M/S. OUDH SUGAR MILLS LTD. versus UNION OF INDIA & ANR. on 7 February 2020

1. These Civil Appeals are filed by the petitioner in Writ PetitionNo.6732 of 1986 filed before the High Court of Judicature at Allahabad,Lucknow Bench, Lucknow, aggrieved by the judgment and order dated18.07.2006 and further order dated 11.09.2007 passed in Review PetitionNo.253 of 2006. By the aforesaid orders, the High Court has dismissedthe Writ Petition and Review Petition respectively filed by the appellantherein.

2. The appellant is a public limited company namely Oudh SugarMills Ltd., situated at Hargaon, District Sitapur in the State of UttarPradesh. The appellant company invoked the jurisdiction of the HighCourt under Article 226 of the Constitution of India by seeking thefollowing reliefs:

“(i) Issue a writ, order or direction in the nature of mandamusdirecting the opposite parties to place the petitioners’ sugar factoryin East U.P. Zone for the purposes of the Sugar (PriceDetermination for 1984-85 production) Order, 1984 and Sugar(Price Determination for 1985-86 Production) Order, 1985;

(ii) Issue a writ, order or direction in the nature of mandamusdirecting the opposite parties to permit the petitioner company torealise the price of their levy sugar as admissible to the sugarfactories in the East U.P. Zone under the Sugar (Price A

B

C

D

E

F

G

H

ADetermination for 1984-85 Production) Order, 1984 and SugarPrice Determination for 1985-86 Production) Order, 1985 and directthe opposite parties to further continue to place the petitionerssugar factory along with the other sugar factories of district Sitapurin the Uttar Pradesh east zone and may further direct the oppositeparties to pay the petitioners the price of levy sugar as per theBprice applicable for sugar factories in the Uttar Pradesh east zone;

(iii) Declare Section 3(2)(f) and Section 3 (3c) of the EssentialCommodities Act, 1955 as ultra vires of Article 14 and 19(1)(g) ofthe Constitution of India; C(iv) Issue any other writ order or direction as the nature of casemay warrant;

(v) Issue an ad interim order in favor of the petitioners;

(vi) Award the cost of the case to the petitioners.”D

3. As the appellant did not press for relief on the declaration soughton the validity of Section 3(2)(f) and 3(3c) of the Essential CommoditiesAct, 1955, the High Court did not go into the same as such.

4. For the crushing years 1984-85 and 1985-86 the appellant sugarEmill was placed in central zone for the purpose of fixation of price forthe levy sugar. Mainly, it was the case of the appellant that the geographicaland climatic conditions of the sugar mills in the District of Sitapur, standon the same footing as that of other similarly placed sugar factoriesnamely Seksaria Biswan Sugar Factory Ltd. Biswan, District Sitapurand Kisan Sahkari Chini Mills Ltd. Mahmoodabad (Awadh), DistrictFSitapur. Inspite of the same, these two factories were included in theeastern zone, while the appellant factory was discriminated against andkept in the central zone for the purpose of fixation of levy sugar price forthe crushing years 1984-85 and 1985-86.

5. Considering the submissions made on behalf of both the sidesGand other material placed on record, the High Court, by recording afinding that the said decision was a policy decision which permitted theCentral Government to make a reasonable classification and in absenceof any case made out either of arbitrariness or hostile discrimination,dismissed the writ petition filed by the appellant.H

6. We have heard Sri V. Shekhar, learned senior counsel appearingon behalf for the appellant and Ms. Binu Tamta, learned counsel appearingfor the respondents and have perused the impugned orders and othermaterial placed on record.

7. The price of levy sugar is fixed for a zone with an intention toensure to the manufacturers of the sugar in the zone a reasonable returnon their overall production and investment, provided that the units arerunning economically and efficiently. Sugar was a controlled commodityduring the relevant time, covered by the provisions of the EssentialCommodities Act, 1955. Certain quantity of sugar called levy sugar, wasto be supplied to the Government at a price fixed by the Governmentand rest of the same was levy free sugar, which could be sold in openmarket. The price of levy sugar was fixed based on the Control Orderframed under the Essential Commodities Act. The price of levy sugarwas fixed by the Central Government, having regard to various factors,including the basis of basic–cost schedules drawn and recommended bythe expert body. As is evident from the stand of the respondents it appearsthat the survey report of Bureau of Industrial Cost & Prices (BICP)regarding the zonal pattern was not found feasible by the Governmentof India and the same was not implemented. The appellant has claimedparity with sugar factories at Biswan and Mahmoodabad, but such unitswere transferred to eastern zone on merits adjudged by the StateGovernment and BICP and levy prices are fixed for zones and not foreach factory. Zones were also not as per the revenue districts. Merelybecause there is difference in price in central zone and eastern zone, theappellant cannot claim, as a matter of right, its unit was to be placed ineastern zone instead of central zone during the relevant years. Theimpugned Orders questioned in the writ petition were based on exhaustivestudy by experts. The conclusions reached by the Central Governmentin exercise of statutory power cannot be said to be either discriminatoryor unreasonable. So far as sugar units at Biswan and Mahmoodabad areconcerned, they were transferred to eastern zone on the basis of meritsadjudged by the State. When the revenue districts are not the limits forzonal division, the appellant cannot claim parity with other units only onthe ground that all the units are situated in Sitapur district. Even withregard to appellant unit, after a lapse of time it was considered feasibleto place it in eastern zone and we are informed that the same was placedin eastern zone. As the appellant has failed to demonstrate any invidiousdiscrimination and statutory violation, merely on the ground that other A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

Aunits in Sitapur district were transferred to eastern zone and that therepresentation of the appellant was not acceded to for the relevantcrushing years, is no ground for interference. We are not persuaded toaccept the plea that the appellant was discriminated against by placingthe appellant unit in central zone and other units in Sitapur district in theeastern zone of Uttar Pradesh. The action of the Central Government inBplacing the factory of the appellant at two different times in two differentzones also does not constitute any discrimination. The policy decisionwas taken from time to time subject to satisfaction of the Governmentby taking into account expert reports. It is also the case of the respondentsthat the factory at Mahmoodabad was established at a very higher freeCsale sugar over the normal quota as per incentive scheme of Governmentannounced in November, 1980. Several relevant factors were consideredby the State Government before announcing policy and for fixation ofzones, during the crushing years of 1984-85 and 1985-86. For the abovesaid reasons, we do not find any illegality in the impugned order dated18.07.2006 dismissing the Writ Petition and further order dated 11.09.2007Ddismissing the Review Petition No.253 of 2006, by the High Court. TheHigh Court has considered the material in detail and by recording correctfindings rejected the plea of the appellant. In view of such findingsrecorded and other reasons referred above, we do not find any merit inthese appeals so as to interfere with the same. These appeals are,Eaccordingly, dismissed with no order as to costs.

8. Pursuant to interim orders passed by this Court, 50% of theamount demanded is deposited by the appellant in the Registry and forthe remaining 50% bank guarantees are furnished. We allow therespondent-Government for withdrawal of such amount covered byFdeposit as well as bank guarantees and accrued interest thereon.

Kalpana K. Tripathy

Appeals dismissed.

G

H