IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.100 of 2011 (O&M) Date of decision: 06.12.2011 Batala Cooperative Sugar Mills Limited, Batala, District Gurdaspur, through its General Manager. ...Petitioner versus State of Punjab, through Secretary, Department of Agriculture, Punjab, Chandigarh, and others. ....Respondents II. Civil Writ Petition No.101 of 2011 (O&M) Gurdaspur Cooperative Sugar Mills Limited, Gurdaspur, District Gurdaspur, through its General Manager. ...Petitioner versus State of Punjab, through Secretary, Department of Agriculture, Punjab, Chandigarh, and others. ....Respondents III. Civil Writ Petition No.2176 of 2011 (O&M) Ajnala Cooperative Sugar Mills Limited, Bhala Pind, Tehsil Ajnala, District Amritsar through its General Manager. ...Petitioner versus State of Punjab, through Secretary, Department of Agriculture, Punjab, Chandigarh, and others. ....Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Civil Writ Petition No.100 of 2011 (O&M) - 2 - Present: Mr. Vikas Singh, Advocate, for the petitioner. Mr. Anil Kumar Sharma, Additional Advocate General, Punjab, for respondents 1 and 2. Mr. Alok Jagga, Advocate, for respondent No.3. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? No. 2. To be referred to the reporters or not ? Yes. 3. Whether the judgment should be reported in the digest ? Yes. ---- K.Kannan, J. 1. All the three writ petitions are at the instance of Cooperative Sugar Mills challenging the order of the Cane Commissioner that specified the notified areas of the various sugar mills and the manner of allocation of villages for the 3rd respondent- M/s Chadha Sugar and Industries Limited. In the manner of such allocation made through the order of the Cane Commissioner, the respective petitioners in CWP Nos.100 ,101 and 2176 of 2011 feel deprived of 11, 8 and 62 villages respectively from their respective “operational area” and have a common grievance to ventilate, that the decision is against the relevant rules and orders. 2. In the matter of grant of State largesse, there has to be a certain play in the joints in the State authority to identify the beneficiaries and no one shall have a vested interest to demand what the State shall do. However, there is a very important constitutional limitation through Article 14 to ensure that there is no arbitrariness Civil Writ Petition No.100 of 2011 (O&M) - 3 - involved in the decision and no unreasonable discrimination is made to benefit one beneficiary at the cost of others. If there is a policy in place, the limit of judicial review shall be to see whether the policy is reasonable and whether it is applied properly. If the action of the Cane Commissioner itself is regulated through statutory provisions, then there will be no need for even examining the reasonableness of provisions unless there is a challenge made to the statutory provision itself. It is an admitted fact that the allotment made by the Cane Commissioner purports to be in terms of Punjab Sugar Cane (Regulation of Purchase & Supply) Rules of 1958 and Sugar Cane (Control) Order of 1966. The Rules and the Order are not in challenge but the manner of their application is. It shall, therefore, be first necessary to set out the relevant provision to examine whether the action of the Cane Commissioner falls within the legal parameters set through law. 3. The Rule 10 of Punjab Sugar Cane (Regulation of Purchase & Supply) Rules of 1958 is as follows:- “(1) In declaring assigned areas under Section 14 of the Act the Sugarcane Control Board may take into consideration (a) the distance of the factory from the area proposed to be assigned, (b) facilities for transport of cane, (c ) whether the area has previously supplied cane to the said factory, (d) previously existing zoning arrangements among the factories and (e) the quantity of cane to be crushed in a factory as determined under Section 10. Civil Writ Petition No.100 of 2011 (O&M) - 4 - (2) An order of the Sugarcane Control Board declaring any area to be assigned for any particular factory or altering the boundaries of an area already assigned, cancelling any previous order declaring an area to be assigned, shall be communicated to the occupier of the factory concerned as well as the cane growers by the publication of such order at the office of the factory and at the tehsil or tehsils in which the areas are situated.” The above Rules contain a fair guideline for a Cane Commissioner to apply to his decisions. In so far as the notifications now made have resulted in certain modifications of the allocations to the existing sugar mills, it is necessary to test whether they conform to the legal boundaries set. It is legally mandated that such a decision could be taken only after communicating to the occupier of the factory concerned as well as the cane growers. That there had been such publications made and that there had been such notices before such decision is taken are not in challenge. The Rules would require to be again read conjointly with the Sugar Cane Control Order of 1966 and to that extent, a reference of Clause 6, on which the petitioners are making reliance, is also reproduced:- “6. Power to regulate distribution and movement of sugarcane. 1. The Central Government may, be order notified in the Official Gazette. (a) reserve any area where sugarcane is grown (herein under in this clause referred to the reserved area) for a factory having Civil Writ Petition No.100 of 2011 (O&M) - 5 - regard to the crushing capacity of the factory, the availability of sugarcane in the reserved area and the need for production of sugar with a view to enabling the factory to produce the quantity of sugarcane required by it, (b) determine the quantity of sugarcane which a factory will require for crushing during the year. (c) fix with respect to any specified sugarcane grower or sugarcane growers generally in a reserved area, the quantity or percentage of sugarcane grown by such grower or growers, as the case may be, which each such grower by himself or, if he is a member of a cooperative society of sugarcane growers operating in the reserved area, through such society, shall supply to the factory concerned. (d) direct a sugarcane grower or a sugarcane growers' cooperative society, supplying sugarcane to a factory, and the factory concerned to enter into an agreement to supply or purchase as the case may be, the quantity of sugarcane fixed under paragraph (c). (e) direct that no gur (jaggery) or Khandsari sugar or sugar shall be manufactured from sugarcane except under and in accordance with the conditions specified in the license issued in this behalf; (f) prohibit or restrict or otherwise regulate Civil Writ Petition No.100 of 2011 (O&M) - 6 - the export of sugarcane from any area (including the reserved area) except under the in accordance with a permit issued in this behalf. 2. Every sugarcane grower, sugarcane growers cooperative Society and factory to whom or to which an order make under paragraph(c) of sub–clause(1)applies, shall be bound to supply or purchase, as the case may be, that quantity of sugarcane covered by the agreement entered into under the paragraph and any willful failure on the part of the sugarcane grower, sugarcane growers cooperative society or the factory to do so, shall constitute a breach of a provisions of this order; Provided that where the default committed by any sugarcane growers cooperative Society is due to any failure on the part of any sugarcane grower, being a member of such society, such society shall not be bound to make supplies of sugarcane to the factory to the extent of such default.” While all the petitioners have a grievance that if the villages where they have established sound contacts and held the local cane growers for optimal results in their cultivation, the fruits of their labour cannot be allowed to be harvested by the 3rd respondent to its benefits. Even apart from the specifically notified villages, the petitioners claimed that they have also established contacts with several cane growers of adjoining villages on account of their Civil Writ Petition No.100 of 2011 (O&M) - 7 - proximity with their respective mills and if the other villages are released and should be assigned to the 3rd respondent without minding the relative longer distance to take the agricultural produce to the 3rd respondent-Mill, it will cost serious prejudice to the cane growers also. The petitioners also complain of large scale poaching that is alleged to be indulged by the 3rd respondent in securing the produce from cane growers from even the villages which are notified or allotted to the petitioners. Each of the petitioners would contend that they are all crushing sugarcane much below their capacity on account of their non-availability and it is only due to their strenuous efforts that they are able to increase the quantity of sugarcane from the respective reserved area. The withdrawal of some of the villages of the petitioners would ultimately result in supplies to sugarcane less than their optimal capacity to crush and would ultimately result in closing down of the sugar mills themselves. From the plan submitted along with the writ petition, it is contended that, from the existing villages allotted to the petitioner in CWP No.100 of 2011, some pockets of land in villages with numbers 403, 382, 383, 416, 417, 422, 426, 428, 421, 425, 429 and 431 have been withdrawn and assigned to the 3rd respondent. There is no rational basis for such allocation, for instance, sugarcane purchase in village Shikar will have to go through the entire area which is now serviced by the petitioner sugar mill before reaching Civil Writ Petition No.100 of 2011 (O&M) - 8 - the 3rd respondent. The villages which are not geographically adjacent are being now assigned to the 3rd respondent allowing the 3rd respondent to procure sugarcane from the aforesaid villages and passing the area of the petitioners would lead to poaching of sugarcane and the apprehensions of the petitioners have come through by such actual poaching. 4. Objections have been filed by the State as well as the 3rd respondent. On behalf of the State, it is contended that the crushing capacity of the mills is about 1500 tonnes per day (TCD) and in a regular season of 180 days, it could crush 27 lakh quintals of sugarcane. The State would also contend that the petitioner in CWP No.100 of 2011 had been left with 32.50 lakh quintals of sugarcane for crushing in 2007-08, but 10 lakh quintals became surplus. Even the payments had not been done properly within time in the year 2002 -2003 and they were paid to the sugarcane growers two years later. As regards the petitioner in CWP No.101 of 2011, 585 villages had been notified and from 2002 to 2002, again there had always been surplus available for crushing. In 2005 when the 3rd respondent-Sugar Mill was set up, a decision was taken only to allocate the non-notified areas and in such a process, care was taken to ensure that the respective petitioners themselves did not suffer any serious loss in business. To pick up further details from the statement filed by the respondents, it is seen that 81 villages Civil Writ Petition No.100 of 2011 (O&M) - 9 - adjoining Gurdaspur, Batala, Ajnala Sugar Mills reserved areas which had not been notified with any Mill were given for development and purchase of cane temporarily to the 3rd respondent. The only village that had been notified with the petitioner in CWP No.100 of 2011 which has subsequently been assigned to the 3rd respondent is Faizlabad (H.B. No.403). The 3rd respondent filed objection in each one of the cases to point out that 81 villages which had been allotted to the 3rd respondent through the impugned order dated 11.11.2010 had been admittedly non-notified areas and did not fall within the assigned areas of the petitioners. The 3rd respondent would take serious objection to the fact that any of the petitioners could also introduce a new concept of “an operational area” even apart from the villages which are notified and allocated to the respondent-Mills. The expression “operational area” itself is alien to the Act and the Rules. The villages that the petitioners could claim would be only the assigned areas and any village nearby cannot become an operational area for the respective mills to claim exclusive privileges. The villages which have been notified and allotted to the 3rd respondent are only non-notified villages and, therefore, the petitioners cannot have any grievance. The 3rd respondent also brings a tabulation evidencing the details of the crushing capacity of the 3rd respondent-Mill and how there is a Civil Writ Petition No.100 of 2011 (O&M) - 10 - justification for the manner of allocations made through the impugned notifications. It would be useful to reproduce the tabulation to get a proper understanding of the contentions raised in defence by the 3rd respondent:- Sr.No. Particulars CSIL Batala Ajnala Gurdaspur 1. Capacity 6500 TCD 1500 TCD 2500 TCD 2000 TCD 2. Requirement of cane as per crushing capacity for the period of 180 days (Lac qtl) 117.00 27.00 45.00 36.00 3. Culturalable Area (Hectare) 26000 70000 78000 75000 4. No. of villages 150 324 491 586 5. Cane Intensity (Assuming 15% of Cultural Area) 15% 15% 15%` 15% 6. Cane Area (Hectare) 3900 10500 11700 11250 7. Yield Per Hectare (Otls) 625 625 625 625 8. Total Production from respective cane area @ 625 Qtls. Per Hectare (Lac Qtl) 24.37 65.62 73.12 70.31 9 Total availability of cane for crushing from respective cane area @ 500 qtls per Hectare after considering @ 125 qtl per hectare of cane qty for Cane Seed, Gurr Making and Chewing purposes. (Lac Qtl) 19.50 52.50 58.50 56.25 10. Short Fall (-)/Surplus (+) Lac Qtl -97.5 +25.50 +13.50 +20.25 Civil Writ Petition No.100 of 2011 (O&M) - 11 - If we notice the fact that the allocations which are made to the 3rd respondent are only in respect of the villages which are already not notified and assigned to the petitioners and the allocations are again made keeping in view the past experience of how they had been surplus which could not be effectively milled with the respective petitioners and there had been also delays for payment to the sugarcane farmers, it was perfectly justified for the Cane Commissioner to take note of the above aspects and make allocation in respect of non-notified villages to the 3rd respondent. The physical proximity of the various villages to the respective petitioners is merely one of several criteria and I would uphold the objections of the 3rd respondent that the petitioners cannot claim a vested interest over the villages which are not notified but owing to the proximity, the petitioners were able to secure those villages as captive to their own crushing activity. 5. The allocations are made to be dependent on the crushing capacity of the respective mills. It is still a free economy and it will not subserve public interest, if any form of vested interest is allowed to be cultivated for existing sugar mills alone. It is in the spirit of competition that the quality of public interest could be better serviced and the petitioners cannot, under these circumstances, make an issue about the setting up a sugar mill itself. If the 3rd respondent has set up an industry which in State Civil Writ Petition No.100 of 2011 (O&M) - 12 - assessment is necessary, it shall be in the interest of all sugarcane factories that there is an equal distribution amongst the various sugar mills that provides ease of access to cane growers and secure appropriate remunerations for their products with minimal difficulties. 6. The petitioners have filed objections to the State counter regarding the alleged surplus that could not be effectively crushed during the various years. I had sought for the information given by the State in the reply to be affirmed through an affidavit and an affidavit had also been filed giving out the details of surplus during the various years from 2001 to 2002 and from 2007 to 2008. This had been circulated to this Court subsequent to the reserving of the case for orders. There is a sure affirmation of surplus details that justified the State decision but I would still not take it as final and there are surely disputed questions of fact. I am, however, convinced that there were weighty reasons for the State assessment and I find that there is no arbitrariness involved. The petitioners were not justified in staking a claim over the non-notified villages and referring to the adjoining villages to the location of factories as coming within the operational area to deny the 3rd respondent the allocations in the manner presently notified. 7. The petitioners have been able to stall the allocations and any continuance of the interim order of stay granted will surely Civil Writ Petition No.100 of 2011 (O&M) - 13 - choke the 3rd respondent out of its existence. The writ petitions are unjustified and I find no serious error in the notifications made. If at all, the only issue that would require a rethinking on the notification is the decision that assigns Faizlabad (H.B. No.403) which had already been allotted to the petitioner in CWP No.100 of 2011 to the 3rd respondent. The allocation of the said village to the 3rd respondent shall be kept in abeyance and the 2nd respondent will consider afresh the said allocation in the light of the objections given by the petitioner and take a final decision on the relative merits of the contentions of parties. As regards the whole of the remaining notifications, there could be nothing which is legally objectionable for any of the petitioners. The challenges to the impugned notifications ought to fail and, therefore, all the writ petitions are dismissed with costs assessed at Rs.10,000/- each in each case in two sets against the respondents. (K. KANNAN) JUDGE 06.12.2011 sanjeev