Aerial Distance Certificate issued by respondent No.2 in favour of respondent No.7. 3. Such of the facts as are necessary for the decision of this petition may briefly be stated thus: The petitioner claims to be a company registered under the Companies Act and with a view to establish a new sugar factory at Hanmantwadi, Devarjan, Taluka Udgir, District Latur, the petitioner had purchased 70 acres of land. According to the petitioner, the petitioner intends to establish a sugar factory with installed capacity of 2500 metric tons per day with 9,00,000 ethanol and power generation plant of 12 MW exportable power. On 23.11.2000, the petitioner applied to the respondent No. i.e. the Ministry for Industries for issuance of the Industrial Entrepreneur Memorandum, hereinafter referred to as the “IEM” 5 for the sake of brevity. Pursuant to the application of the petitioner, the IEM came to be issued by the Central Government in favour of the petitioner on 23.11.2000. On 21.1.2003, the petitioner applied for setting up an additional plant for manufacturing of absolute alcohol and accordingly, the concerned department issued the IEM in favour of the petitioner on 21.1.2003. The petitioner also accordingly obtained the No Objection Certificate from the Maharashtra Pollution Control Board on 13.2.2001 and obtained a No Objection Certificate/Consent Certificate for installation of the co-generation power plant from the Maharashtra State Electricity Board on 20.10.2003. After obtaining the No Objection Certificate, the petitioner obtained the permission from the Sub Divisional Officer, Udgir on 1.1.2004 for conversion of the land to non agricultural purposes. According to the petitioner about 1500 members have been enrolled and the majority of them have made payment towards the share capital. The petitioner however, as claimed by the petitioner, could not obtain the loan of Rs.40 Crore for various reasons. The petitioner claims that the petitioner has been successful in obtaining the loan amount required for installation of the machinery for starting of sugar factory from the VEE KAY Consultants, Mumbai. The petitioner claims that on account of these difficulties, the petitioner could not set up the sugar factory and the other ancillary project till now. 6 4. On 10.11.2006, the Central Government had issued notification in exercise of the powers under Section 3 of the Essential Commodities Act, 1955 amending the Sugarcane (Control) Order, 1966 wherein the aerial distance between two sugar factories is prescribed as 15 Kms. Under the aforesaid amended provisions, it is mandatory to obtain the Aerial Distance Certificate, if the sugar factory has not started functioning within six months of the date of issuance of the IEM. The petitioner accordingly applied for issuance of the Aerial Distance Certificate and submitted an application to that effect before respondent No. 2 and 6. The application of the petitioner was given the serial number at 41. On 11.8.2008, the petitioner also applied to the Additional Surveyor General (Respondent No.6). 5. According to the petitioner Writ Petition No.3222 of 2010 came to be filed before the principal seat of this High Court at Bombay by one Indian Sugar Manufacturing Co.Ltd. The Division Bench of this Court issued certain directions vide its order dated 16.4.2010. The Division Bench directed the Commissioner of Sugar to decide the application for issuance of the Aerial Distance Certificate, as contemplated by Rule 6 (b) of the Sugarcane (Control) (Amendment) Order, 2006, strictly in accordance with the chronological order in which the applications are received without breaking the chronological order. According to the 7 petitioner the petitioner received a communication dated 23.4.2010 on 30.4.2010 at about 11.00 a.m. By virtue of the said communication, the petitioner was called upon to remain present personally on the said date. On the same day the Managing Director of the petitioner – Company, since the letter had been received on 30.4.2010 at 11.00 a.m., could not remain present for the said meeting and requested one of his friends, Mr.Dhuble, an Advocate from Pune to attend the office of the Commissioner of Sugar on behalf of the petitioner – Company and request for adjournment. Accordingly, Advocate Mr.Dhuble remained present and attended the office of the Commissioner of Sugar and was informed that in the next meeting a decision about the issuance of the Aerial Distance Certificate would be taken. On 5.5.2010, the Managing Director of the petitioner – Company had attended the office of the Commissioner of Sugar at Pune and submitted an application before the Commissioner of Sugar requesting not to issue Aerial Distance Certificate in favour of any other sugar factory situated within the distance of 15 Kms. from the site of the proposed sugar factory of the petitioner. This was necessitated, according to the petitioner, because it apprehended that respondent No.7 – Jagruti Sugar and Allied Industries Ltd., Talegaon, Taluka Devni, District Latur, by exerting political pressure and influence was likely to get favourable orders from the Commissioner of Sugar. According to the petitioner – 8 Company the petitioner learnt recently that one Deeliprao Dagadujirao Deshmukh, Ex-Minister intends and desires to install a sugar factory at Talegaon, Taluka Devni, District Latur upon reading a news item in that behalf in the newspaper. According to the petitioner, the apprehension of the petitioner turned into reality when the petitioner received a copy of the order dated 21.5.2010 on 29.5.2010 informing the petitioner that the application submitted by the petitioner for issuance of the Aerial Distance Certificate came to be rejected. According to the petitioner, in the aforesaid order/communication, an erroneous and a false statement has been made that the petitioner had been issued with a letter dated 20.4.2010. According to the petitioner, the petitioner was never in receipt of the letter dated 20.4.2010. The petitioner has obtained a certificate in respect of the communications received by the petitioner under Registered Post from 20.4.2010 to 30.4.2010. According to the petitioner, though the respondent No.7 had submitted an application subsequent to the application of the petitioner, the aforesaid application has been decided favourably by the respondents and accordingly, the Aerial Distance Certificate has been issued to respondent No.7. The aforesaid orders rejecting the application of the petitioner and the order granting Aerial Distance Certificate to respondent No.7 are subject matter of challenge in the present petition. 9 6. On notice of this petition being issued to the respondents, respondents 1 and 2 have filed their affidavit in reply opposing the petition. According to the respondents, the petitioner had submitted an application on 30.8.2008 to the respondent No.2 Commissioner of Sugar for issuance of Aerial Distance Certificate. The respondents 1 and 2 in their affidavit at paragraph 4 have highlighted the various documents submitted by the petitioner. The respondents contend that the application of the petitioner was bereft of a measurement report conducted by the Surveyor of India, Pune. It is further submitted that the Division Bench of this Court in a public interest litigation, Writ Petition No.20 of 2006 have passed an order dated 12.7.2006 restraining the Commissioner of Sugar and the Government from issuing any fresh directions for new sugar factories in the State. During the pendency of the said order, the petitioner had submitted the application and, therefore, application of the petitioner was kept pending. Respondents 1 and 2 further contend that several other private sector units have preferred applications to the respondent No.2 but all the applications were kept pending because of the interim order of this Court dated 12.7.2006. Some of the private sector units obtained orders from this Court in the pending public interest litigation by filing applications and seeking directions to the respondent No.2 for consideration of their applications for issuance of the Aerial Distance Certificate and pursuant to the 10 directions of the Division Bench of this Court those applications came to be decided by respondent No.2. It is further stated at paragraph 6 that subsequently, the Division Bench clarified its interim order dated 12.7.2006 on 21.1.2010 and held that the aforesaid interim order dated 12.7.2006 would not come in the way of State Government for deciding the applications of private sugar factories, provided no financial assistance in the nature of grant or subsidy or guarantee is granted to the said applicants. The respondents further contend that pursuant to the aforesaid clarificatory order dated 21.1.2010, the respondent No.2 started the process of considering the applications which were complete in all respects. According to the respondents, the respondent No. 7 had submitted an application for issuance of the Aerial Distance Certificate on 9.12.2009 land since the application was complete in all respects including the measurement report of the Survey of India, a public notice inviting objections was issued and the same was issued in daily newspaper, `Sakal’ dated 8.2.2010. Since objections were not received pursuant to the public notice, the application was considered and Aerial Distance Certificate came to be issued in favour of respondent No.7. At paragraph 9, the respondents 1 and 2 have stated about the procedure which was adopted for deciding the applications for issuance of the Aerial Distance Certificate. According to respondents the stages are: 11 (A) Receipt of the application; (B) Scrutiny of the application in order to see whether the measurement report issued by the Survey of India is available with the application; (C) Issuance of the public notice inviting objections; (D) Hearing on the objections, if received; (E) Further process if no objections are received for issuance of the certificate; and (F) Decision regarding issuance of the Aerial Distance Certificate. The respondents 1 and 2 further contend that since the application of respondent No.7 was complete in all respects, the aforesaid stages of the procedure were gone through and the Aerial Distance Certificate came to be issued to the respondent No.7 on 2.3.2010. It is further stated in the affidavit in reply that after the clarificatory order of the Division Bench, the respondent No.2 started considering and in the meantime, the Division Bench issued the order in Writ Petition No.3222 of 2010 on 16.4.2010 directing the respondent No.2 to consider and decide all pending applications in chronological order and accordingly, the application of the petitioner came to be considered. The respondents at paragraph 12 then contend that since there were 12 certain deficiencies, the petitioner was asked to supply the requisite documents and accordingly, a letter dated 20.4.2010 was issued to the petitioner. By virtue of the aforesaid communication the petitioner was directed to remove the shortcomings on or before 20.5.2010. Thereafter a communication dated 23.4.2010 was issued to the petitioner intimating that the date of hearing was fixed on 30.4.2010. The representative of the petitioner sought adjournment of hearing till 3.5.2010 but since the petitioner failed to submit the requisite documents within the time granted, the order impugned in the present petition dated 21.5.2010 came to be passed. It is further stated in the affidavit in reply that the IEM issued to the petitioner stood derecognised on account of several factors which are highlighted in the affidavit in reply. 7. Respondent No.7 has filed its affidavit in reply and in the affidavit in reply, respondent No.7 states that the petition filed by the petitioner challenging the order dated 21.5.2010 is premature as it is not an order in law. Respondent No.7 further states in the affidavit the reasons as to why the sugar factory of respondent No.7 came to be established in the year 2009-2010. It is further stated that the respondent No.7 had submitted an application on 26.10.2009 to the Survey of India, Pune along with the requisite amount for issuance of the distance certificate. It is further 13 stated that on 3.11.2009 the aforesaid certificate came to be issued and, therefore, on 9.12.2010 the respondent No.7 applied for No Objection Certificate in respect of co-ordinate an Aerial Distance Certificate to the Commissioner of Sugar. It is further stated that on 2.3.2010, the respondent No.2 issued the certificate regarding the aerial distance between the sugar factory of the petitioner and the other existing sugar factories in the vicinity. It is further stated that requisite Bank guarantee of Rs.1 Crore has been submitted by respondent No.7. It is further stated that the respondent No.7 has incurred an expenditure of nearly Rs.154.46 lacs for the purpose of purchase of land and had applied to the Latur District Central Co-operative Bank Ltd., Latur for term loan of Rs.46 Crores and working capital of Rs.10 Crores. It is further stated that the aforesaid loan came to be sanctioned on 20.3.2010. It is further stated that respondent No.7 has entered into an agreement with M/s Meru Industries, Pune for supply of requisite plant and machinery and the civil work has also been allotted to M/s Tejas Constructions Private Ltd., Chalisgaon. The respondent No.7 in the further affidavit has denied the various averments made by the petitioner in the petition and it is urged at paragraph 25 that the petitioner had submitted an application for distance certificate on 11.8.2008 but had not taken further steps by pursuing the same and by taking it to its logical end. It is also averred that the petitioner has been 14 most negligent throughout. Further paragraphs of the affidavit in reply deal with the conduct of the petitioner and the lackadaisical attitude of the petitioner. Additional affidavit came to be filed on behalf of respondent No.7 and in the additional affidavit it is stated that almost 60 to 65% of the civil work has been completed and nearly 60 to 65% of the machinery has been installed. It is further stated that as on the date of the swearing of the affidavit respondent No.7 had appointed nearly about 36 employees. Out of which 25 employees have already joined the services. It is further stated that about 10,000 agriculturists/farmers have purchased the preferential shares of the respondent No.7 – Company. 8. The other respondents to the petition are the intervenors to object to granting of relief to the petitioner. 9. Mr.N.P.Patil, learned Counsel for the petitioner has urged before us that the order granting Aerial Distance Certificate to the respondent No.7 – Company is wholly unjustified in the light of the fact that the petitioner – Company had applied for the same. The application of the petitioner – Company ought to have been decided first, if not along with the application of respondent No.7. Any order granting Aerial Distance Certificate to respondent No.7 would be rendering the consideration of the application of the 15 petitioner as futile. It is also urged before us that in the light of the Division Bench order in Writ Petition No.3222 of 2010, dated 16.4.2010 all the applications ought to have been decided in the preferential order of their filing. The learned Assistant Government Pleader opposing the aforesaid submissions had reiterated the submissions made in the affidavit in reply and has stated that on account of the earlier interim stay which was operating, the application of the petitioner was not considered and it was only after the clarificatory order was passed by the Division Bench, the application of the petitioner came to be considered. In any event, it is urged before us that the order dated 16.4.2010 has been passed after the consideration of the application of respondent No.7. Learned Counsel for respondent No.7 on the other hand contends that the application of the petitioner was defective for several reasons. The learned Counsel for respondent No.7 has pointed out to us that the IEM which was obtained by the petitioner stood discharged on account of failure of petitioner to fulfill the various obligations under the amended provisions. It is also urged before us that the petitioner had not submitted the Bank guarantee of Rs.1 Crore which was the performance guarantee required to be submitted by the petitioner. It is further urged that the application of the petitioner was deficient as the petitioner had not annexed the distance certificate and the respondents, therefore, were perfectly justified 16 in considering the application of respondent No.7 which was complete in all respects and postponing the consideration of application of the petitioner. 10. At this juncture, it would be useful to reproduce in detail the amended provision of the sugarcane order, particularly para 6A onwards, which reads thus: 6A. 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 to 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. 17 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 6C. 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; 18 (e) any other step prescribed by the Central Government, in this regard through a notification 6B. 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 19 time as specified in clause 6C failing which Industrial Entrepreneur Memorandum shall stand de- recognized as far as provisions of this Order are concered. 6C. Time limit to implement Industrial Entrepreneur Memorandum.- The stipulated time for taking effective steps shall be two years and commercial production shall commence within four years with effect from the date of filing the Industrial Entrepreneur Memorandum with the Central Government, failing which the Industrial Entrepreneur Memorandum shall stand de-recognized as far as provisions of this Order are concerned and the performance guarantee shall be forfeited: Provided that the Chief Director (Sugar), Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution on the recommendation of the concerned State Government, may give extension of one year not exceeding six months at a time, for implementing the Industrial Entrepreneur Memorandum and commencement of commercial production thereof. 6D. Consequences of non-implementation of the provisions laid down in clauses 6B and 6C.- If an Industrial Entrepreneur Memorandum remains unimplemented within the time specified in clause 6C; the performance guarantee furnished for its implementation shall be forfeited after giving the 20 concerned person a reasonable opportunity of being heard. 6E. Application of clauses 6B, 6C and 6D to the person whose Industrial Entrepreneur Memorandum has already been acknowledged. (1) Except the period specified