WRIT PETITION 258 of 2011 on 2 February 1979

1. Heard Mr. R. K. Srivastava, Counsel with Mr. C. K. Sharma, Counsel for the petitioner, Ms. Beena Pande, Standing Counsel for the State of Uttar Pradesh and Mr. N. P. Sah, Standing Counsel for the State of Uttarakhand.

2. Petitioner is a limited company who runs a sugar factory at Laksar District Haridwar. Under the Sugar Undertaking (Taking Over of Management) Act, 1978 (hereinafter referred to as the “Act”) the management and control of the petitioner sugar factory was taken over by the Central Government and remained in possession with the Central Government from 2.2.1979 to 1.2.1986.

3. During aforesaid period, the petitioner sugar factory was managed and controlled by the Custodian appointed by the Government of India and was in its possession till 1.2.1986. Prior to for the purposes of rehabilitation and modernization of the petitioner sugar factory and with a view to increase production of sugar an advance of `8.5 Lacs was made to the sugar factory i.e. petitioner under the “Shakkar Vikas Nidhi” on 18.10.1978.The saidadvance was free of interest and was payable after expiry of five years in five yearly installments.The first installment was liable to be paid on 18.10.1983.The petitioner before this Court has filed the present writ petition after the management and control was handed over to it by the Central Government on 2.2.1986.After 2.2.1986 management and control of the sugar factory was handed over to the petitioner, a recovery was initiated against the petitioner by the State Government for the advance given as “Shakkar Vikas Nidhi”.Petitioner has challenged this recovery by means of the present writ petition. Petitioner relied upon Section 7(1)(b) of the Act and submits that the operation of all or any of the existing contracts assurances of property, agreements settlements awards etc during the period when the management and control stood vested with the Central Government shall be suspended. Section 7(1)(b) of the Act reads as under:

“7. Power to Central Government to make certain declarations. (1) The Central Government may, if it is satisfied, in relation to a notified sugar undertaking that it is necessary so to do in the interests of the general public with a view to preventing the fall in the volume of production of the sugar industry, it may, by notification, declare that- (a)… (b) the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force (to which such undertaking or the person owing such undertaking is a party or which may be applicable to such sugar undertaking or person) immediately before the date of issue of the notification shall remain suspended or that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified in the notifications.”

4. He further submits that under Section 7(5) of the Act the period of limitation for excluding any liability or interest of the sugar factory from the period during which the sugar factory stood vested under the management and control of the Central Government shall be excluded. Section 7(5) of the Act reads as under:- “7. Power to Central Government to make certain declarations.-

(2) …

(3) …

(4) …

(5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability referred to in clause (b) of sub-section (1), the period during which it or the remedy for the enforcement thereof remained suspended shall be excluded.”

5. According to Ms. Beena Pande, Standing Counsel appearing for the State of Uttar Pradesh after the management and control was handed over to the petitioner on 2.2.1986, as per the terms of the agreement loan was to repay in five yearly installments. 1[st]installment was to be paid on October, 1983 2[nd]

installment was to be paid on October, 1984 3[rd]

installment was to be paid on October, 1985 4[th]installment was to be paid on October, 1986 and 5[th]installment was to be paid on October, 1987.Though Government of Uttar Pradesh admits that the entire loan advanced to the petitioner by way of “Shakkar Vikas Nidhi” has been repaid but the interest on the said amount is still liable to be recovered from the petitioner. The petitioner on the other hand contends that the period during which the factory stood under the management and control of Central Government interest for that period should not be calculated.

6. This Court is of a clear view that that the period from 2.2.1979 to 1.2.1986, where admittedly the management and control of the sugar factory of the petitioner was with the Central Government under the Act, shall be excluded while making any recovery against the petitioner, including the interest.Therefore the writ petition is partly allowed.Recovery dated 28.12.1989 is hereby quashed. Cane Commissioner Uttar Pradesh/respondent no.1 shall recalculate the amount which is to be recovered from the petitioner excluding the above period. While doing so he shall keep in mind the provisions of the Act as mentioned above. It is further made clear that recovery which is pending against the petitioner shall now be subject to the order passed by the Cane Commissioner, Uttar Pradesh/respondent no.1.

7. No order as to costs.

Kuldeep

(Sudhanshu Dhulia, J.) 2.11.2012