IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, CIVIL JURISDICTION WRIT PETITION NO.9189 of 2010 1.Khandoba Prasanna Sakhar ) Karkhana Limited, At Pal, Post ) Marali,Taluka Karad, District Satara) Maharashtra ) 2.Swapnil Bhingardeve, ) Managing Director of the Petitioner ) No.1, residing at 38/B, ) Chandraprabha, Near Vaibhav Gas ) Godown, Banawadi Road, Karad, ) Satara-415 110 )..PETITIONERS Versus 1.Union of India through the ) Ministry of Consumer Affairs, ) Food & Public Distribution, ) Department of Food & Public ) 2 wp-9189 & 9217-10.doc Distribution and also through the ) Ministry of Industries, Department ) Industrial Policy & Promotion, ) through Joint Secretary, Department ) of Law, having his office at Aayakar ) Bhavan, Maharashi Marve Marg, ) New Marine Lines, Mumbai-400020 ) 2.The Secretary, Government of India ) Ministry of Consumer Affairs, ) Food & Public Distribution, ) Department of Food & Public ) Distribution and also through the ) Ministry of Industries, Department ) Industrial Policy & Promotion, ) through Joint Secretary, Department ) of Law, having his office at Aayakar ) Bhavan, Maharashi Marve Marg, ) New Marine Lines, Mumbai-400020 ) 3.Chief Director (Sugar) ) Ministry of Consumer Affairs Food ) and Public Distribution, Directorate ) of Sugar, Krishi Bhavan, New Delhi ) 4.The State of Maharashtra through ) the office of the Government Pleader) 3 wp-9189 & 9217-10.doc High Court, Bombay. ) 5.The Commissioner of Sugar, ) Sakhar Sankool, Shivaji Nagar, ) Pune. ) 6.M/s.Jaywant Sugars Limited, ) “Ratnadeep”, Behind Krishna ) Hospital, Campus, Malkapur, ) Karad, Dist.Satara (Maharashtra) ) 7.Sudesh Shantilal Shah, ) having his office at S. No.20-21, ) Balaji Nagar, Dhankawadi, ) Pune-411 043. )..RESPONDENTS WITH WRIT PETITION NO.9217 OF 2010 1.Sahyadri Sahakari Sakhar Karkhana ) Limited, Near Shirwade, ) Railway Station, Yeshwantnagar, ) Taluka Karad, Dist. Satara. ) 2. Shri Hindurao Tatoba Desai, ) Finance Manager, ) Sahyadri Sahakari Sakhar Karkhana ) Limited, Near Shirwade, ) 4 wp-9189 & 9217-10.doc Railway Station, Yeshwantnagar, ) Taluka Karad, Dist. Satara. )..PETITIONERS Versus 1.Union of India through the ) Ministry of Consumer Affairs, ) Food & Public Distribution, ) Department of Food & Public ) Distribution and also through the ) Ministry of Industries, Department ) Industrial Policy & Promotion, ) through Joint Secretary, Department ) of Law, having his office at Aayakar ) Bhavan, Maharashi Marve Marg, ) New Marine Lines, Mumbai-400020 ) 2.Ms.Alka Sirohi, Secretary, ) Government of India ) Ministry of Consumer Affairs, ) Food & Public Distribution, ) Department of Food & Public ) Distribution, Department having her ) office at Krishi Bhavan, New Delhi ) through Joint Secretary, Department ) 5 wp-9189 & 9217-10.doc of Law, having his office at Aayakar ) Bhavan, Maharashi Marve Marg, ) New Marine Lines, Mumbai-400020 ) 3.State of Maharashtra ) 4.Commissioner for Sugar, ) Maharashtra State, having his ) office at Sakhar Sankul, Shivaji ) Nagar, Pune-411 005. ) 5. Jaywant Sugars Limited, ) having its registered office at ) Ratnadeep, Behind Krishna ) Hospital Campus, Malkapur, ) Taluka Karad, Dist.Satara ) (Maharashtra) ) 6.Sudesh Shantilal Shah, ) Proprietor of M/s.Mahavir Sugar ) Works, having his office at S. ) No.20-21, Balaji Nagar, Dhankawadi) Pune-411 043. )..RESPONDENTS Mr. C.M. Korde, Senior Advocate i/b.Mr. Bhushan Mahadik, for the petitioner in Writ Petition No.9217 of 2010. Mr.Y.S. Jahagirdar, Senior Advocate with Mr. Vineet B. Naik, Mr. Ravindra Suryawanshi, Mr. Vaibhav Bhure and Mr. Sukand Kulkarni i/b. Naik Paranjape & Co., for the petitioners in Writ 6 wp-9189 & 9217-10.doc Petition No.9189 of 2010. Mr. Dara Zaiwala, Senior Advocate i/b. Mr. Y.S. Bhate and Mr. Jaydeep Deo, for respondent Nos. 1 to 3 in Writ Petition No.9217 of 2010 and for respondent No.1 in Writ Petition No.9189 of 2010. Mr. Samir Patil, AGP for respondent Nos.3, 4 and 7 in Writ Petition No.9217 of 2010 and for respondent No.4 and for respondent Nos. 4 and 5 in Writ Petition No.9189 of 2010. Mr.A.V. Anturkar i/b. Mr. R.V. Govilkar, Mr. S.B. Khurjekar, Mr. S.B. Deshmukh, Mr. A.A. Gatne, Mr. S.P. Pathak, Mr. P.B. Bhargude, Mr. Tanaji Mahatugde, for respondent No.5 in Writ Petition No.9217 of 2010 and for respondent No.6 in Writ Petition No.9189 of 2010. CROAM: B.H. MARLAPALLE & U.D. SALVI, JJ. RESERVED ON: 7TH MARCH, 2011 PRONOUNCED ON: 5TH MAY,2011 JUDGMENT (PER B.H. MARLAPALLE, J.) 1. These Writ Petitions filed under Articles 226 and 227 of the Constitution of India are directed against the order dated 8th October, 2010 passed by the Secretary to the Government of India, Department of Food and Public Distribution thereby deciding the questions referred by this Court as per the order dated 10th November, 2009 passed in Writ Petition Nos.1172 and 1518 of 2008. 7 wp-9189 & 9217-10.doc 2. The admitted facts briefly stated are as under:- 1st petitioner in Writ Petition No.9189 of 2010 is a company registered under the Companies Act, 1956 and is carrying on the business of distillery and 2nd petitioner is its Managing Director. It intended to set up a private sugar factory at village Pal in Taluka Karad of Satara District and, therefore, registered its IEM with the Department of Food and Public Distribution, Government of India on 15th November, 2000, whereas the petitioner No.1 in Writ Petition No.9217 of 2010 is an existing Co-operative sugar factory at Yeshwantnagar in Karad Taluka, Satara District with a crushing capacity of 7500 TCD. One Sudesh Shantilal Shah, respondent No.7 in Writ Petition No.9189 of 2010 and Respondent No.6 in Writ Petition No.9217 of 2010 had obtained an IEM dated 12th October, 1998 as the Proprietor of M/s.Mahavir Sugar Works for setting up a private sugar factory at village Dhavadwadi in Taluka Patan, District Satara. The proposed new sugar factory either by Mr. Sudesh Shantilal Shah or by M/s.Khandoba Prasanna Sakhar Karkhana Limited could not have started at any location within a distance of 15 Kms., from Yeshwantnagar where Sahyadri is an existing sugar factory, , in view of the minimum distance condition laid down in Press Note No.12 dated 31st August, 1998, issued by the Government of India-Secretary for Industrial 8 wp-9189 & 9217-10.doc Assistance in the Ministry of Industry and, therefore, when the IEMs of both these parties were registered on 12th October, 1998 and 15th November, 2000, they had submitted a certificate stating that the proposed locations of their respective sugar factories were at a distance of more than 15 Kms., from Yeshwantnagar in Taluka Karad of Satara District. 3. Originally the IEM of the petitioner in Writ Petition No. 9189 of 2010 was registered on 15th November, 2000 in the name of Khandoba Prasanna Sugars and Allied Products Private Limited and by the certificate of change of name under the Companies Act, 1956 issued on 2nd May, 2001 the name of the said company came to be changed to M/s.Khandoba Prasanna Sugar Karkhana Private Limited as per the fresh certificate of incorporation issued by the Registrar of Companies in Maharashtra on 2nd May, 2001 and on the same day the name of Khandoba Prasanna Sugar Karkhana Private Limited came to be changed to Khandoba Prasanna Sakhar Karkhana Limited as per the certificate issued by the Registrar of Companies, Maharashtra State, Pune. The IEM registered on 15th November, 2000 came to be amended on 10th July, 2001 and 18th July, 2001 in the changed name of “ Khandoba Prasanna Sakhar Karkhana Limited” (for short Khandoba). It is also pertinent to note that one more IEM came to be registered on 4th December, 9 wp-9189 & 9217-10.doc 1998 by M/s.Krishna Koyna Sugar and Allied Industries for setting up a private sugar factory at village Dhavadwadi in Taluka Patan, District Satara by Dr. Suresh J.Bhosale in his capacity as the Proprietor of the said firm (for short Krishna Koyana). 4. On 10th January, 2006 Shri Sudesh Shah, Proprietor of M/s.Mahavir Sugar Works (for short Mahavir) submitted an application to the Department of Industrial Development, Government of India, for an amendment to IEM No.2034- SIA/IMO/1998 dated 12th October, 1998. It was prayed that the name of the said IEM holder be amended from M/s.Mahavir Sugar Works to Jaywant Sugars Limited. In response to the said application the Under Secretary to the Government of India in the Department of Industrial Policy Promotion (DIPP) Ministry of Industry, amended the IEM by his letter dated 12th January, 2006 in the name of Jaywant Sugars Limited (for short Jaywant). On 16th March, 2006 M/s.Jaywant Sugars Limited submitted an application to the Department of Industrial Development, Government of India, for further amendment in its IEM so as to correct the location of the proposed sugar factory. It was contended that the location of village Dhavadwadi of the proposed sugar factory was correct, but the name of the Tahsil/Taluka was wrongly mentioned in the IEM registered on 12th October, 1998 10 wp-9189 & 9217-10.doc and amended on 12th January, 2006. It was stated that village Dhavadwadi is in fact located in Taluka Karad and not in Taluka Patan of District Satara and that it was by inadvertence that the name of the Tahsil was wrongly written as Patan instead of Karad. The said application was allowed by order dated 20th March, 2006 passed by the Under Secretary to the Government of India DIPP and thus the IEM dated 12th October, 1998 registered in the name of .Mahavir at village Dhavadwadi, Taluka Patan, District Satara came to be amended in the name of Jaywant at Dhavadwadi, Taluka Karad, District Satara. This amendment of 20th March, 2006 changing the name of the tahsil, came to be challenged in Writ Petition No.2225 of 2007 filed by Khandoba and Writ Petition No.5093 of 2007 filed by Sahyadri. A Division Bench of this Court by its order dated 16th August, 2007 directed all the parties to maintain status quo and not to proceed with any further construction work of the proposed sugar factories during the pendency of the petitions. Both the petitions were disposed off by a common order dated 29th July, 2008 and by directing the Joint Secretary, Government of India, DIPP, New Delhi to decide the following issues:- (i) Whether the submission of IEM of M/s.Mahavir Sugar Works on 10th October, 1998 is valid in law; 11 wp-9189 & 9217-10.doc (ii) Whether the application made by M/s.Mahavir Sugar Works dated 10th January, 2006 for amendment in the IEM was allowed by the authority correctly and legally; (iii) Whether the application made by M/s.Jaywant Sugars Ltd., for amendment in the IEM was allowed in accordance with law by the authorities..” The interim order passed on 16th August, 2007 was directed to be continued till the Joint Secretary would pass the order after hearing all the parties concerned. Accordingly, the Joint Secretary passed his order on 17th December, 2008 and held that (a) the IEM of Mahavir was valid in law (b) the application for amendment of IEM dated 10th January, 2006 for the change of name from Mahavir Sugar Works to Jaywant Sugar Words was correctly allowed (c) the application filed by Jaywant Sugars Limited for the amendment in IEM for change of location was allowed in accordance with law and (d) the issue of location of the petitioner could not be conclusively determined as the matter regarding effective steps having been taken or not, was subjudice before the High Court. 5. The said order dated 17th December, 2008 came to be challenged in Writ Petition No.1172 and 1518 of 2009 by 12 wp-9189 & 9217-10.doc Sahyadri and Khandoba respectively and by a common order dated 5th November, 2009 passed by consent of the parties the petitions came to be disposed off by setting aside the impugned order dated 17th December, 2008 and directing the Secretary to the Government of India, Ministry of Consumer Affairs, Food and Public Distribution, Department of Food and Public Distribution to decide the following questions:- A] Whether the submission of Industrial Entrepreneurs Memorandum (for short, IEM) of M/s Mahavir Sugar Works on 10th October 1998 is invalid in law because of admitted wrong mentioning of the location in that IEM ? B] Whether the application made by M/s Mahavir Sugar Works dated 10th January 2006 for amendment in IEM, for substitution of the name of M/s Jaywant Sugars Ltd. in place of M/s Mahavir Sugar Works was allowed by the authorities correctly and legally ? C] Whether the application dated 16th March 2006 made by M/s Jaywant Sugars Ltd. For modification in the IEM was allowed by the authorities in accordance with law ? D] Whether the petitioners – Khandoba Prasanna Sakhar 13 wp-9189 & 9217-10.doc Karkhana Ltd. And M/s Sahyadri Sahakari Sakhar Karkhana Ltd. have locus standi to object to the application dated 10th January 2006 submitted by M/s Mahavir Sugar Works and application dated 16th March 2006 submitted by M/s Jaywant Sugars Ltd. ? E] In case the authority comes to the conclusion that the modification and substitution pursuant to the applications dated 10th January 2006 and 16th March 2006 are validly allowed, whether that modification and assignment will operate prospectively from the date of grant or with retrospective effect ? F] Whether the petitioners – Khandoba Prasanna Sakhar Karkhana Ltd., M/s Mahavir Sugar Works as well as respondent No.6 – M/s Jaywant Sugars Ltd. have taken effective steps within the meaning of the Sugarcane (Control) (Amendment) Order 2006 ? It was further directed that till the Secretary would pass his order, the interim order passed on 28th april, 2009 would continue to operate and the undertaking of Jaywant was recorded to the effect that unless the matter would be decided by the Secretary it would not commence commercial production of sugar and that no 14 wp-9189 & 9217-10.doc equities would be claimed either before the authority or in the proceedings relating to the subject matter on the basis of any construction carried out or any work done during the pendency of the proceedings. 6. By the impugned order dated 8th October, 2010, the above stated six questions have been decided by the Secretary and both Sahyadri as well as Khandoba claim to be the aggrieved parties by the said order. The findings on the referred issues have been summaried in the impugned order as under:- Issues Findings (A) Whether the submission of Industrial Entrepreneurs Memorandum (for short, IEM) of M/s.Mahavir Sugar Works on 10th October, 1998 is invalid in law because of admitted wrong mentioning of the location in that IEM? The application for IEM dated 10.10.1998 submitted by M/s.Mahavir Sugar Works does not make itself invalid in law because of admitted wrong mentioning of the location in the application for IEM. [para.21.5 to 21.0] (B) Whether the application made by M/s.Mahavir Sugar Works dated 10th January, 2006 for amendment in IEM, for substitution of the name of M/s.Jaywant Sugars Ltd., in place of M/s.Mahavir Sugar Works was allowed by the authorities correc tly and The application made by Mahavir Sugar Works dated 10th January for amendment in IAM was allowed by the authorities in conformity with the guidelines issued by the Secretariat for Industrial Approval of the Ministry of Industry through the various 15 wp-9189 & 9217-10.doc legally? Press Notes. [Para.22.3 to 22.5] (C) Whether the application dated 16th March, 2006 made by M/s.Jaywant Sugars Ltd., for modification in the IEM was allowed by the authorities in accordance with law. The appication dated 16th March, 2006 made by Jaywant Sugars Limited for modikfication in the IEM was allowed by the authorities as per the existing guidelines. [Para.23.2 to 23.4] (D) Whether the petitioners – Khanodba Prasanna Sakhar Karkhana Ltd., and M/s.Sahyadri Sahakari Sakhar Karkhana Ltd., have locus standi to object to the application dated 10th January, 2006 submitted by M/s.Mahavir Sugar Works and application dated 16th March 2006 submitted by M/s.Jaywant Sugars Ltd.? Khandoba hav ing not acquired the status of an existing sugar factory have no locus standi to object to the application dated 10th January, 2006 submitted by M/s.Mahavir Sugar Works and application dated 16th March, 2006 submitted by M/s.Jaywant Sugars Ltd., on the ground of being an existing sugar factory. It has, however, locus being holder of an IEM for a new sugar factory for a location in the vicinity of the location mentioned in the IEM of M/s.Jaywant. Sahyadri do not have any locus to object to these applications since the sugar factory of Sahyadri is located beyond a distance 15 kms., from the location of the proposed sugar factory of M/s.Mahavir Sugar Works/Jaywant Sugars Limited. 16 wp-9189 & 9217-10.doc [Para.24.4 to 24.6] (E) In case the authority comes to the conclusion that the modification and substitution pursuant to the applications dated 10th January, 2006 and 16th March, 2006 are validly allowed, whether that modification and assignment will operate prospectively from the date of grant or with retrospective affect? The modification sought in the applications dated 10th January, 2006 with regard to the change in the name of company will operate prospectively from the date of grant of permission. As regards modification in respect to the location of the sugar factory sought vide application dated 15th March, 2006, there is no material change in location by virtue of change in spelling or name of tahsil, and hence these changes have to be read with reference to the IEM dated 12.10.1998. [Para.25.2 to 25.5] (F) Whether the petitioners – Khandoba Prasanna Sakhar Karkhana Ltd., M/s.Mahavir Sugar Works as well as respondent No.6- M/s.Jaywant Sugars Ltd., have taken effective steps within the meaning of the sugarcane (Control) (Amendment) Order 2006? In view of detailed analysis contained in para. Above, M/s.Jaywant can be said to have taken effective steps within the meaning of the SCO 2006. The same cannot be said of Kkhandoba. [Para.26.0 to 26.2, 27] 7. It is also pertinent to note at this stage that on 31st August, 1998 the Government of India decided to delete the sugar industry 17 wp-9189 & 9217-10.doc from compulsory licensing under the Industries (Development and Regulation) Act, 1951 and as per the Press Note No.12 it clarified that in order to avoid unhealthy competition amongst the sugar factories to procure sugarcane a minimum distance of 15 Kms., was required to be observed between an existing sugar mill and a new mill (factory). Further, the entrepreneur who desired to avail of the delicensing of sugar industry was required to file an Industrial Entrepreneur Memorandum (IEM) with the Ministry of Industry. The Government of India further issued the Notification dated 11th September, 1998 under Section 29-B(1) of the Industries (Development and Regulation)Act, 1951 so as to usher the policy of de-licensing and it was required to be read with Press Note No.12 dated 31st August, 1998. The Government of India issued the Sugarcane (Control) (Amendment) Order 2006 on 10th November, 2006, inter alia, laying down the effective steps which the applicants/IEM holders were required to take. The said amendment Order has inserted Clauses 6-A to 6-E into the Sugarcane (Control) Order 2006. 8. Mr. Jahagirdar, the learned Senior Counsel appearing for Khandoba has attacked the impugned order on all counts and the 18 wp-9189 & 9217-10.doc said challenge has been supported by Sahyadri through its Senior Counsel Mr. Korde. It was submitted that the IEM registered on 12th October, 1998 in the name of Shri Sudesh Shantilal Shah as a Proprietor of Mahavir could not have been transferred in the name of Jaywant and the amendment in the IEM of Mahavir Sugar Works so as to transfer the said IEM in the name of Jaywant is illegal. Shri Shah registered the IEM in his Proprietary capacity and his application dated 10th January, 2006 for change of name from Mahavir Sugar Works to Jaywant Sugars Limited could not have been allowed. The Press Note Nos.4,7 and 12 of 1998 read with the format of application for registration of IEM did not provide for such a change to be allowed and even if such change is permissible, it ought to be registered as a fresh IEM from the date the amendment as requested is allowed and in the instant case from 12th January, 2006. It was, therefore, urged that the IEM of Jaywant ought to be held to have been registered on 12th January, 2006 for the first time. It was further submitted that the application for the amendment in the location of the proposed sugar factory submitted by Jaywant was not maintainable and on the basis of such an application the IEM itself is required to be cancelled as the IEM was registered on the basis of a location which was non-existent. Both Shri Shah and 19 wp-9189 & 9217-10.doc Jaywant with their eyes wide open had claimed that the proposed sugar factory was to be located at village Dhavadwadi in Taluka Patan and it has to be presumed that they were fully aware of the said village fell in the Tahsil of Patan, it could not be accepted that after about more than 7 years suddenly Mr. Shah and Jaywant realized that the village Dhavadwadi was not located in Taluka Patan and in fact it was located in Karad Taluka. Having regard to the condition of minimum distance of 15 Kms., from the existing sugar factory, the applicant applying for IEMs., were under an obligation to know the details of the location of the proposed sugar factory including the Talukas and District and if there was any mistake in such proposed location with respect to Tulka or District the IEM would be registered for a non-existent location. It was submitted that there is a village by name Dhavarwadi in Khandala Taluka of Satara District as well and if that be so it was not permissible for the Secretary to hold that it was a mistake only in respect of Taluka and it was required to be corrected. It was not permissible for the Secretary to hold that the location Dhavadwadi did exist, but it was within the Tahsil limits of Karad Taluka and in the limits of Patan Tahsil there was no such village and, therefore, the application of IEM will not render itself invalid even if the applicant had committed a mistake of 20 wp-9189 & 9217-10.doc indicating the name of Taluka Patan. The Secretary also erred in allowing the correction of location on the ground that on 10th October, 1998 Khandoba had not filed their application for IEM and Sahyadri did not claim that there was a violation of distance norms vis-a-vis their existing factory and that both Khandoba and Sahyadri had accepted that in Karad Taluka there is a village by name Dhavarwadi/Dhavadwadi. The mere existence of village Dhavadwadi/ Dhavarwadi in Taluka Karad could not be a ground to allow the amendment in the location and more particularly for correction of Taluka when a village by the very same name exists in Taluka Khandoba of Satara District. The Secretary erroneously relied upon Press Note No.9 of 1998 issued on 15th June, 1998 so as to allow the amendment for the change in the name of the entrepreneur and what has been contemplated in the scheme of Rule 19A(2) of the Industrial Licensing Rule 1952 does not permit the change of ownership of license and more particularly from individual /proprietor to a company incorporated under the Companies Act. It was also pointed out that Mahavir never claimed to have changed its name to Jaywant and that Jaywant is the successor of Mahavir. It was pointed out that the application dated 10th January, 2006 was submitted by Shri S.C.Shah as a proprietor of Mahavir and the only connection he had with 21 wp-9189 & 9217-10.doc Jaywant was his shareholding of Jaywant (100 shares) and this cannot be a reason to hold that Jaywant was the successor of Mahavir. It was submitted that the change of ownership of license as permissible under Rule 19A(2) of the Industrial License Rules 1952 is in favour of the successor entrepreneur and not in favour of a totally new corporate body. 9. Even otherwise the change of location accepted as per the order dated 16th March, 2006 ought to have been considered