Kisan Sahkari Chini Mills Ltd. & Ors vs Vardan Linkers & Ors

4. In response to the tender notice, first respondent and others submitted their tenders, which were opened on 1.3.2004 at 3.30 PM by the Assistant Cane Commissioner, Udham Singh Nagar, in the presence of the General Manager, Gadarpur, the Purchase Clerk of Sitarganj Mills and Molasses Clerk of Nadehi Mills. The first respondent's tender was for purchase of 15,000 quintals of molasses from Kisan Sahakari Chini Mills Limited, Nadehi, at a price of Rs.101/- per quintal. The said offer contained a note to the effect that "we will lift molasses in favour of distilleries of UP, Punjab and Haryana". The first respondent did not enclose any earnest money with the tender, but stated that a sum of Rs.1,00,000/- was already deposited with the Nadehi Sugar Mill. The first respondent did not make any offer for purchasing molasses from the other four mills. As the prices offered by the tenderers were found to be very low, negotiations were held by the Assistant Cane Commissioner with the tenderers on the same day. This was followed by further negotiations on 3.3.2004. At the time of negotiations on 3.3.2004, only three members of the Molasses Sales Committee were present - District Magistrate, Udham Singh Nagar, General Manager, Gadarpur Sugar Mills and the Assistant Cane Commissioner, Udham Singh Nagar. The Chairman of the Molasses Sales Committee and the General Managers of the five other sugar mills, were not present. The Chief Accountant of Sitarganj Mills was present. During negotiations, the first respondent increased its offer to Rs.119/- per quintal and again to Rs.127/- per quintal.

5. The three members of the Committee, who were present (along with the Chief Accountant of Sitarganj Mills), submitted a Note dated 03.03.2004 to the Chairman of the Molasses Sales Committee, reporting that during negotiations, the first respondent had offered to purchase the entire stock of molasses of the five sugar mills at Gadarpur, Nadehi, Sitarganj, Kichha and Doiwala at a price of Rs.127/- per quintal, though he had submitted the tender only for purchase of molasses of Nadehi sugar mill. It was also reported that the first respondent had assured payment of earnest money in respect of each of the four other mills, within seven days if his offer was accepted. The report also stated that the price of Rs. 127/- per quintal offered by the first respondent was higher than the offer of the other tenderers - IGL (Rs.117/-) and Rampur Distillery (Rs.126/-). The Chairman was requested to make his recommendations for accepting the offer of first respondent. The Chairman of Molasses Sales Committee made an endorsement 'Seen' on the said note on 3.3.2004. The District Magistrate, Udham Singh Nagar, made a note thereon to the effect, "Necessary orders may be issued today itself. Firm may deposit earnest money". The first respondent deposited Rs.4,00,000/- by bank drafts under cover of letter dated 10.03.2004, towards earnest money for purchase of molasses of the sugar mills at Gadarpur, Sitarganj, Kichha and Doiwala.

7. The first respondent gave an undated letter to the District Magistrate, Udham Singh Nagar requesting allotment of 1,02,000 quintals of molasses of all five sugar mills. On this letter, the District Magistrate, Udham Singh Nagar made a note on 23.3.2004 instructing the Assistant Cane Commissioner to issue orders giving time till 31.5.2004 to take delivery. On the basis of the said request of the first respondent, the Assistant Cane Commissioner prepared an undated official note and sought approval from the District Magistrate for granting permission to the first respondent for lifting 15,000 quintals of molasses from each of the four sugar mills at Nadehi, Gadarpur, Sitarganj, and Doiwala and 25,000 quintals of molasses from Kichha Sugar Mill, in all 85,000 quintals, by 31.05.2004. The District Magistrate, Udham Singh Nagar, on 25.03.2004 made the following endorsement thereon: "Approved. The Commissioner has desired to issue orders".

On 06.04.2004, M/s Associated Alchohols and Breweries Limited, Jaipur and M/s. Jagjit Industries Limited, Kapurthala, wrote letters to the District Magistrate, Udham Singh Nagar, offering to purchase molasses from the sugar mills of Kiccha, Sitarganj, Gadarpur, Nadehi and Doiwala at the rate of Rs.260/- and Rs.250/- per quintal respectively. M/s Uttar Pradesh Sahkari Sugar Mills Sangh Limited, Lucknow, informed the Government of Uttaranchal by a fax message that the stock of molasses lying at the co-operative sugar mills in the State of U.P. at Sarsawa, Bagpat and Morna Distilleries were sold to M/s. Chandigarh Distillers and Bottlers Limited on 8.4.2004 at the rate of Rs.300/- per quintal. Information was also received that molasses were being sold by the neighbouring private sector sugar mills in Uttaranchal at rates ranging from Rs.310/- to Rs.330/- per quintal. In view of it, the Additional Secretary, Cane Development and Sugar Industries submitted a report to the Secretary, Cane Development and Sugar Industries, (for short 'Secretary(Sugar)') referring to the irregularities in the proposal for supply of 85,000 quintals to first respondent and stating that the six sugar mills would suffer a loss of more than Rs.1.40 crores if they were required to sell molasses at the rate of Rs.127/- per quintal to the first respondent. The Secretary(Sugar), by letter dated 08.04.2004 addressed to the five sugar mills, stayed the operation of the letter dated 26.03.2004 issued by the Assistant Cane Commissioner allotting 85,000 quintals of molasses to first respondent until further orders.

10. Being aggrieved, the first respondent filed W.P.(C) No.318/2004 in the High Court praying inter alia to issue directions to the appellants herein (the State Government, Controller of Molasses, Molasses Sale Committee and the five Sugar Mills) to continue the supply of molasses to him so that the entire allotted quantity of 85,000 quintals could be lifted on or before 31.05.2004. It was alleged that the first respondent had already taken delivery of 7465.9 quintals of molasses, from three sugar mills at Nadehi, Sitarganj, and Doiwala and that he had also made all arrangements for taking delivery of the balance stock.

(iv) The Assistant Cane Commissioner's letter dated 26.3.2004 which is originally written to M/s Vardan Linkers, Bijnor contains the details of M/s Patiala Distilleries and Manufactureres and M/s Chandigarh Distillers to whom the molasses is sold @ Rs.127 per quintal but M/s Vardan Linkers did not disclose their names in its tender form.

(vi) From the information obtained from the sugar mills it has been observed that the letter dated 26.3.2004 issued by Assistant Cane Commissioner for sale of molasses in favour of M/s Vardan Linkers was only submitted in the mills by the representative during the period 6.4.2004 to 8.4.2004 of M/s Vardan Linkers and they lifted the molasses during this period. During this period another firm M/s Jagjit Industries, Kapurthala and another firm M/s Associated Alcohol and Breweries Limited vide its fax letter dated 6.4.2004 offered its rates @ Rs.250 and Rs.260 per quintal respectively for molasses. The submission of alleged letter dated 26.3.2004 of Assistant Cane Commissioner issued a letter in favour of M/s Vardan Linkers and its submission and its submission by its representative in the mills during the period 6.4.2004 to 8.4.2004 creates doubt and question mark, and by this act it creates loss of Rs.1.40 crores to the mills of State of Uttaranchal. As such it is reviewed.

(viii) From the facts available on file, it is observed that one M/s Chandigarh Distillers is purchasing molasses @ Rs.300/- per quintal from the Co-

operative Sugar Mills of UP which were near to the sugar mills of State of Uttaranchal. Moreover, the private sector mills in the State of Uttaranchal, like Laksar Uttam, Iqbalpur and Kashipur are sealing the molasses @ Rs.330, Rs.320, Rs.320 and Rs.310 per quintal of molasses respectively. As such without any valid contract with the mill of State of Uttaranchal to sale the molasses @ Rs.127 per quintal to M/s Vardan Linkers is against the rules.

The first respondent thereafter made an application for amendment of the pending writ petition, praying to challenge the order of cancellation dated 24.4.2004. The High Court allowed the application for amendment on 18.05.2004. The State of Uttaranchal and the Sugar Mills filed separate counter affidavits, in opposition to the writ petitions setting out the entire facts, and contended that there was no concluded contract with the first respondent, for sale of 85,000 quintals of molasses; and that the first respondent, in collusion with certain officers (the Assistant Cane Commissioner and District Magistrate, Udham Singh Nagar), had managed to secure allotment of 85,000 quintals of molasses without any authority.

14. A Division Bench of the High Court heard the writ petition and allowed it by judgment dated 28.07.2004. The High Court quashed the order dated 24.04.2004 passed by the Secretary (Sugar) and directed that the first respondent "shall be allowed to lift 85,000 quintals of molasses less the quantity already lifted", in terms of letter dated 26.03.2004. It also extended the time for lifting the molasses by a period equivalent to the number of days between 24.4.2004 and 31.5.2004, that is one month and seven days. The correctness and legality of the said judgment of the High Court is Questions for consideration

Re: Question (i)

33. We, therefore, allow these appeals and set aside the judgment dated 28.7.2007 passed by the High Court of Uttaranchal in WP No.318(N/B) of 2004 and dismiss the writ petition. We direct the first respondent to pay costs of Rs.10,000/- in each appeal (in all Rs.30,000/-) to the appellants.