Case: SWAMI SAMARTH SUGARS AND AGRO INDUSTRIES LTD Vs. LOKNETE MARUTRAO GHULE PATIL DNYANESHWAR SAHAKARI SAKHAR KARKHANA LTD &amp; ORS

supplies, especially when there is a shortfall in sugarcane production in the cane reservation area. Moreover, mills are tied down to the quality of cane that is supplied by the farmers in the area….. 4. The minimum distance criterion for setting up of a new mill is expected to ensure a minimum availability of cane for all mills. This can cause distortion in the market. The virtual monopoly over a large area can give the mills power over farmers, especially where landholdings are smaller. This restriction inhibits entry and further investment, and adversely impacts competition for purchase of sugarcane as well as for improving mill efficiency. As such, it is not in the interest of development of sugarcane farmers or the sugar sector, and may be dispensed with as and when a state does away with cane reservation area and bonding. 48. In respect of cane reservation area and minimum distance criteria, it was stated in Chapter 2, while dealing with the Cane Area Reservation and the Minimum Distance Criterion as under: 2.1 Central Government has been protecting the interests of sugarcane farmers and sugar mills through various policy instruments. Sugarcane farmers are assured of a minimum price for sugarcane, payable by mills. On the other hand, sugar mills have been assured regular supply of sugarcane by providing that a minimum distance be maintained between two mills and an area be earmarked for each mill for drawal of cane. The expectatons implicit in the extant system of cane area reservation and the criterion for distance between mills could be as under: (i) ensuring adequate cane supply to mills and preventing unhealthy competition to procure sugarcane; (ii) ensuring crushing of the entire quantity of cane grown by sugarcane farmers in the reserved area, with no cane remaining uncrushed at the end of the season; and (iii) increasing the productivity of sugarcane cultivation so as to increase the income of farmers and enhance supplies and sugar recovery for mills. xxx xxx xxx 2.5 Those who suggest that the reservation of cane area be done on a permanent basis argue that the system facilitates sugar factories to undertake cane development work in their respective areas. This argument of the industry may be true in some selected pockets, but appears fallacious when one looks at the trends of sugarcane productivity in the country. Cane productivity was 68.57 tonnes/ha in 2000- 01 and stood at about the same level in 2010-11 (68.59 tonnes/ha), marginally declining thereafter to 68.09 tonnes/ha in 2011-12. Thus, for the country as a whole, cane area reservation does not seem to have promoted productivity. xxx xxx xxx 2.7 Those in favour of scrapping the cane area reservation reiterate the views of the Thorat Committee (2009). The present system ties farmers to supply cane to a particular mill whether or not s/he is satisfied with it. The moot question is whether a farmer should remain bonded and supply cane to a particular mill even if it has not made payment for her/his earlier supplies. There is a case for dispensing with cane area reservation and giving freedom to the farmers to supply their cane to any mill of their choice. There is no cane area reservation system in Maharashtra and non-members of cooperative mills are free to supply cane to any mill which they like. 2.8 The system of cane area reservation and maintaining a minimum distance between mills has been shielding them from competition and has created perpetual monopolies. This policy does not allow a farmer to participate in a competitive market and get the best price for her/his cane. The farmer has no freedom to choose the buyer and is more likely to get delayed payments and unfair price for the cane than in a competitive set up. Thus, these policies have led to the continued functioning of inefficient sugar mills by giving them a guaranteed supply of cane and by not allowing market forces to work towards a viable equilibrium. For the growth of the sector and in the interest of efficiency in this industry, policy should allow the Schumpeterian process of creative destruction to work. 49. The Ministry of Consumer Affairs, Food and Public Distribution has referred to recommendations of Dr. C. Rangarajan Committee. The gist of the recommendations of the Committee and Implementation of Recommendations of Dr. Rangarajan Committee, is as under: Issues Gist of Recommendations Status Cane Area Reservation: Over a period of time, states should encourage development of such market-based long-term contractual arrangements, and phase out cane reservation area and bonding. In the interim, the current system may continue. States have been requested to consider the recommendations for implementation as deemed fit. So far, none of the States have taken action, current system continues Minimum Distance Criteria: It is not in the interest of development of sugarcane farmers or the sugar sector, and may be dispensed with as and when a State does away with cane reservation area and bonding. States have been requested to consider the recommendations for implementation as deemed fit. There is no reservation of area in Maharashtra. Rest of the States have not made any changes in the current arrangement. 50. We also note the reasoning given by the Central Government that in order to avoid unhealthy competition, the licensing under the Industries (Development and Regulation) Act, 1951 was done away with on 31.08.1998. Unhealthy competition has two major aspects- one relating to the existing and new sugar factory, and second in the context of the farmers. On account of competition between the existing and new sugar factory, it would be the farmers who will be the beneficiary as they would have an option to select the sugar mill which provides better service in the manner of payment of price. Keeping in view the recommendations of the Rangarajan Committee and the fact that the Central Government has exercised its jurisdiction to grant extension in time, the ultimate beneficiary would be the farmer and not the existing or the new sugar factory.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]22. A perusal of the Control Order shows that initially as per the Control Order as amended in the year 2006, the time limit for implementing the IEM was 2 + 4 years and that there was no specific Clause to extend the period of implementation of IEM on account of delay due to any unforeseen circumstances. The subsequent amendment to the Control Order dated 24.08.2016 extended the period of implementation to 3+5 years with a further condition to grant extension for a maximum period of two years due to any unforeseen circumstances beyond control. However, in the further subsequent amendment on 12.08.2018, Clause 6C(2)(a) specified that where delay is due to any unforeseen circumstances beyond the control of person concerned such as natural calamities, the extension could be granted for a further period of two years after the expiry of five years for commencing the commercial production, not to exceed more than a year at a time. However, Clause 6C(2)(b) provided that where delay was due to any court case relating to land use, environment or such other reason that may have arisen within five years from the date of filing of IEM, the Ministry of Consumer Affairs may extend the period stipulated under sub-clause (1) initially for a further period of two years not to exceed more than a year at a time. Clause 6C(c) provided that where delay is due to court case relating to land use, environment or such other reason continues beyond the period extended under clause (b), the Ministry of Consumer Affairs may grant extension or such period as may deem fit, not to exceed more than a year at a time, but subject to furnishing of bank guarantee of Rs. 50 Lakhs for each year for which extension is sought, in addition to the bank guarantee furnished under sub-clause (2) of Clause 6B of the Control Order. Such Bank Guarantee is liable to forfeiture but only in terms of Clause 6D of the Control Order.The latin maxim Actus Curiae Neminem Gravabit i.e., the act of the Court will not prejudice anyone, is well known, but the applicability of the same to the facts of the present circumstances need to be examined. We find that the appellant was justified in not taking any effective steps pending such lis, as contemplated under Explanation 4 to Clause 6A of the Control Order. The arial distance is one of the foremost requirements for a valid IEM. This Court in a judgment reported as South Eastern Coalfields Ltd. v. State of M.P. and Others(2003) 8 SCC 648  held that injury, if any, caused by the act of the Court shall be undone and the gain which the party would have earned, unless it was interdicted by the order of the Court would be restored to or conferred on the party by suitably commanding the party liable to do so. The Court noticed that the litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application. It was held as under:28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the act of the court embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the court being wrongful or a mistake or error committed by the court; the test is whether on account of an act of the party persuading the court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonably have made. There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the court not intervened by its interim order when at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict. Whenever called upon to adjudicate, the court would act in conjunction with what is real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the litigant would stand to gain by swallowing the benefits yielding out of the interim order even though the battle has been lost at the end. This cannot be countenanced. We are, therefore, of the opinion that the successful party finally held entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation. (Emphasis supplied)24. In the present appeal, the lis initiated by the writ petitioners in the first round was nothing less than gamble so as to scuttle the process of commissioning of plant. The appellant was at the receiving end of the writ petitions filed and was at the receiving end of such litigation and the period spent in such lis cannot be used against the appellant.25. In another judgment reported as Beg Raj Singh v. State of U.P. and Others (2003) 1 SCC 726,  this Court held that ordinary rule of litigation is that the rights of the parties stand crystallized on the date of commencement of litigation and the right to relief shall be decided by reference to the date on which the petitioner entered the portals of the Court. That was a case where the appellant was granted sand mining lease for a period of one year but before the expiry of the term of lease, the appellant sought renewal of lease for another period of two years. Around the time when the appellant was allowed the extension of two years, the Government had taken a decision to hold an auction of the sand mining lease. It was in these circumstances, this Court held as under:6. Having heard the learned counsel for the petitioner, as also the learned counsel for the State and the private respondent, we are satisfied that the petition deserves to be allowed. The ordinary rule of litigation is that the rights of the parties stand crystallized on the date of commencement of litigation and the right to relief should be decided by reference to the date on which the petitioner entered the portals of the court. A petitioner, though entitled to relief in law, may yet be denied relief in equity because of subsequent or intervening events i.e. the events between the commencement of litigation and the date of decision. The relief to which the petitioner is held entitled may have been rendered redundant by lapse of time or may have been rendered incapable of being granted by change in law. There may be other circumstances which render it inequitable to grant the petitioner any relief over the respondents because of the balance tilting against the petitioner on weighing inequities pitted against equities on the date of judgment. Third-party interests may have been created or allowing relief to the claimant may result in unjust enrichment on account of events happening in-between. Else the relief may not be denied solely on account of time lost in prosecuting proceedings in judicial or quasi- judicial forum and for no fault of the petitioner. A plaintiff or petitioner having been found entitled to a right to relief, the court would as an ordinary rule try to place the successful party in the same position in which he would have been if the wrong complained against would not have been done to him. The present one is such a case. The delay in final decision cannot, in any manner, be attributed to the appellant. No auction has taken place. No third-party interest has been created. The sand mine has remained unoperated for the period for which the period of operation falls short of three years. The operation had to be stopped because of the order of the State Government intervening which order has been found unsustainable in accordance with stipulations contained in the mining lease consistently with GO issued by the State of Uttar Pradesh. Merely because a little higher revenue can be earned by the State Government that cannot be a ground for not enforcing the obligation of the State Government which it has incurred in accordance with its own policy decision.27. In the present case, the appellant was not the writ petitioner before the High Court. Rather, he was defending the permissions granted by the State and the Central Government. It was not prudent for the appellant to proceed with the heavy investment required for installation of a sugar factory and then to suffer the consequences depending on the outcome of the litigation. The appellant opted for a safer option not to erect the plant and commence production because of the pending litigation. It was a reasonable and precautionary option exercised by the appellant. The litigation initiated in public interest or by the rival sugar factory cannot be used against the appellant when the writ petition was disposed of with the condition that there cannot be any development within 500 meters of river which necessitated the change of location. The Aerial Distance Certificate was categorically declared to be not open to challenge even though the State had amended the Control Order on 03.11.2011 to increase the distance between the existing sugar factory and the new factory was increased to 25 kilometers. Even though the Control Order was already amended by the State, but the High Court held that the aerial distance would be as applicable on the date of IEM acknowledged by the Central Government. It is to be noted that there is no challenge to the order passed by the High Court in the first round of the litigation. Therefore, even the High Court in the second round of litigation was not within its jurisdiction to hold that the amended distance regulations would be applicable.28. Still further, the State Government while recommending extension on 02.01.2018 did not dispute that the aerial distance between the existing sugar factory and the proposed new sugar factory was less than 25 kms, and rightly so for good reasons. The conditions provided in the IEM acknowledged on 08.09.2010 would alone be applicable, which was extended by the Central Government on 14.08.2018. The appellant has to be restituted in terms of the order passed in South Eastern Coalfields Ltd. as on the day when the lis was initiated, not by the appellant but by the other persons. The litigation at the behest of rival parties cannot be used against the appellants, more so when they have substantially failed in the first round of lis.29. The language of the Control Order has been amended time and again with a view to enable the competent authority to grant extension of time due to unforeseen circumstances. The Control Order amended on 12.08.2018 contemplates more than one unforeseen circumstance beyond the control of the person concerned. It also empowers the competent authority to extend the validity of IEM where the delay is due to any court case relating to land use, environment or such other reason. Sub-clause (c) of Clause 6C empowers the competent authority to grant further extension for a period of not exceeding a year at a time subject to furnishing of a bank guarantee. Therefore, the objective and purpose of such amended Control Order is that a sugar mill should commence production by excluding the period spent in the court cases. Though the appellant was the defender of the IEM granted and there was no stay in the first round of litigation, but the extension granted would fall under the category of such other reason. The judgment of this Court in South Eastern Coalfields Ltd. is to the effect that no one shall suffer by the act of the Court which embraces within its sweep all such acts as to which the Court may form an opinion in any legal proceedings but the Court would not have so acted had it been correctly apprised of the facts and the law. In the first round of litigation, challenge was to the Aerial Distance Certificate, the writ petitioners have failed in such challenge but the High Court rightly interdicted that the appellant is required to comply with the anti- pollution laws in the field and the laws relating to preservation of ecology and environment. Such order led to the appellant looking for alternative location in view of the denial of no-objection certificate by Godawari Marathwada Irrigation Development Corporation. Therefore, the period spent in litigation for the years 2010-2014 has been rightly excluded by the competent authority.The High Court has not set aside the said order on only such ground but also for the reason that the appellant has not implemented IEM within the time prescribed. This Court in Tata Cellular v. Union of India (1994) 6 SCC 651  has held as under:70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.77. The duty of the court is to confine itself to the question of legality. Its concern should be:1. Whether a decision-making authority exceeded its powers?2. Committed an error of law,3. committed a breach of the rules of natural justice,4. reached a decision which no reasonable tribunal would have reached or,5. abused its powers.Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.(ii) Irrationality, namely, Wednesbury unreasonableness.(iii) Procedural impropriety.The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind [(1991) 1 AC 696] , Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, consider whether something has gone wrong of a nature and degree which requires its intervention.xx xx xx94. The principles deducible from the above are:(1) The modern trend points to judicial restraint in administra- tive action.(2) The court does not sit as a court of appeal but merely re- views the manner in which the decision was made.(3) The court does not have the expertise to correct the ad- ministrative decision. If a review of the administrative de- cision is permitted it will be substituting its own decision, without the necessary expertise which itself may be falli- ble.(4) The terms of the invitation to tender cannot be open to ju- dicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to ac- cept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by ex- perts.(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administra- tive sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbi- trariness not affected by bias or actuated by mala fides.(6) Quashing decisions may impose heavy administrative bur- den on the administration and lead to increased and un- budgeted expenditure.Based on these principles we will examine the facts of this case since they commend to us as the correct principles.31. In the absence of any finding by the High Court to the effect that the decision of the Central Government is so arbitrary, irrational or unjust, we find that the High Court has gravely erred in taking into consideration that appellant was remiss in not implementing IEM during the pendency of the writ petitions in the first round of litigation.32. The second round of litigation began even before the Aerial Distance Certificate was issued. The appellant was again the defender of the issuance of the IEM. The High Court therein found that the amendment carried out by the State of Maharashtra contemplating that no sugar factory shall be set up within the radius of 25 kms would be applicable, though it is not even the averment or objection of the State in its communication dated 02.11.2018. Still further, the scheme of the Control Order shows that once IEM is granted, the timeline has to be determined keeping in view the date of the issuance of the IEM. Therefore, subsequent amendment would be applicable in respect of new sugar factory which may be proposed to be set up. It is conceded that during the interregnum from 2010 till the hearing of the appeal before this Court, no other entrepreneur has applied for IEM in the area Taluka Newasa and Shevgaon. Since no other entrepreneur has applied for IEM to set up a sugar factory in the area in question, it is not open to the existing sugar factory to contend that the revised parameters by the State Government should be made applicable. IEM fixes the timeline from the date of issuance of the same and the subsequent amendment in the Control Order would not have any application towards the IEM already issued.34. In the said referred case, this Court was considering an application filed by multiple sugar mills in the State of Uttar Pradesh. That was a case where the proliferation of IEM to block the competition was the cause of dispute. The IEM filed by the appellant for setting up of a sugar mill at Village Baisagapur, Distt. Lakhimpur was acknowledged on 13.05.2004, whereas the respondent in the said appeal filed its IEM on 17.05.2004 for setting up of a sugar mill at Village Saidpur, Khurd, Distt. Lakhimpur which was at a distance of 7.2 kms from the proposed sugar mill of the appellant. The Government of India had approved the IEM filed by the appellant on 30.06.2005 whereas IEM filed by the respondent was disapproved. The respondent filed a writ petition challenging the IEM approved in favor of the appellant and another IEM in favor of the M/s Bajaj Hindustan Ltd. for setting up of a sugar mill at Village Khambarkhera. This Court held as under:30. 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.34. Before concluding on this issue we may reiterate that raising of resources and application of resources by a unit is different from the condition of distance. The concept of distance is different from the concept of setting up of unit in the sense that setting up of a unit is the main concern of the businessman whereas a concept of distance is an economic concept which has to be taken into account by the Government because it is the Government which has to frame economic policies and which has to take into account factors such as demand and supply.35. This Court approved the IEM filed by M/s Balrampur Chini Mills Ltd. at Village Kumbi, where it had invested Rs.213 crores for its plant. The said sugar factory had also invested Rs. 152 crores at Village Guleria. The following observations were made by this Court:37. We are of the view that out of two projects at Kumbhi and Guleria, Balrampur can be given milling permission for its factory (mill) at Kumbhi. In our present judgment we have taken the view that the Sugarcane (Control) (Amendment) Order, 2006 operates retrospectively. We have also taken the view that in applying the said 2006 Order there will be a bar on subsequent IEM-holders during the specified period when the earlier IEM- holder is taking effective steps. At the same time, we find that in the case of Kumbhi substantial investment has been made by Balrampur. Their projections are better than units proposed to be set up by Oudh. Moreover, the sugarcane crushing season ends on 15-5-2007, we do not want the cane-growers to suffer. Therefore, we grant milling permission only to Kumbhi Project. IA No. 2 of 2007 is made absolute. However, Guleria Project shall be governed by the principles laid down in this judgment, as indicated above.36. We find that the said judgment is relevant only to examine the question as to whether the Control Orders are retrospective or not. The finding about the distance while granting permission to Balrampur Chini Mills is in the facts of that case. In the present appeal, after the IEM was acknowledged in the year 2010, no other entrepreneur had even sought or had been granted IEM in the area in question except the existing sugar factory was permitted to enhance its crushing capacity.37. In view of the principles laid down in the aforesaid judgment, the amendments carried out subsequently in the Control Order would also be read as retrospective as they are not creating any right for the first time. Clauses 6A to 6E were inserted by the amendment on 10.12.2006 to substitute the press notes which were found to be under cloud by this Court. Subsequent amendments on 24.08.2016 and 12.10.2018 would also be retrospective being amendments dealing with procedural aspects and clarificatory in nature in lieu of the press notes issued earlier by the Central Government. Such amendments were necessitated to take care of situation when IEM holder is not able to take effective steps because of unforeseen circumstances.38. The judgment reported as Babaji Kondaji Garad v. Nasik Merchants Co-operative Bank Ltd., Nasik and Others (1984) 2 SCC 50  and Dhananjaya Reddy v. State of Karnataka (2001) 4 SCC 9  were pressed to argue that where the statute prescribes a procedure for doing a thing, it must be done accordingly, unless there is any contrary indication.The said judgments have no applicability to the facts of the present case as the extension has been granted by the Central Government on the recommendation of the State Government keeping in view of the unforeseen circumstances faced by the appellant.We do not find any merit in such arguments. The extensions were given when the second round of litigation was pending before the High Court due to which the appellant was not able to take effective steps.40. A perusal of the above table would show that the extensions granted on 15.11.2018 and 12.04.2019 were for a period which had already expired. The extension granted on 09.05.2019 was valid only till 07.09.2019 i.e. less than four months. All the extensions were granted when the matter was still pending before the High Court and were subject to the outcome of the writ petitions. Therefore, the objections regarding frequent grant of extension of IEM are not of much substance.41. Hence, we find that the decision of the competent authority to grant extension of time is proper exercise of the powers conferred on it and cannot be said to be illegal, irrational or suffering from procedural impropriety. Accordingly, in respect of Question nos. (i), (ii) and (iii), we find that the findings recorded by the High Court are not sustainable in law.43. In the second round of writ petitions, objections were raised by the existing sugar factory that the appellant has started construction. Such construction was interdicted on the ground that no equity will follow on the basis of any construction raised. The reasons which prevail with the appellant in not setting up of the sugar factory or raise construction in the first round of litigation are very well applicable in the second round as well. The IEM was amended subject to the writ petitions filed in the second round. Therefore, having objected to the construction and the High Court passing an order that the appellant would not be entitled to claim any equity, it is a reasonable and prudent decision taken by the appellant not to proceed with the construction and set up a plant.However, we are unable to agree with such interpretation. Though Clause 6C as applicable on 10.11.2006 as well as on 24.08.2016 and 12.08.2018 contemplates the IEM shall stand de- recognised and the performance guarantee shall be forfeited, the performance guarantee is to be forfeited in terms of Clause 6D after providing the reasonable opportunity of being heard. We find that twin conditions have to be fulfilled- (i) failure to set up plant and to commence production and then (ii) the forfeiture of the performance guarantee. Second will not arise unless the first is satisfied and the second step cannot be undertaken, without complying with an opportunity of personal hearing in terms of Clause 6D of the Control Order. Unless the performance guarantee is forfeited, there is no lapsing of IEM. Thus, unless the necessary consequences of de- recognition of IEM are undertaken, there is no automatic lapsing of IEM. Such is the language in the subsequent amended Control Orders as well. The appellant had furnished a performance guarantee of Rs. 1 crore, however no steps were taken either by the State Government or by the Central Government to forfeit such performance guarantee inasmuch as not even a show cause notice was issued. Thus, a conclusion cannot be drawn that the IEM is deemed to be lapsed automatically only on account of lapsing of time.In the present case, the farmers are not getting the advantage of competition which could fetch them timely payment and better services. In view of the said fact, we find that the order of the High Court allowing the writ petition filed by the competitors is wholly unjust and unfair and is liable to be set aside.46. It may be stated that one I.A. has been filed on behalf of the farmers of the area supporting the setting up of a sugar mill by the appellant. It is not necessary to dwell on such I.A. except to state that the farmers are also looking forward for some competition in the area.49. The Ministry of Consumer Affairs, Food and Public Distribution has referred to recommendations of Dr. C. Rangarajan Committee. The gist of the recommendations of the Committee and Implementation of Recommendations of Dr. Rangarajan Committee, is as under:						Issues			Gist of Recommendations			Status							Cane Area Reservation:			Over a period of time, states should encourage development of such market-based long-term contractual arrangements, and phase out cane reservation area and bonding. In the interim, the current system may continue.			States have been requested to consider the recommendations for implementation as deemed fit. So far, none of the States have taken action, current system continues							Minimum Distance Criteria:			It is not in the interest of development of sugarcane farmers or the sugar sector, and may be dispensed with as and when a State does away with cane reservation area and bonding.			States have been requested to consider the recommendations for implementation as deemed fit. There is no reservation of area in Maharashtra. Rest of the States have not made any changes in the current arrangement.			50. We also note the reasoning given by the Central Government that in order to avoid unhealthy competition, the licensing under the Industries (Development and Regulation) Act, 1951 was done away with on 31.08.1998. Unhealthy competition has two major aspects- one relating to the existing and new sugar factory, and second in the context of the farmers. On account of competition between the existing and new sugar factory, it would be the farmers who will be the beneficiary as they would have an option to select the sugar mill which provides better service in the manner of payment of price. Keeping in view the recommendations of the Rangarajan Committee and the fact that the Central Government has exercised its jurisdiction to grant extension in time, the ultimate beneficiary would be the farmer and not the existing or the new sugar factory.