1 lgc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO.1908 OF 2009 IN WRIT PETITION NO. 5120 OF 2009 Shri Siddheshwar Sahakari Sakhar Karkhana Ltd, Kumthe, Post Tikekar Waid, : Applicant/ Tal. North Solapur, Dist. Solapur : Petitioner versus Chief Director (Sugar) Govt. of India Ministry of Consumer Affairs, Food and Public Distribution Department of Food and Public Distribution Krishi Bhavan, New Delhi & Anr. : Respondents. Mr. A A Kumbhakoni i/by Mr Umesh R Mankapure for the Applicant/Petitioner. Mr. R.V. Govilkar a/w Mr N R Prajapati for the Respondents. CORAM : S B MHASE & R M SAVANT, JJ. DATE : 4th August 2009 P.C. 1. This is an Application filled by the Applicant, original Petitioner, for seeking permission to sell 655.5 metric tonne and 18292.8 metric tonne of sugar, remaining unsold and being the un-despached quantity out of the dismantled from buffer stock of 30 lac tons of the Petitioner sugar factory which is converted by the Chief Director (Sugar) into levy sugar by the impugned orders dated 17th April 2009 and 20th April 2009. This is the sugar which was to be sold in the open market by 2 the Petitioner. It is undisputed fact that the levy sugar, which the Petitioner was to give to the Government so as to make the same available to the fair price shops, has already been given to the Government and, therefore, so far as demand of levy sugar is concerned, the same stands satisfied. 2. The sugar, which is the subject matter of this Civil Application, is a free sugar from the buffer stock to be sold in the open market at a price prevailing in the market, but, in any circumstances, above the levy sugar price. The levy sugar is given at a controlled price to the Government, therefore, in order to fulfil the demands of the sugar cane agriculturists and to generate funds, the sugar factories like the Petitioner, have to earn money out of the free sugar which is to be sold in the open market. In short, the highest price given to the agriculturists who produce sugar cane and the payments to the sugar cane workers at a good rate can be made by the sugar factories only if they earn good price out of the sale of free sale sugar in the open market. It is significant to note that in respect of this free sale sugar already release orders have been issued by the Government from time to time and the Petitioner factory had also made attempts to sell the said sugar in the open market but unfortunately for the Petitioner, the offers received in the tenders 3 were less than the cost of production and therefore instead of selling the said sugar at a lesser price, the offers were not accepted, resulting in the said sugar remaining unsold. In these circumstances, the impugned orders have been passed by the Chief Director (Sugar) converting the said sugar into levy sugar. 3. We have tried to trace the power of Chief Director (Sugar) under the Essential Commodities Act, 1955 and/or the Sugar Control Order of 1966. We have also asked the learned counsel for the Respondents that from where such power is derived by the Chief Director (Sugar) with the best of efforts made at the Bar we are unable to trace any such power with the Chief Director (Sugar) of converting free sale sugar into levy sugar. By way of an opportunity, we had also granted time to Mr.Govilkar, the learned counsel for the Respondents, to get instructions from the Chief Director of Sugar. The learned counsel for the Respondents submitted today that in spite of the communication to the Central Law Ministry in this respect, no instructions have been received by him so as to oppose the present Civil Application. Prima facie we do not find any such power with the Chief Director of Sugar, that is why we have admitted the above Writ Petition and granted interim relief in the main Petition staying the impugned orders. 4 4. The Petitioner in the above Civil Application has come with a case that if the sugar remains in the godown un-despached, and since the above Writ Petition is not likely to reach for final hearing in the near future taking into consideration the pendency before this Court, by the time the Petitioner succeeds in the Petition, the sugar which is the subject matter of this Petition will become value less. Mr. Kumbhakoni, the learned counsel for the petitioner, submitted that in vacuum pan process of sugar, since chemicals like sulphuric acids are used and since the sugar is an organic material with lapse of time it looses its white colour and decomposition starts. Not only that, because of rainy season it absorbs moisture also which causes damage to the sugar and, therefore, he submitted that the petitioner may be allowed to sell the said sugar in the open market. He has stated that thereby the interest of the Petitioner factory, and also the interest of the agriculturists, i.e the interest of the sugar cane growers will be safe guarded. He therefore submitted that in the larger interest permission to sell the sugar may be granted. He also submitted that the Petitioner is ready and willing to maintain account in respect of the disposal of the sugar, tenders for which would be called. 5 5. Mr.Govilkar, the learned counsel for the Respondents, very vehemently tried to persuade this Court stating that the orders passed by the Respondent No.1 are in the interest of the Petitioner viz if the Petitioner cannot get the price in the open market equal to the production cost, since the levy price has been fixed taking into consideration the production cost and therefore if the Petitioner allows the impugned orders to be executed as directed by the Respondent No.1, the Petitioner will be in profit. He further submitted that since sugar is an essential commodity availability of the said sugar in the market is equally a main consideration which has weighed with the Central Government. 6. As observed above, prima facie we do not find that there is a power with the Chief Director of Sugar to convert free sale buffer stock sugar into levy sugar. No doubt the Central Government is under obligation to see that sugar is available in the market and there should be no hoarding of the sugar by the sugar factories or any dealer of the sugar factories. Equally the Central Government is under obligation to see that the price of the sugar is fairly maintained in the market and, therefore, the Central Government is possessed with the power of releasing sugar for sale in the open market in such quantities it deems 6 fit. The Central Government has exercised this power and has issued release orders in favour of the Petitioner and in view of those orders, the Petitioner tried to sell the said sugar in the market but it could not get a good price and therefore the free sugar from the buffer stock remained unsold. However that cannot be a ground prima facie for permitting Central Government to convert free sugar into levy sugar. We cannot lose sight of the fact that the manufacture of sugar and sale of sugar is the business of the Petitioner for which the Petitioner society has been established under the Co-operative Societies Act, 1960 and once the levy sugar has been given to the Central Government and release orders have been issued by the Central Government in respect of free sale sugar, prima facie we do not find any power in the Central Government to interfere with the activities of the sale of free sugar from the buffer stock. This sugar undoubtedly belongs to the Petitioner and amenable to any control, as there were already release orders in favour of the Petitioner. We, therefore, deem it appropriate to allow the Petitioner to sell the said sugar in the market. 7. So far as damage to the sugar as a result of storage for long period, and the submission made by the learned counsel for the Petitioner Shri Kumbhakoni in that respect are concerned, since we do not have the 7 expertise, we refrain from commenting one way or the other on the said aspect. But the fact cannot be lost sight of that there is every likelihood that the sugar is likely to be damaged if it remains in the godown of the sugar factory for a long time. We are, therefore, of the view that it would be better if the sugar is made available for consumption, as the same would serve the interest of all parties. 8. So far as the levy sugar which the Petitioner is to make available to the Government and which the Government distributes through the fair price shops is concerned, since the said quantity has already been handed over to the Government, it will not be proper for the Central Government to get excess levy sugar from the Petitioner by the mechanism of passing orders in the nature of the impugned orders. 9. The last point which requires consideration that in case the Petition is dismissed and ultimately it is found that the orders are sustainable and the Central Government is entitled to the sugar covered by the impugned orders, the interest of the Central Government would have to be protected by securing amount equally to the levy price, considering the same, we pass the following order :- :ORDER: 8 (1) The above Civil Application is allowed in terms of prayer clause (a) which reads thus :- “Pending hearing and final disposal of the present Writ Petition, this Hon’ble High Court be pleased to allow the applicant to sale the free sale sugar, dismantled from buffer stock in open market by calling tender and on any other terms and conditions this Hon’ble High Court deems fit and proper in the interest of justice.” subject to the following conditions :- (i) The Petitioner to call for offers by issuing tenders for the quantities stated in the release orders which are issued in favour of the Petitioner by the Respondents earlier in sequence of the orders in spite of the fact that time limit stated in the said orders has elapsed. We only grant relaxation in respect of the said time in favour of the Petitioner. (ii) The tenders should be issued in widely circulated news paper and the tenders shall be opened in the Karkhana in the presence of the representative of the Solapur District Central 9 Bank, and for that purpose a proper notice should be given to the Solapur District Central Bank. (iii) The Petitioner shall maintain a separate account in respect of this sugar, as also the price realised out of the said tenders (iv) The Petitioner shall execute an Indemnity Bond within fifteen days in favour of the Registrar Judicial of this Court which will be continuously operative till the final disposal of the above Writ Petition to compensate the Respondent No.1 to the extent of levy price of 655.5 metric tonnes and 18292.8 metric tonnes in case petition fails. (2) The above Civil Application is accordingly disposed of. [R.M.SAVANT, J] [S.B.MHASE, J]