M/S Dhampur Sugar Mills Ltd vs State Of U.P. & Ors

3. Facts in nutshell giving rise to the writ petition as well as present appeal may now be stated.

4. The appellant-M/s Dhampur Sugar Mills Ltd. (Company for short) is a Public Limited Company incorporated under the Companies Act, 1956 having its registered office at Dhampur (Bijnor). The appellant has sugar mill in the State of Uttar Pradesh and has also a distillery. The distillery manufactures ethyl alcohol, used for blending of petrol, manufacture of chemicals and rectified spirit for medicines. It is also having a similar business at Asmouli, District Moradabad, Mansurpur, District Muzaffarnagar and Rozagaon, District Barabanki The writ petitioner approached the High Court by invoking Article 226 of the Constitution against the respondents for issuance of appropriate writ, direction or order quashing certain Government Orders said to have been passed by the Authorities under the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 [Act XXIV of 1964] (hereinafter referred to as the Act) directing the writ-petitioner to supply 20% of the molasses produced by the sugar mills for manufacturing country made liquor by distilleries for the financial years 2003-04 and 2004-05. The writ petitioner also challenged consequential action of issuance of show cause notices as to why it should not be prosecuted for committing offences punishable under the Act since it has not complied with the orders issued by the Authorities and has not supplied 20% molasses for manufacturing country liquor. The main challenge of the writ petitioner was that though the Company was producing molasses, the entire production was required by the Company itself which was used for captive consumption and even that was not sufficient. The Company had, therefore, obtained permission from the Government for import of molasses from other States as also other Countries. Since the writ petitioner did not have balance or extra stock of molasses for being supplied to distilleries for manufacturing country-made liquor, the Authorities could not compel the writ petitioner to supply molasses as directed in various Government Orders and Letters. Such action was improper, illegal, arbitrary and unreasonable, inconsistent with the provisions of the Act as also violative of Articles 14 and 19(1)(g) of the Constitution. The action was also against public policy reflected in Article 47 of the Constitution. It was contended that since the above directives could not have been issued by the Authorities, issuance of show cause notices as to why the writ petitioner should not be prosecuted also were not legal and the prosecution should be quashed. It was also the case of the writ petitioner that the State Government ought to have constituted Advisory Committee under Section 3 of the Act.

11. On May 2, 2005, notice was issued by this Court. The matter appeared on Board thereafter from time to time and ultimately on March 2, 2007, the Registry was directed to place the matter for final disposal on a non-miscellaneous day. That is how the matter has been placed before us.

18. The English translation supplied by the appellant at Annexure P-3 reads thus; From the balance stock of molasses with each sugar mill, 20% of molasses shall be reserved for the distilleries manufacturing country liquor. The sugar mills having their own distilleries shall not be covered with this reservation to the extent that after the actual consumption of molasses in their captive distillery, 20% reservation shall be applicable on the balance stock.

Sri L.N. Wahi, Indian Sugar Mills Association, Uttar Pradesh Branch, Sri Niwas, I, Kabir Marg, Lucknow.

(iii) One representative of Moulding and Foundry Industries Sri Raman, Secretary, Agra Iron Founders Association, Agra.

(vi) Sri Ram Surat Prasad, M.L.A., Mohalla Mohaddipur, Gorakhpur.

(emphasis supplied)

34. Explaining the doctrine of power coupled with duty, de Smith, (Judicial Review of Administrative Action, 1995; pp.300-01) states:

41. In Ratlam Municipality v. Vardichan, (1981) 1 SCR 97 : (1980) 4 SCC 162; some residents of Ratlam Municipality moved the Sub-Divisional Magistrate under Section 133 of the Code of Criminal Procedure, 1973 for abatement of nuisance by directing the municipality to construct drainpipes with flow of water to wash the filth and stop the stench. The Magistrate found the facts proved and issued necessary directions. The Sessions Court, in appeal, reversed the order. The High Court, in revision, restored the judgment of the Magistrate and the matter was carried to the Supreme Court.

(emphasis supplied)

46. For the foregoing reasons, in our opinion, the appeal deserves to be allowed and the order of the High Court deserves to be set aside. It is, accordingly held that the directive issued by the respondents would not apply in case there is no balance stock of molasses with any sugar mill. The respondent-authorities have no right to compel such sugar mills to supply 20% molasses for the purpose of manufacturing country liquor.

48. The appeal is allowed to the extent indicated above. On the facts and in the circumstances of the case, however, the parties will bear their own costs.