WP/18864/2004 of M.A.Haseeb Khan, Vs The Commissioner and Director of Sugars, on 27 December 2004

ORDER:

The petitioners claim to have been cultivating sugar cane for the last 10 to 12years in their lands situated in Narayankhed, Manoor, PeddashankarampetMandal in Medak District. It is stated that they have been supplying the cane tovarious factories as per the zone declared by the Director of Sugar and CaneCommissioner-first respondent herein from time to time. In the year 2003 byproceedings dated 24-02-2003 issued by the first respondent the petitioners and other villagers ofthe locality were informed that their respective mandals were shown as part ofthe zone attached to the proposed factory of M/s. G.S.R. Sugars at MagiVillage. Since admittedly the said G.S.R. Sugars was not existing by that timeand since proceedings dated 24-02-2003 were silent about any other factory towhich the petitioners and other villagers have to supply the sugar cane, thepetitioners and other villagers who fall within the zone of M/s. G.S.R. Sugar Industries sold the cane to other factories nearby. The officers did not raise anyobjection to the same. However, during the current season some of theemployees claiming themselves to be under the control of first respondent havebeen asking the petitioners to sell the cane only to the factory at Kamareddy,which is more than 100 km., from the villages of the petitioners. As a matter offact, there is another factory at Zaheerabad, which is nearer to the villages ofthe petitioners and there is also another factory at Sangareddy nearby.However, the subordinates of the respondents are forcing the petitioners to sellthe sugarcane grown by the petitioners to a particular factory. Aggrieved by thesaid action, this writ petition is filed seeking a declaration that the action of therespondent in not declaring that the petitioners are free to sell the cane grownby them to the factory of their choice, till the proposed factory at Magi Village,Nizamsagar Mandal, starts functioning as arbitrary, illegal and unconstitutional.

On behalf of the respondents the Assistant Cane Commissioner, Bodhan, fileda counter affidavit stating that M/s. G.S.R. Sugars Limited which was formerlyknown as M/s. Indira Sugars and Industries Limited was proposed to be setupat Magi Village, Nizamsagar Mandal, Nizamabad District, for which a zone hasbeen declared by the first respondent vide proceedings dated 19-09-2001 forfive seasons from 2001-02 to 2005-06 subject to the condition that crushingshould commence in the year 2003-04 positively, barring which it shall bedeemed that zone stands cancelled. Subsequently, on a representation madeby M/s. G.S.R. Sugars Limited, the first respondent by proceedings dated 02-08-2003 while renewing the zone of M/s. G.S.R. Sugars imposed condition thatthey should establish a factory before December, 2005, failing which a reviewshall be taken in January, 2006, in the interest of cane growers. In pursuancethereof, M/s. G.S.R. Sugars purchased 80 acres of land at Magi Village forsugar factory and developed 5,300 acres cane area and they have alsosupplied seed cane, chemical fertilizers on loan basis for development of caneproduction. It is further stated that the M/s. G.S.R. Sugars Private Limited hastaken steps for development of sugarcane in five mandals i.e., Kalher, Kangti,Narayankhed, Manoor and Shankarampet of Medak District under tie up withthe banks by arranging crop loans and extending necessary technicalassistance and field staff and they have already entered into an agreement with M/s. Gayatri Sugars Limited which is their sister concern on 27-03-2003 forsupplying of sugar cane for crushing till the erection of new sugar factory in theinterest of cane growers. The said action of M/s. G.S.R. Sugars in entering intoan agreement with Gayatri Sugars Limited was ratified by the first respondentby proceedings dated 02-08-2003. Hence the cane grown in the zone of M/s.G.S.R. Sugars has to be crushed at M/s. Gayatri Sugars till the erection iscompleted. The staff members of M/s. G.S.R. Sugars are working in their zonearea and motivating the cane suppliers to supply the cane to M/s. GayatriSugars for which transport subsidy is provided. It is also stated that once thezone is declared for a particular sugar factory, the cane growers cannot supplythe cane to any factory other than the zone area sugar factory, unless and untilvalid permission from the Cane Commissioner as per sub Section 2 of Section16 of A.P. Sugar Cane (Regulation of Supply and Purchase) Act, 1961, (forshort “the Act”). While denying the allegation of the petitioners that thesubordinates of the respondents are asking the petitioners to sell their sugarcane to a certain sugar factory, it is stated that during the crushing periodmovement of cane loaded vehicles will be checked by the officers of thedepartment as a routine duty, but the cane growers are not insisted to supplytheir cane to any particular sugar factory.

I have heard the learned counsel for the petitioners and learned GovernmentPleader appearing for the respondents and perused the material on record.

At the out set, it is to be noted that the Act provides for the regulation of supplyand purchase of sugar cane required for use in sugar factories and kandasariunits and for matters connected therewith in detail. Under Section 15 of the Actthe Cane Commissioner is empowered to declare any area as the factory zonefor the purposes of supply of cane to the factory during five crushing seasonsimmediately following the date of the order. The Cane Commissioner has alsobeen empowered either to cancel such order or to alter the boundaries of thearea so declared. Under Section 16 of the Act it is made clear that where anarea has been declared as the factory zone for a factory, the occupier offactory shall purchase such quantity of cane grown in that area and offer forsale to the factory as may be determined by the Cane Commissioner in

accordance with the provisions of the schedule to the Act. Sub Section 2 ofSection 16 further provides that no cane grower in a factory zone shall sell orsupply cane to any factory or other person otherwise than in accordance withthe provisions of the schedule. Similarly, under Sub Section (2-A) no personother than the occupier of a factory for which a factory zone has been declaredshall purchase cane in the factory zone otherwise than in accordance with theprovisions of the schedule. Any person who contrivance the provisions of eithersub Sections (2) or (2-A) of Section 16 is liable to be punished in terms ofSection 23 of the Act.

As can be seen from the material on record the Mandals where the landsbelonging to the petitioners are situated were initially included in the factoryzone of a sugar factory by name M/s. Manjeera Sugars Limited as per theallotment made by the first respondent by proceedings dated 28-10-1994. However, the said sugar factory, which was proposed to beestablished at Bichkonda was not erected at all and even the zone periodexpired by 1998-99 season. Thereafter M/s. Indira Sugars and Industriesproposed to establish a new sugar factory at Magi Village, Nizamsagar Mandal,Nizamabad District and made a request for inclusion in their zone of all themandals which were earlier allotted to M/s. Manjeera Sugars. Havingconsidered the said request, the first respondent, in exercise of the powersconferred under Section 15 of the Act, issued a notification dated 19-09-2004 allotting a part of the zone of M/s. Manjeera Sugars Limited i.e.,seven mandals, situated in Nizamabad District, to M/s. Indira Sugars andIndustries Limited which is now known as M/s. G.S.R. Sugars Limited dulystipulating certain conditions on purchase of land, cane development, indent formachinery, etc. Thereafter, on a further request made by M/s. G.S.R. SugarsPrivate Limited the first respondent issued notification dated 24-02-2003including the second part zone of erstwhile Manjeera Sugars i.e., five mandals,situated at Medak District in the zone area of M/s. G.S.R. Sugars up to 2005-06season with a condition that they should establish the factory before December,2005 based on the fulfillment of certain conditions like purchase of land at MagiVillage for factory site and development of sugarcane in the allotted zone areaand indent for machinery to meet sufficient cane for 2,500 TCB.

Admittedly, the lands belonging to the petitioners herein which are situated inMedak District have been included in the factory zone of M/s. G.S.R. SugarsPrivate Limited under the notification dated 24-02-2003 issued by the firstrespondent. There cannot be any dispute about the legal position as per theprovisions of the A.P. Sugarcane (Regulation of Supply and Purchase) Act,1961, that the petitioners are bound to sell or supply the cane grown by themonly to M/s. G.S.R. Sugars Private Limited. However, the only grievance of thepetitioners in this writ petition is that since M/s. G.S.R. Sugars Private Limitedfailed to erect the sugar factory at Magi so far, they are unable to sell thesugarcane grown by them to the said factory and at the same time, they arebeing prevented by the officials of the respondents to sell the sugarcane to anyother sugar factory nearby. In the circumstances, the petitioners seek adeclaration that they are entitled to sell the sugarcane to the factory of theirchoice.

Though the respondents have not disputed the fact that M/s. G.S.R. Sugars hasnot yet erected the sugar factory at Magi Village, the only plea raised by themis that the said M/s. G.S.R. Sugars Private Limited entered into an agreementwith M/s. Gayatri Sugars Limited which is their sister concern for supply ofsugarcane for crushing till the erection of new sugar factory at Magi Village andthat the said action of the M/s. G.S.R. Sugars has been ratified by the firstrespondent vide proceedings dated 02-08-2003.

In the circumstances, the learned Government Pleader submits thatsince it is necessary to implement the provisions of the Sugar Cane RegulationAct to avoid conflicts among the sugar factories and also to protect the interestof the villagers, the petitioners may be directed to supply their cane to M/s.Gayatri Sugars Limited which is a sister concern of M/s. G.S.R. Sugars.

It is true that as per the provisions of the Act once the zone is declared for a particular sugar factory the cane growers are bound to supply their caneto the said factory and supply of cane to any factory other than the factorynotified is an offence under provisions of the Act. However, when admittedly,the factory, which has been declared as factory zone under the notificationissued under Section 15 of the Act is not in existence, I am of the view that therespondents are not entitled to insist that cane growers shall supply the cane toany other factory, in the absence of any such order in terms of Section 16 ofthe Act. It is relevant to note that under paragraph 8 of the schedule to the Act,it is always open to the Cane Commissioner or any officer authorized by him togrant permission for the purchase of cane grown in a factory zone by anyperson or factory other than the factory for which such zone has been declaredand for the sale or supply of cane grown in a factory zone to any person orfactory other than the factory for which such zone has been declared. If that beso, when admittedly under the notifications dated 24-02-2003 and 02-08-2003the first respondent granted time to G.S.R. Sugars Private Limited to establishthe factory at Magi Village up to December, 2005 and since admittedly the saidnotifications are valid up to the year 2005-06, nothing prevented firstrespondent, in exercise of the powers conferred under Section 16 of the Actread paragraph 8 of the schedule, to issue appropriate orders permitting thepetitioners and other cane growers situated in the factory zone of M/s. G.S.R.Sugars for the sale of the cane grown by them to any other factory. Withoutissuing such orders, by merely ratifying the agreement entered into betweenM/s. G.S.R. Sugars with their sister concern M/s. Gayatri Sugars Limited, therespondents cannot insist upon the petitioners to supply the cane grown bythem to M/s. Gayatri Sugars Limited.

In the circumstances, though a mandamus cannot be issued declaring that thepetitioners are entitled to sell the sugarcane to the factory of their choice, whichwould be contrary to the provisions of the Act, I deem it appropriate to disposeof the writ petition with a direction to the first respondent to issue appropriateorders for sale/supply of the sugarcane grown by the petitioners in terms of theAct, within a period of four weeks from the date of receipt of a copy of thisorder. Till such time the respondents are directed not to insist that thepetitioners shall supply the cane grown by them either to M/s. Gayatri Sugars or to any other sugar factory and not to take any coercive steps against them for the violation, if any, of sub Section 2 of Section 16 of the Act.

The writ petition is accordingly disposed of. No order as to costs.

Dated: 27-12-2004

LSK

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G. ROHINI, J

To

1. The Commissioner and Director of Sugars, Cane Commissioner, Shakkar Bhava, Basheerbagh, Hyderabad.

2. Assistant Cant Commissioner,

Bodhan, Nizamabad District.

3. Two C.C. to the Government Pleader for Industries and Commerce, High Court Buildings, Hyderabad. (O.U.T.)

4. Two C.D. copies.