Bombay High Court
Sahyadri Sahakari Sakhar Karkhana Ltd vs Union Of India And Ors on 6 June, 2025
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
Digitally
signed by
PRASHANT
PRASHANT VILAS RANE
2025:BHC-AS:22566-DB
VILAS
RANE Date:
2025.06.06
WP 13816-23.DOC
20:09:05
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 13816 OF 2023
Sahyadri Sahakari Sakhar Karkhana Ltd. )
(A Co-operative Sugar Factory registered )
under the provisions of Maharashtra )
Cooperative Societies Act ) ...Petitioner
Versus
1. Union of India )
2. The Secretary, Food and Public )
Distribution , Ministry of Consumer Affairs )
Food and Public Distribution, )
Government of India )
3. The Chief Director of Sugar Ministry of )
Consumer Affairs Food and Public )
Distribution, Government of India )
4. The Union Secretary, )
Public Relation and the Complaints Section )
Ministry of Industry, Government of India )
5. The Deputy Director General (Statistics) )
Department of DIPP, Ministry of Industry )
Government of India )
6. State of Maharashtra )
7. Principal Secretary, Cooperation and )
Marketing, Government of Maharashtra )
8. Commissioner of Sugar, Maharashtra State)
9. Jijamata Sugar and Power Industries Ltd. )
10. Shivneri Sugars Ltd. ) ...Respondents
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Mr. Ashutosh Kumbhakoni, Senior Advocate with Mr. Akshay P. Shinde, for
Petitioner.
Mr. Y. S. Jahagirdar, Senior Advocate with Mr. Sumit Kothari with Mr.
Kaustubh Thipsay, for Respondent No.10.
Mr. Y. S. Bhate i/b. Ms. Tanu N. Bhatia, for Respondent Nos.1 to 5.
Mr. B. V. Samant, Addl. Govt. Pleader with Mr. Y. D. Patil, AGP for the
State.
Mr. A. R. Gole, for the Applicant/Intervenor.
_______
CORAM: G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
RESERVED ON: 17 FEBRUARY 2025
PRONOUNCED ON: 6 JUNE 2025
JUDGMENT ( Per G. S. Kulkarni, J.)
Paragraphs
B Facts 2 to 25
C Reply Affidavit, Rejoinder and Additional Evidence 26 to 53
D Submissions on behalf of the Petitioner 54 to 56
E Submissions on behalf of the Respondents 57 to 58
F Analysis and Conclusion 59 to 80
A. Prelude
1. This petition under Article 226 of the Constitution of India prays for a
declaration that the Industrial Entrepreneur Memorandum (for short,
"IEM") No. 2654/SIA/IMO/2003 dated 18 September 2003 standing in the
name of Respondent No.10-Shivneri Sugars Ltd. (for short, "Shivneri") stood
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de-recognized on account of legal fiction created by Clause 6C of the
Sugarcane Control Order, 1966 (for short, "the SCO 1966"). It is
accordingly prayed that the said IEM be quashed and set aside. These are
two principal prayers. We note the substantive prayers as made in the
petition which read thus:-
"b) To hold and declare that the IEM No.
2654/SIA/IMO/2003 dated 18th September 2003 standing in the
name of tenth Respondent has stood de-recognized on account of
legal fiction as provided under Clause 6C of the Sugarcane Control
Order, 1966;
c) To quash and set-aside the IEM No. 2654/SIA/IMO/2003
dated 18th September 2003 standing in the name of tenth
Respondent in view of the fact that the same has stood de-
recognized account of legal fiction as provided under Clause 6C of
the Sugarcane Control Order, 1966;"
(B) Facts :-
2. The relevant facts as may be derived from the memo of writ petition
are:- The petitioner is a Co-operative Sugar Factory registered under the
Maharashtra Co-operative Societies Act, 1960 (for short "the MCS Act").
The area of operation of the petitioner is stated to comprise of 191 villages
falling within five Tahsils of Satara and Sangli Districts.
3. On 6 August 1970, the Government of India (for short, "GOI") issued
an Industrial License to the petitioner's factory to set up a plant of 1250
TCD (extendable to 2000 TCD) for manufacture of cane sugar. Accordingly,
the plant was erected and commissioned in the year 1974. From the year
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1976 till January 2020 there were several extensions as excess sugarcane was
available. On 22 January 2020, an expansion from 7500 TCD to 11000
TCD was sanctioned. It is stated that the work of such expansion has
progressed and is on the verge of completion.
4. It is the petitioner's case that during the petitioners' journey from the
year 1970 it has received variety of awards. An award for Excellent Financial
Management was granted to it by the National Federation of Co-operative
Sugar Factories Limited, New Delhi. The petitioner thus contends that it is
in a settled activity of manufacturing sugar and its activities benefit large area
of five Tahsils.
5. The petitioner contends that the impugned IEM was initially granted
in favour of respondent no.9-Jijamata Sugar and Power Industries Ltd. (for
short, "Jijamata") and thereafter the same was transferred or issued in favour
of Shivneri. In such context, the petitioner has adverted to the following
legal position.
6. As per the provisions of the SCO 1966 as amended by the Sugar
Control (Amendment) Order, 2006 (for short "2006 Amendment"), the
minimum distance which was required to be maintained between two sugar
factories was 15 kilometers. Such distance for the State of Maharashtra was
substituted to 25 kms by a notification dated 03 December 2011, issued by
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the Government of Maharashtra with the prior approval of the Central
Government. The relevant extract of the said notification reads thus:-
"SUGARCANE (CONTROL) ORDER, 1966.
No. SSK. 2011/C. R. 22(part 1/13 C.-Whereas, clause 6A of the
Sugarcane (Control) Order, 1966, issued by the Central Government, in
exercise of the powers conferred by section 3 of the Essential
Commodities Act, 1955 (10 of 1955), provides that no new sugar factory
shall be set up within the radius of 15 kms of any existing sugar factory
or another new sugar factory in a State:
And whereas, under the proviso to the said clause 6A, the State
Government is empowered, with prior approval of the Central
Government to notify such minimum distance higher than 15 kms;
And whereas, with a view to ensure viability of the existing sugar
factories and also with a view to ensure long term sustenance of the
sugarcane crop, the Government of Maharashtra, considers it expedient
to provide that the minimum distance between the existing sugar factory
and the new factory to be setup shall be 25 kms;
Now, therefore, in exercise of the powers conferred by the
proviso to the said clause 6A, the Government of Maharashtra, after
prior approval of the Central Government hereby directs that no new
sugar factory shall be set up within a radius of 25 kms. of any existing
sugar factory or another new factory.
By order and in the name of the Governor of Maharashtra"
(emphasis supplied)
7. According to the petitioner, as a consequence of the aforesaid
notification prescribing the distance of 25 kms, for setting up of new sugar
factory from the location of any existing sugar factory created a secured
industrial zone for existing sugar factory. The petitioner contends that such
amendment is retrospective in operation.
8. It is petitioner's contention that in so far as the State of Maharashtra is
concerned, in the years 1984, 1987 and 1993, Zonal Orders were issued by
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the State Government. By virtue of such orders, all agriculturists, within the
dedicated zone, who were allotted to a particular sugar factory, were under an
obligation to supply sugarcane, only to that particular sugar factory, within
whose zone, the agriculturists have cultivated the sugarcane. It was hence
not permissible for the agriculturists at the relevant time to supply sugarcane
to any other sugar factory unless a special permission was granted. It is
contended that in the year 1997, by an amendment to the Maharashtra Zonal
Order, it was provided that if the concerned agriculturist is a member of the
Co-operative Sugar Factory, then he is under obligation to supply the
sugarcane proportionate to the area required by him as per the Bye-laws of
the sugar factory, for the purpose of becoming a member. It is stated that
validity of the 1997 amendment to the Maharashtra Zonal Order was
assailed before this Court by "Maharashtra Rajya Sahakari Sakhar Karkhana
Mahasangh (Federation)", in a writ petition, which came to be dismissed.
Even a further challenge to the same before the Supreme Court is stated to
have failed. The petitioner states that consequently the zone, which was
originally made, has continued to operate, but in a different format, namely,
there is still a dedicated zone, so far as the members are concerned to the
extent of the shares held by them and a permission is given to them to supply
sugarcane, to any other factory of their choice.
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9. The petitioner next contended that even under the SCO 1966 as
amended in 2006, the circumferential area of 15 kms (which is increased to
25 km as applicable to State of Maharashtra) is still dedicated and no other
sugar factory is permitted within circumferential area of 25 kms.
10. It is on such backdrop the petitioner has contended that insofar as the
challenge as raised by the petitioner to the IEM of respondent no.10-Shivneri
is concerned, which was earlier held by Jijamata Ethanol & Agro Processing
Industries Ltd. whose business (along with the land and sugar factory) is now
purchased by Shivneri, is within the distance of 25 kms from the existing
location of the petitioner's sugar factory. In supporting such contention, the
petitioner has placed reliance on the report of Survey of India dated 07
February 2008 which shows that Jijamata situated at Pimpri (Navi Budruk)
Tal. Koregaon, District-Satara, to be at the distance of 23 kms from the
petitioner's existing sugar factory which, according to the petitioner, is within
the prohibited distance being 25 kms of the circumferential area as prescribed
by the State Government Notification dated 03 December 2011. It is on
such backdrop, it is contended that the IEM issued in favour of Shivneri is
bad and illegal.
11. This apart, the petitioner has several other contentions as set out in the
memo of the petition which we note hereinbelow. It is contended that
initially Jijamata (respondent no.9) was issued an IEM on 18 September
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2003 by the Department of Industrial Policy and Promotion, Ministry of
Commerce & Industry being IEM No. 2654/SIA/IMO/2003.
12. It is contended that subsequent to its issuance, there were
amendments made to the said IEM. The first amendment was made on 17
March 2008 when the name of the IEM holder was changed from "M/s.
Jijamata Ethanol and Agro Processing Industries Ltd." to "M/s. Jijamata
Sugar & Power Industries Ltd."
13. The GOI on 22 September 2008, issued a letter to Jijamata that the
sugar factory is taken on record as "an existing sugar factory". Jijamata was
also advised to enhance the capacity of the factory from 500 TCD to 1250
TCD in the next three years and further to 2500 within five years from the
date of issue of the said letter. Jijamata filed Part-B of the IEM on 14 January
2015 in relation to the commencement of its sugar plant, on sugar
production commencing from 03 April 2012. The original IEM as issued in
favour of Jijamata dated 18 September 2003, when filed, the crushing
capacity which was allowed to Jijamata, was 20,000 ton per year i.e. 125 M.T.
per day. On 27 November 2014 the IEM was amended whereby crushing
capacity was increased to 56000 M.T. per year i.e. 350 M.T. per day. It is
the petitioner's case that such targets could not be achieved by Jijamata nor
the capacity was enhanced as in compliance of such requirements of the GOI.
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14. It is on the aforesaid backdrop, the petitioner contends that the
petitioner received information that by virtue of a registered Sale Deed dated
06 December 2016 read with Sale Deed dated 03 May 2017, Shivneri was
claiming rights under the IEM issued in favour of Jijamata.
15. Thereafter, on 28 November 2018, Shivneri made an application to
the GOI for regularization of 'short name & plant code'. In pursuance
thereto, vide communication dated 28 January 2019 GOI informed Shivneri
that the short name and plant code was issued in its favour, on provisional
basis for three months, as also Shivneri was called upon to submit the
production records in proforma-II and Excise Return and regularization, if
any, is subject to furnishing of the proof that Shivneri has enhanced the
capacity of factory from 500 TCD to 2500 TCD. The production was to be
uploaded online on the website of Directorate of Sugar.
16. The petitioner contends that even these directions were not complied
by Shivneri. The case of the petitioner is that such conduct of Shivneri
offends the SCO 1966, on non-compliance of provisions of clauses 6A and
6C which were inserted by the 2006 Amendment which, according to the
petitioner, has retrospective effect. The contention of the petitioner is to the
effect that by virtue of clause 6A read with clause 6C of the SCO 1966, a
minimum period of four years was available for the purpose of
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commencement of commercial production, considering the meaning of term
"commercial production" as provided in clause 6A of the SCO 1966.
17. It is contended by the petitioner that on 17 September 2007 i.e. after a
period of 4 years from the issuance of the IEM, as commercial production
was not started by the erstwhile M/s. Jijamata Ethanol and Agro Processing
Industries Ltd. as per the requirement of Clause 6C, the IEM had
automatically lapsed and/or ceased to be legal and valid, as none of the
effective steps as contemplated by the said clauses of the SCO 1966 were
complied either by Jijamata much less by Shivneri. It is contended that as no
commercial production had at all commenced, the petitioner's contention of
the IEM having lapsed, needs to be accepted.
18. The fact that the commercial production had not at all commenced, is
asserted by the petitioner by the following narratives - (i) In the first instance,
insofar as the year 2010-11 is concerned, although a crushing licence was
issued by the Commissioner of Sugar, Maharashtra State to Jijamata, for the
year 2010-11, no sugarcane was crushed by Jijamata. (ii) The five year period
from the grant of the IEM i.e. from 18 September 2003 expired on 17 March
2009. Thus, as no commercial production had commenced till the year
2009-10, the IEM dated 18 September 2003 granted in favour of Jijamata
would automatically come to an end. (iii) The crushing licence for the first
time was asked during the sugar year 2010-11 and not for the previous years
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i.e. till 2009-10. This indicated that during the sugar year 2008-09 and
2009-10, admittedly, no commercial production was started. (iv) As a result
of the aforesaid factual scenario, under the provisions of the SCO 1966 as
amended by 2006 Amendment which operated automatically, the IEM had
lapsed and/or had already come to an end. (v) Consequent to the IEM
having come to an end, subsequent steps cannot infuse life into the IEM
which stood expired by efflux of time.
19. The petitioner, having asserted the aforesaid contentions, has
contended that factually it is not correct from the materials as gathered by the
petitioner that Jijamata or Shivneri had taken steps from the year 2010-11 to
commence production of sugar. It is contended that whatever claims Jijamata
and Shivneri have made were only paper claims, as no steps were taken to
commence production, moreover, it was a dead IEM as held by
Jijamata/Shivneri for the reason that it had already lapsed in the year 2009.
In supporting such contention, the petitioner has placed reliance on a letter
dated 04 February 2020 addressed by one Shri Hindurao Tatoba Desai to the
Principal Secretary, Cooperation and Marketing, Government of
Maharashtra which according to the petitioner inter alia pointed out several
facets to indicate that Jijamata's claim of actual manufacturing of sugar in the
crushing year 2011-12 of 187 quintals was not correct.
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20. The petitioner has contended that even assuming that such claim of
production of sugar by Jijamata was to be accepted, there were several other
factors which would prove that Jijamata/Shivneri's claim of commencement
of production ought not to be accepted. These factors being that for the year
2011-12, no licence for the starting of the boiler from the Boiler Inspector
was taken; no permission from the Factory Inspector was taken; Sugarcane
Purchase Tax on the purchase of the sugarcane, for producing 187 quintals of
the sugar, was not paid; no excise duty was paid to the GOI for
manufacturing of the sugar; no information was given to the Chief Director
of the Sugar, Ministry of Food, GOI; for the purpose of selling 'levy sugar'
and 'free sugar', Monthly Release Orders were not obtained. All these factors
are relevant insofar as the crushing year 2011-12 is concerned for Jijamata's
claim to have undertaken commencement of the sugar production ought not
to be accepted.
21. It is hence the petitioner's contention that since the year 2011-12 as
sugar was not actually produced and sold, hence, no excise duty was paid on
the manufacture of the sugar or on the sale of molasses. No permission was
taken from the State Excise Department for the sale of molasses and no tax
on the sale of the molasses was paid. It is next contended that not even for a
single day also, as per the IEM crushing capacity namely original at 20,000
MT per annum, or the amended crushing capacity of 56,000 MT per
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annum, Jijamata had at all run the factory, much less with such crushing
capacity.
22. The petitioner in supporting such contention has placed reliance on
other documents namely documents submitted to the Registrar of
Companies which do not in any manner indicate any business being
undertaken when, in the balance sheet submitted by Jijamata for the financial
year 2010-11, the Auditor made a remark "The company has not started its
actual working. It is presently in the process of raising funds." . There are
also photographs of the site which are placed on record which according to
the petitioner, would indicate that the entire site is vacant and recently some
work is commenced.
23. In such context, the petitioner has referred to (a) a representation
dated 10 April 2019 which was made by the petitioner to respondent no. 2 -
Secretary, Ministry of Consumer Affairs, Food and Public Distribution, GOI;
(b) a letter dated 20 May 2019 addressed to respondent no. 3 - Chief
Director of Sugar; (c) a letter dated 20 July 2019 to the Secretary, Joint
Secretary and the Chief Director of Sugar Ministry of Consumer Affairs,
Food and Public Distribution pointing out all such facts in relation to the
IEM of Jijamata/Shivneri. It is the petitioner's case that on enquiry, the
petitioner learnt that the Government of Maharashtra also addressed a letter
dated 6 March 2020 to the Under Secretary, Ministry of Consumer Affairs,
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Food and Public Distribution, GOI, requesting for cancellation of the IEM
dated 18 September 2003. Similar letter was also addressed on 07 March
2020.
24. The petitioner contended that as no decision was taken by the GOI
(respondent nos.1 to 5) on the representations of the petitioner, Writ Petition
No. 7458 of 2022 was filed by the petitioner in this Court for directions that
the representations/letters be decided in a time bound manner. A reply
affidavit was filed to the said writ petition on behalf of the GOI opposing
such petition inter alia contending that Jijamata had taken all effective steps
before 17 September 2007 i.e. within four years of the grant of IEM and
accordingly, the sugar mill was taken as an "existing sugar mill" in the record
of the GOI. On such backdrop, the petitioner withdrew the said writ petition
with liberty to file a fresh petition which was granted by this Court vide an
order dated 8 February 2023. The petitioner further contended that for the
last four years starting from financial year 2017-18 till 2020-21, Shivneri has
not made any commercial production. On such backdrop, the petitioner
without prejudice to its contention that the IEM granted in favour of
Jijamata was rendered inoperative, contends that the benefit of the IEM now
being claimed by Shivneri, is illegal for such reason that the same stood de-
recognized in the year 2008 itself, for the reason of commercial production
having not commenced by Jijamata.
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25. The primary contention of the petitioner, referring to the provision of
clause 6C of the SCO 1966 as it stood at the relevant time, is to the effect
that such clause by providing stipulated time for taking effective steps to be
of two years and commercial production to commence within four years,
with effect from the date of filing of the IEM with the Central Government,
failing which the IEM shall stand de-recognized as far as the provisions of the
SCO 1966 are concerned and the performance guarantee in that event shall
be forfeited. It is contended that for the purpose of clause 6C, effective steps
as defined under clause 6A of the SCO 1966 are required to be considered.
The contention is that considering the language used by the legislature in
inserting Clause 6C made it is clear that the said provision is mandatory in
nature, for the reason that failure to comply with the first part of Clause 6C
entails into automatic de-recognition of the IEM. It is hence contended that
on non-compliance of such condition, no discretion is left with the
Government for the consequences of failure to comply with the first part of
Clause 6C. It is submitted that it is settled principle of law that the
amendment to the SCO 1966 is retrospective in nature and the same would
be applicable to the IEM although issued on 18 September 2003. It is
further contention of the petitioner that several other factors as noted above
would clearly indicate that the claim of Jijamata/Shivneri, that the production
had commenced in the year 2011-12 was false, and in fact no such activity of
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the production could be gathered from such materials. It is on such backdrop,
the present petition has been filed praying for the reliefs as noted by us
hereinabove.
Reply affidavit on behalf of Government of India
26. There are two reply affidavits filed on behalf of the Government of
India (respondent Nos.1 to 5) of Shri. Alok Kumar Tiwari, Deputy Secretary,
dated 5 June 2023. Briefly the GOI's case in this affidavit needs to be set out.
27. It is the GOI's case that the sugarcane is an essential commodity under
the Essential Commodities Act, 1955 and SCO 1966 issued under the said
legislation, the intention of which is primarily to protect the interest of
sugarcane farmers. It is stated that with effect from 31 August 1998 the sugar
industries were deleted from the list of industries requiring compulsory
licensing under the provisions of the Industries (Development and
Regulation) Act, 1951. However, while de-licensing the sugar industry, the
GOI also decided that in order to avoid unhealthy competition among sugar
factories to procure sugarcane, a minimum distance of 15 kms would
continue to be observed between an existing and a new mill by exercising
powers under the SCO 1966.
28. It is contended that the notice issued by the GOI in this regard
provided that the entrepreneurs would require filing an Industrial
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Entrepreneur Memorandum (IEM) with the Secretariat of Industrial
Assistance (SIA) with the Ministry of Industry in terms of Press Note dated
22 August 1991, and in that regard a Notification dated 11 September 1998
was also issued by the GOI. It is further contended that whenever an IEM is
filed, a clear message goes in the area that a sugar plant is being set up in the
near future. By this the farmers of the area become hopeful of supplying their
produce to the mill at legitimate remunerative price. It is stated that this
scenario changes when the project is not completed. It is stated that in these
circumstances, unfortunately, the sugarcane farmers of that area are forced to
sell their produce, through other options at throw away prices. It is stated that
since sugarcane crop is also a Ratoon crop, the farmers bear this loss for
almost three years, besides preventing him from sowing other crops. It is
stated that this, consequently, deteriorates economic condition of the farmers
badly and beyond resurrection. It is stated that on the other hand, a genuine
entrepreneur is deprived of an opportunity to install sugar mill as the area is
already occupied by frivolous entrepreneur.
29. It is next contended that Clause 6 of the SCO 1966 mandates the
Central Government to regulate distribution and movement of sugarcane. It
is stated that sub-clause (1) of Clause 6 provides that "the Central
Government may, by an Order, notified in the Official Gazette reserve any
area where sugarcane is grown for a factory having regard to the crushing
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capacity of the factory, the availability of sugarcane in the reserved area and
the need for production of sugar with a view to enabling the factory to
purchase the quantity of sugarcane required by it." It is further stated that
the powers of the Central Government under Clause 6 of the SCO have been
mainly vested with the State Governments vide notification dated 16 July
1966 to regulate distribution and movement for sugarcane, under the SCO,
and it is expected that the State Governments would manage to keep the
minimum distance of 15 Kms between existing and a new sugar mill as
required under the Press Note dated 31 August 1998. The affidavit refers to
certain proceedings being taken before the Allahabad High Court in M/s
Kisan Sahakari Chini Mills Ltd. V/s Union of India and Ors. 1 wherein the
Court held that the minimum distance criteria of 15 Km as mentioned in
Press Note dated 31August 1998 is directory in nature and not mandatory. A
reference is further made to the orders passed by the Delhi High Court in
M/s Oudh Sugar Mills Ltd. V/s Union of India and ors. 2 wherein the High
Court held that the Press Note dated 31 August 1998 provides for the
minimum distance to be observed between an existing sugar mill and a new
sugar mill and not between the two proposed sugar mills.
30. It is next contended that in view of such judicial pronouncement, the
expert opinion of the Department of Legal Affairs was sought in the matter
1 Civil Writ Petition No.31199 of 2005, Judgement dated 01.2.2006
2 Civil Writ Petition No.12078/2005, Judgement dated 22.12.2005
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and an advice dated 7 July 2006 was rendered to the effect that since there
was no provision to provide the limits in regard to a minimum distance
between the two existing or proposed sugar mills in the SCO 1966, the same
be amended suitably, and it is in such context the process was initiated to
amend the SCO 1966. It is stated that also an order passed by the Supreme
Court in M/s. Balrampur Chini Mills Ltd. Vs. Ojas Industries Pvt. Ltd. &
Ors.3 wherein the Supreme Court opined that the difficulties highlighted in
the context of SCO 1966 are required to be ironed out by the GOI, and it is
in such context by an order dated 10 November 2006, GOI brought about
the amendments to SCO 1966 by incorporating Clauses 6A to 6E. It is next
contended that the Supreme Court in its order dated 2 April 2007 in M/s.
Ojas Industries (P) Ltd. Vs. M/s. Oudh Sugar Mills Ltd., & Ors. 4 has upheld
the validity of the SCO 2006 Amendment. The following observations of the
Supreme Court are highlighted by the Government of India:
" We hold that the Sugarcane (Control) (Amendment) Order,2006 imposes
a bar on the subsequent IEM holders in the matter of setting up of new sugar
factories during the stipulated period given to the earlier IEM holders to take
effective steps enumerated in Explanation 4 to 6A of Sugarcane (Control)
(Amendment) Order, 2006 dated 10.11.2006. We further hold that the said
2006 order operates retrospectively".
"........if the first IEM holder or the earlier IEM holder takes effective steps to
implement its IEM then the subsequent IEM holder cannot proceed with his
IEM. If the first IEM or earlier IEM holder completes its projects successfully
then the remaining IEMs for that area shall become non est. They shall,
however, remain in suspense during stipulated period when the earlier IEM
holder takes effective steps for implementing its IEM."
3 Transfer Petition (Civil) No.421 of 2006, Order dated 05.09.2006
4 (2007)4 SCC 623
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31. Insofar as the petitioner's case is concerned, GOI in the reply affidavit
has contended that Jijamata (former M/s.Jijamata Ethanol & Agro Processing
Industries Ltd.) obtained IEM in question dated 18 September 2003 for
setting up new sugar plant at the location in question. It is stated that
subsequently by a legal process, a change in the name of M/s. Jijamata
Ethanol & Agro Processing Industries Ltd. to M/s. Jijamata Sugar & Power
Industries Ltd., was permitted. It is contended that Jijamata had filed Part-B
of IEM on 14 January 2015 regarding commencement of sugar plant stating
that it had started sugar production from 3 April 2012.
32. It is next stated that Jijamata was taken on record as an existing sugar
factory vide office letter dated 22 September 2008 subject to enhancing of
the capacity of the factory from 500 TCD to 1250 TCD in the next three
years i.e. by 2011. It is stated that thereafter on 27 September 2017 an
application was filed by respondent No.10-Shivneri regarding change of
name and ownership from M/s. Jijamata Sugar & Power Industries Ltd. to
M/s. Shivneri Sugars Ltd. The request as received was stated to have been
forwarded to the Commissioner of Sugar, Maharashtra, for obtaining their
views in the matter. This was responded by the Commissioner of Sugar,
Maharashtra, with the comments that Shivneri which was a subsidiary
company of Athani Sugars has purchased 16 Hectare & 68 R land of Jijamata
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for Rs. 20 crores under the Sale Deed dated 3 May 2017. It was stated that
there was a corrected sale deed executed between the parties on 29 December
2017 under which total land purchased was corrected as 17 Hectare 61 R
instead of 16 Hectare 68 R. It is next stated that Shivneri submitted
Certificate of Incorporation showing that Shivneri was incorporated as a
limited company as per the Companies Act, 2013. Also, a request dated 28
November 2018 was received from Jijamata for allotment of "short name and
plant code" to the sugar mill. It is stated that again this request was
forwarded alongwith the old request for change of name due to change in
ownership, to the Commissioner of Sugar, Maharashtra, for obtaining their
views in the matter. The Commissioner of Sugar, Maharashtra, vide his letter
dated 12 December 2018 responded, informing the GOI that 187 quintals
sugar was produced during 2011-12 sugar season and on the basis of the
comments received from the Commissioner of Sugar, State of Maharashtra,
the short name and plant code was allocated to the sugar mill vide GOI letter
dated 28 February 2019.
33.It is next stated that representations were received from one Shri.
Hindurao Tatoba Desai, M/s. Vardhan Agro Processing Ltd. and M/s.
Sahyadri Sahakari Sakhar Karkhana Ltd. (petitioner), by the GOI to cancel
the IEM issued in favour of Jijamata on several grounds namely ; the
entrepreneur has not paid any amount of excise duty on sales of sugar and
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molasses till date, and therefore, no sale transaction of these commodities was
materialized; the entrepreneur has not taken Sugarcane Crushing Licenses
from the Commissioner of Sugar, Maharashtra State, nor paid the fee for
Sugarcane Crushing Licenses for the season 2011-12; the sugar
manufacturing machinery is not seen at the location set out in the said IEM.
It is stated that these representations were forwarded to the Commissioner of
Sugar, Maharashtra State, for his views vide letter dated 3 June 2019, 27
November 2019 and 16 March 2020. Responding thereto, the
Commissioner of Sugar addressed a letter to the GOI dated 6 March 2020
recording that as per the record available with the Commissioner of Sugar,
Jijamata had not applied for crushing licence since 2011-12. It is stated that
the representative of Regional Joint Director (Sugar), Pune had visited the
factory site and reported that there was no machinery, civil work and
administrative building available at site.
34. It is however stated that such comments as received from the
Commissioner of Sugar, Maharashtra, were contradictory to the earlier
comments submitted on 12 December 2018 recording that the sugar mill had
produced 187 quintals of sugar during the sugar season 2011-12. It is stated
that Shivneri by its letter dated 28 February 2021 informed the GOI that it
is facing problem to run the existing sugar plant / factory as the turbine and
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boiler were not of adequate capacity after sugar season 2016-17, hence, the
management of Shivneri decided that the existing plant be
demolished/scrapped so as to install a new plant of 4500 TCD with co-
generation of electricity with 20 mw and 60 KLPD-ethanol capacity. It is
stated that Shivneri requested for change of name from M/s. Jijamata Sugar
& Power Industries Ltd. to M/s. Shivneri Sugars Ltd., which was examined
and a NOC was issued for change of name from M/s. Jijamata Sugar & Power
Industries Ltd. to M/s. Shivneri Sugars Ltd.
35. In dealing with the petition parawise, the following are the relevant
averments as made in the affidavit:
"23. That in reply of Paras 25 to 27 it is stated here that M/s. Jijamata Sugar &
Power Industries Ltd. (Earlier M/s Jijamata Ethanol & Agro Processing Industries
Ltd.) obtained IEM No. 2654/SIA/IMO/2003 dated 18.09.2003 for setting up
new Sugar Plant at Ganesh Tekadi, Pimpri Nhavi, Taluka Koregaon, District
Satara, Maharashtra. Subsequently, said sugar mill was taken on record as an
"existing sugar factory" under explanation provided below clause 6A of Sugarcane
(amendment)(control) Order, 2006 vide this office letter dated 22.09.2008
subject to enhance the capacity of the factory from 500 TCD to 1250 TCD in the
next three years. Later on, sugar mill went into production in 2011-12 (confirmed
by Cane Commissioner, Maharashtra) which makes it evident that M/s Jijamata
Sugar & Power Industries Ltd. was a running sugar mill which was already taken
on record as an "existing sugar mill" by this office. Further, selling/purchasing of
an existing sugar mill by another entrepreneur cannot be taken under violation of
minimum distance clause 6(A) of SCO, 1966. Further, the minimum distance
criteria of 15 kms was increased to 25 kms in State of Maharashtra in year 2011.
The criteria was not applicable to existing sugar mills and M/s. Jijamata Sugar &
Power Industries Ltd. was already taken on record as an existing sugar factory vide
letter dated 22.09.2008.
.........
25. That in reply Para nos.33 to 34 of the writ petition, at this juncture, it is
stated here that as per explanation 1 provided below clause 6A of Sugarcane
(Control) Order, 2006, an existing sugar factory shall mean a sugar factory in
operation and shall also include a sugar factory that has taken all effective steps as
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specified in Explanation 4. Further, the case of M/s. Jijamata Sugar & Power
Industries Ltd. (earlier M/ s Jijamata Ethanol & Agro Processing Industries Ltd. )
was examined by the department and it was found that although sugar factory was
not able to commence commercial production but it had taken all effective steps
as provided in explanation 4 below clause 6A of Sugarcane control Order, 2006.
As such the sugar factory was taken on record as "Existing Sugar factory" under
explanation 1 below clause 6A of SCO, 2006.
.........
28. That the contents of Para 41 to 47 of the writ petition it is stated here that
the time limit for implementation of IEM as prescribed in clause 6C of Sugarcane
(Control) Order was further amended in year 2016 from 4 years to 5 years.
Further, provision for extension in time limit was also inserted in Sugarcane
(Control) Order vide amendment dated 12.10.2018. It is also pertinent to
mention here that in light of Hon'ble Supreme Court Judgement passed in the
matter of Ojas industries verses Oudh Sugar, the sugarcane control order operates
retrospectively.
Further, the sugar factory was taken on record as "Existing sugar factory" under
explanation provided below clause 6A of Sugarcane (amendment)(control) Order,
2006 vide this office letter dated 22.09.2008. Before that, the case of M/s Jijamata
Ethanol and Agro Processing Industries was examined in detail by the answering
respondent department. Some facts of the examination are de-lineated below as:-
i. M/s Jijamata Ethanol and Agro Processing Industries had submitted their
progress report towards effective steps taken by them vide their letter dated
02.05.2007.
ii. In order to examine the request a personal hearing dated 10.03.2008 was
organised under chairmanship of CD (Sugar), wherein M/s M/s Jijamata Ethanol
and Agro Processing Industries were requested to bring documentary proof
regarding effective steps taken by them.
iii. During the hearing, they had submitted amendment No. 1 dated
17.03.2008 in IEM regarding change of name from "M/s. Jijamata Ethanol and
Agro Processing Industries Ltd." to "M/s.Jijamata sugar & Power Industries Ltd.
Fresh certificate of incorporation dated 17.08.2007 issued in favour of changed
name.
iv. Documentary proofs regarding:-
Purchase of land of 55 Acres by them.
Agreements dated 15.03.2005, 24.04.2005 & 22.08.2005 with M.M.Techno
Chems regarding purchase of plant & machinery costing to Rs 4.80 cr.
Copy of approval plan regarding commencement of civil works & building
structure and a copy of cheque dated 07.01.2005 of about Rs. 12,09,746.00 paid
as advance for start of the work.
Letters of different financial institutions dated 24.08.2005, 05.09.2005,
12.09.2005 regarding sanctioning of loans of about Rs 75 lakhs to M/s Jijamata.
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So, it is evident from above narrated position that all effective steps as provided in
explanation 4 below clause 6A of Sugarcane (Control) Order, 2006 were taken by
the sugar mill before 10.05.2007 (last date of IEM). Therefore, the sugar mill was
taken on record as an "existing sugar factory" by the answering respondent
department.
29. That in reply Paras 48 to 50 of the writ petition it is stated here that
petitioner have submitted wrong facts as after the sugar mill was taken on record
as "existing sugar mill" after that as certified by the cane commissioner,
Maharashtra vide their letter dated 12.12.2018 that the sugar mill viz. M/s
Jijamata Sugar had produced 187 quintals 2011-12 Sugar Season. Further, it is
submitted before Hon'ble Court that production cannot be started with successful
commencement of the plant.
Further, as prescribed in preceding paras that the sugar mill was taken on record as
"existing sugar mill" after detailed examination & verification of all effective steps
taken by them. So, it is false claim of the petitioner that except purchase of land,
the sugar mill had not taken any effective steps. It is also submitted before this
Hon'ble Court that since the status of sugar mill was changed successfully from
new sugar factory to "existing sugar factory" vide letter dated 22.09.2008, the
claim of the petitioner that IEM itself stands de-recognised in year 2009 does not
stand.
30. That in reply Paras 51 to 66 of the writ petition it is stated here that the
grievance received from Shri Hindurao Tatoba Desai dated 11.04.2019 along with
other grievances received in the matter were forwarded to Govt. of Maharashtra
vide this office letters dated 03.06.2019, 29.11.2019. Further, State Govt. of
Maharashtra vide their letter dated 06.03.2020 provided their comments in the
matter as per record available in the Commissioner of Sugar, Maharashtra State,
Pune M/s Jijamata Ethanol & Agro Processing Industries Ltd. have not applied
for crushing license since 2011-12 to till date. Further, representative of Regional
Joint Director (Sugar), Pune had visited the factory site and reported that the
there is no machinery, civil work and Administrative building available at site.
However, according to their earlier letter dated 28.11.2018, the sugar mill in name
of M/s. Jijamata Powers & Sugars Ltd. was gone into production in year 2011-12.
Later on M/s Shivneri Sugars Ltd. vide their representation letter dated
28.01.2021 submitted that that due to various problems like turbine & others,
after successful purchase of M/s Jijamata Sugars & Powers Ltd., M/s Shivneri
Sugars Ltd. demolish all the structure in order to re-build it. As such at the time of
inspection, no plant & machinery was seen at sight.
Further, after examination of the request of M/s Shivneri Sugars Ltd., the NOC
regarding change of name of the company from M/s Jijamata Sugar & Power Ltd
to M/s Shivneri Sugars Pvt Ltd. for recording the change in their IEM was issued
by the answering respondent.
... ... ... ..
32. That in reply Paras 69 to 73 of the writ petition it is stated here that the
Counter affidavit was successfully filed by the answering respondent department
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in the earlier WP No. 7458 of 2022. Further, it is evident that after knowing that
petition of the petitioner is futile, he withdrew the petition and filed a fresh
petition before this Hon'ble court.
Further, from above narrated facts it is evident that all facts stated by petitioner are
false and that it is therefore submitted that in view of the fact & the circumstances
the Hon'ble Court may be pleased to dismiss the Writ Petition which is devoid of
merits in the interest of Justice.
33. That the petitioner is not entitled to any relief claimed against the
respondents.
34. That the writ petition is legally not maintainable.
35. That in these circumstances stated above the petition may please be
dismissed."
(emphasis supplied)
36. A second affidavit dated 29 November 2023 on behalf of the GOI
of Shri. Alok Kumar Tiwari, Technical Officer, is filed in pursuance of the
order dated 4 October 2023 passed by a co-ordinate Bench of this Court.
The said order is required to be noted which reads thus:
"1. We have heard this matter for some time. We find that the earlier
Petition in which one of the reliefs sought was for issuance of a mandamus to the
Sugar Director to decide the representation of the Petitioner, was withdrawn with
the permission of the Court with liberty to file a fresh Petition.
2. Mr. Kumbhakoni, Learned Senior Advocate submits that the withdrawal was
done on the basis of what was put on the record of that Petition, through the
affidavit filed by the Sugar Director. According to him, the tenor of the affidavit
was such that it created a different impression about fact situation. It showed that
Respondent No.10 had purchased the sugar factory from Respondent No.9 and
that was at a time when the Industrial Entrepreneur Memorandum ("IEM") was
already issued. He submits that it also showed that there was no violation of
conditions of the IEM and so it was not felt necessary for the Sugar Director, i.e,
Respondent No.3 to derecognize the IEM.
3. On going through this affidavit dated 8th December 2022 filed in Writ
Petition No. 7458 of 2022, we find that it also refers to some final decision in
paragraph 25 thereof which was taken by the Sugar Director and this final
decision, it appears, was not produced before this Court during the earlier round
of litigation.
4. Learned Senior Advocate for the Petitioner has no instructions in respect of this
final decision. It appears to us that before this Petition is heard finally, it is
necessary to know about the final decision stated to be taken by Respondent No.3
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but it is not filed on record by Respondent No.3. We direct Respondent No.3 to
file the same on record of this Petition, with liberty to the Petitioner to challenge
the same, if the decision is viewed as going against the interest of the Petitioner.
5. Stand over to 1st November 2023.
6. Meanwhile, we direct that whatever actions that will be taken by Respondent
No.10 on the basis of the impugned IEM, would be subject to the final outcome
of the Petition."
37. The second affidavit filed on behalf of GOI inter alia states that the
final decision as referred to by this Court in the aforesaid order refers to a
series of decisions taken by the department, as explained in the affidavit,
which are to the following effect:
(I) As per explanation 1 provided below clause 6A of SCO 1966 read
with amendment dated 10 November 2006, an existing sugar factory means
a factory which is in operation or have taken all effective steps provided in
explanation 4 below clause 6A. It is stated that since Jijamata had taken all
effective steps, it was declared as an "Existing Sugar Factory" vide office order
dated 22 September 2008 of the GOI, and a copy of the said order is
annexed to the affidavit.
(II) As per the procedure followed by this department, after successful
commencement of commercial production, a 'short name & plant code' is
issued to existing sugar mills. In such context, Commissioner of Sugar Mill,
Maharashtra, vide its letter dated 4 January 2019 informed the GOI that the
sugar mill namely Jijamata produced 187 quintals of sugar during 2011-2012
sugar season, which was a proof that sugar mill had successfully commenced
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commercial production, and it is on the basis of such letter, a 'short name &
plant code' as "Pimpari/69048" was allocated to the Jijamata vide office
letter dated 28 February 2019.
(III) On 8 March 2017, a request for change of name & ownership of M/s
Jijamata was forwarded by GOI to the Commissioner of Sugar, Maharashtra
who responded vide letter dated 23 February 2018 that Shivneri was a
subsidiary company of Athani Sugars and referring to sale deeds dated 3
May 2017 and 29 December 2017, the total land purchased from Jijamata has
been corrected as 17 Hectare 61 R and a Certificate of Incorporation of
Shivneri under the Companies Act was also submitted.
(IV) The representations were received from Shri Hindurao Tatoba Desai
dated 11 April 2019, M/s Vardhan Agro Processing Ltd dated 6 May 2019
and the petitioner - Sahyadri dated 10 April 2019 requesting for
cancellation of IEM granted in favour of Shivneri, which were also forwarded
to the Commissioner of Sugar, Maharashtra, which was responded by the
Commissioner of Sugar, Maharashtra vide letter dated 6 March 2020 inter
alia recording that Jijamata had not applied for crushing license since 2011-
12 till date and that the representative of Regional Joint Director (Sugar),
Pune, had visited the factory site and reported that the there was no
machinery, civil work and administrative building available at site."
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(V)The aforesaid comments of the Commissioner of Sugar, Maharashtra,
were found to be contradictory to their earlier comments provided vide letter
dated 4 January 2019, and further Shivneri by letters dated 15 January 2021
and 28 January 2021 informed the GOI that they tried to start sugarcane
crushing with some minor modifications in the existing machinery and
produced 107.55 quintals of white sugar, however, due to mechanical
problems, they had to stop the operations. It was also recorded by Shivneri
that in order to modernize the plant, it has decided to install additional
equipments. These letters dated 15 January 2021 and 28 January 2021 are
annexed to the reply affidavit. It is stated that the representations as made by
Shivneri were found to be explanatory of reasons behind demolition of the
structure of the plant, and therefore, the change of name of M/s. Jijamata
Ethanol & Agro Processing Industries Ltd. to M/s. Shivneri Sugars Ltd. was
successfully recorded by the GOI and conveyed by letter dated 21 February
2021.
(VI) It is accordingly contended that as clear from the aforesaid
explanation, all actions taken by GOI were within the ambit of law, and
therefore, the petition be dismissed.
38. There is another (third) affidavit filed on behalf of the GOI of Shri.
Sunil Kumar Swarnkar, Under Secretary, dated 14 February 2025, in
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pursuance of the orders of this Court dated 13 February 2025, when at the
midst of the hearing of this petition, Mr. Bhate, learned Counsel appearing
for GOI (respondent Nos.1 to 5) was requested to take instructions from the
concerned department of the Government of India as to whether the IEM
which was issued in favour of Jijamata (respondent No.9) stands continued
in favour of Shivneri (respondent No.10). In compliance of such order, this
short affidavit states that with reference to Office Memorandum dated 27
September 2017 (O. M. No. IM188466 / SIA/ IMO/2017) issued by the
Department of Industrial Policy and Promotion, the Directorate of Sugar &
Vegetable Oils, Department of Food & Public Distribution, an NOC was
issued vide OM dated 16 February 2021, regarding change of name in IEM
of sugar mill from JM/s. Jijamata Sugar & Power Industries Ltd. to M/s.
Shivneri Sugars Ltd. It is stated that consequent to such, the Department of
Industrial Policy and Promotion had issued IEM in the name of M/s.Shivneri
Sugars Ltd. (respondent No.10). Copies of the Office Memorandum dated 16
February 2021 and 27 September 2017 are annexed to the affidavit.
Reply affidavit on behalf of the State Government
39. A reply affidavit on behalf of the State Government (Respondent
Nos.6, 7 and 8) of Shri.Shridhar Vithoba Kolhapure, District Special
Auditor, Co-operative Societies, Satara, is filed, being an affidavit dated 29
January 2024. At the outset it is contended that all the contentions,
6 June 2025
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averments and allegations as made by the petitioner in the Writ Petition are
incorrect, fictitious and frivolous, and the petition is liable to be dismissed
with costs. In paragraph 6, it is stated that there are no prayers sought against
these respondents. It is further stated that there is no authority with these
respondents to either grant or de-recognize the impugned IEM. In dealing
with certain paragraphs of the writ petition, the State Government has made
the following statements in the affidavit.
40. In paragraph 4(aa) of the State's affidavit, in dealing with the
paragraph 32 of the petition, it is stated that as per the record available with
respondent No.8, there was no commencement of commercial production as
no machinery was erected and installed at the site of the sugar factory of
Jijamata. It is further stated that a letter dated 6 March 2020 was issued by
the Deputy Secretary, State of Maharashtra addressing the Under Secretary,
GOI (Department of Food and Public Distribution) which recorded that as
per the information available with the office of the Commissioner of Sugar,
Jijamata had not erected or installed any machinery or civil work or
administrative building constructed as on the said date. It is further stated
that as per the record available with respondent No.8, it is evident that no
sugar was crushed by Jijamata during the period 2009-2011. It is further
stated that Jijamata had obtained crushing licence for the year 2010-2011 as
well as 2011-2012 on the said IEM dated 18 September 2003. Thereafter, a
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crushing licence was issued to Shivneri for crushing season 2023-24 on a
separate and distinct IEM bearing No.230/SIA/IMO/2021 dated 19
February 2021
Reply affidavit on behalf of Shivneri
41. An affidavit on behalf of respondent no.10--Shivneri, being the
contesting respondent, of Mr. Ravindra Janardan Deshmukh, authorised
representative of Shivneri is filed, contending that petition is devoid of merit
and is abuse of process of law. At the outset, it is contended that the
petitioner had earlier filed Writ Petition No.7458 of 2022 seeking directions
to the respondent authorities to decide various representations made by the
petitioner which sought cancellation and de-recognisation of IEM dated 18
September 2003 issued in favour of Jijamata, as also cancellation and
deletion of the 'plant code' issued in favour of Jijamata and later on
transferred in favour of Shivneri and that such petition was withdrawn after
considering the affidavit filed on behalf of Shivneri. It is on such backdrop,
the affidavit further contends that the petitioner is controlled by Mr.
Shamrao alias Balasaheb Patil, who is the chairperson of the petitioner. It is
stated that in the year 2019, when the Government was formed by the
Mahavikas Aghadi, in Maharashtra, till June 2022 the said Balasaheb Patil
was holding the portfolio of Minister of Cooperation, Marketing and Textiles
and taking advantage of the said position, he had engineered the
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representation dated 7 March 2022 submitted to the Under Secretary,
Ministry of Consumer Affairs, Food and Public Distribution, GOI. It is
contended that the Government of Maharashtra had no reason to make such
representation and as a matter of fact, the said representation was not made
by the Government of Maharashtra since there is no resolution of the
Council of Ministers to make such representation. It is contended that the
present petition is filed solely for the purpose of advancing the personal
political agent of the office bearers of the petitioner and more particularly of
the Chairperson, and for such reason the petition ought not to be entertained
in the extraordinary jurisdiction of this Court.
42. The affidavit has raised a preliminary objection, firstly on delay
and laches to contend that the petitioner has challenged the IEM dated 18
September 2003 issued in favour of Jijamata. It is contended that the
petitioner was always aware of the said IEM for several years and apart from
the fact that the petition has no locus standi to challenge the said IEM, no
justification has been given for the delay from 2003 till 2022. It is further
contended that the petitioner's contention that IEM dated 18 September
2003 needs to be quashed and set aside and the same stood de-recognized, is
completely misconceived. This contention can be accepted, if the petition
was to be filed within 5 years of the IEM i.e. in the year 2008. It is contended
that the sugar factory was existing in the year 2008, hence, the petitioner has
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to explain the delay from 2008. Also, necessary averments in the petition
that there being no delay and laches in filing the petition, are missing. It is
next contended that such omissions are deliberate and that the petitioner
does not have any explanation about delay. It is contended that insofar as the
laches are concerned, the petition is filed when the petitioner was fully aware
that apart from the existing shed and machinery which had been erected by
Jijamata/respondent No.9 prior to the sale of entire unit to respondent
No.10/Shivneri, respondent No.10 has undertaken the work of expansion
from the year 2019 and for that purpose, Shivneri had applied for obtaining
environmental clearance from the Ministry of Environment, Forest and
Climate Change, GOI, pursuant to the Notification dated 14 September
2006 in the year 2019. It is contended that for that purpose, Shivneri had
complied with the procedure of issuing notices for public hearing, for which
notices were issued in the year 2019 itself, and the petitioner had raised
objections to the said public hearing. It is thus contended that at least in the
year 2019, the petitioner could have filed a writ petition seeking reliefs qua
alleged IEM dated 18 September 2003.
43. The second objection of Shivneri is on the 'locus standi' of the
petitioner. On such count, Shivneri contends that the factory of the
petitioner was located at an aerial distance of 23 kms from the unit of
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Jijamata and that the IEM was granted on 18 September 2003 at which time
Clause 6A of the SCO 1966 provided for a distance of 15 kms. The said
clause has been amended subsequently by the State Government by a
Notification dated 3 February 2011. It is stated that qua such amendment, it
can never be said that the petitioner is a "person aggrieved" by the said IEM
dated 18 September 2003, or any subsequent amendments thereof. It is
contended that even otherwise, in the entire petition, the petitioner has not
indicated as to how the petitioner is adversely affected either by the grant or
transfer of IEM or the running of unit of Jijamata and now Shivneri. It is
contended that the present petition would be barred on principles analogous
to Order 2 Rule 2 of the Civil Procedure Code and more particularly when
the earlier petition was filed and the same was withdrawn and such reliefs
ought to have been prayed for in the earlier writ petition and the petitioner
having failed to do so, the present petition is not maintainable.
44. It is next submitted that the petitioner has not come to the Court
with clean hands and on this count alone, the present petition deserves to be
dismissed, as several material facts and documents have been suppressed, as
set out in detail in the reply affidavit. It is stated that the true and correct
chronology of events has been as set out [in the affidavit paragraphs 9(I) to
9(XXVI)] to contend that these facts would demonstrate that the petitioner
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is not entitled for any relief. The case of the petitioner that no other sugar
factory is permitted to operate within the distance of 25 kms in so far as the
Maharashtra State is concerned, is not applicable to Jijamata and Shivneri.
Referring to the notification dated 3 December 2011, providing that no new
sugar factory shall be set up within a radius of 25 kms of any existing sugar
factory or another new factory, it is contended that the IEM to run the sugar
factory in the name of Jijamata was issued from the Department of
Industries on 18 September 2003 which is much prior to the amendment to
the SCO 1966 in the year 2011. It is further contended that Jijamata was
taken on record by the GOI as an existing sugar factory on 22 September
2008, it is hence denied that the amendment to the SCO 1966 can have
retrospective effect unless specifically provided in such amendment. It is
thus, contended that although the Shivneri's Sugar Factory is located within
the circumferential area of 25 kms, however, the restrictions as per the
amended SCO will not apply to the IEM in question, as it was issued initially
in favour of Jijamata and now transferred in favour of Shivneri. It is further
contended that as the IEM in question is dated 18 September 2003 and the
same was amended subsequently on 17 March 2008, the 2006 amendment
to SCO by virtue of Clause 6A to 6E which came into force on 10 November
2006 (date of publication of the said amendment) is not relevant for the
IEM, for the reason that on the date of such publication, there was no
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prohibition / restriction and/or any requirement to be followed by any
concerned person or any industrial unit for submission of IEM, obtaining of
certificate from the Sugar Commissioner regarding the minimum distance as
prescribed. Also, untill 10 November 2006 there was no time limit for
implementation of IEM as prescribed in Clause 6C of the 2006 Amendment.
It is hence contended that the petitioner's case that Jijamata filed Part-B of
IEM on 14 January 2015 regarding commencement of Sugar Plant by stating
that it started sugar production from 3 April 2012, has no relevance. It is
next contended that all the materials on record clearly indicate that Jijamata
was taken on record by the GOI and the production of the sugar had already
commenced with effect from the crushing season 2011-12.
45. Insofar as the case of the petitioner that Shivneri has not enhanced
the production capacity of the factory, it is contended that Shivneri was
following appropriate steps after purchase of the factory in the year 2017
which includes change in the name of IEM, change of ownership name of the
factory etc. It is contended that the application for change in the name of
IEM was made on 27 September 2017 and the same was approved on 19
February 2021. It is stated that thereafter the Maharashtra Pollution Control
Board (MPCB) conducted public hearing in respect of issuance of
Environmental Clearance and the same was granted on 19 April, 2023. It is
contended that the petitioner's case in regard to non-compliance by
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Jijamata / Shivneri to the directions dated 28 January 2019 of the Technical
Officer, GOI, is not correct. In this context, it is stated that the Technical
Officer after being satisfied with the compliance, had informed Jijamata that
the 'Short name and Plant Code' allotted to the sugar factory on provisional
basis on 28 January 2019 be treated as final allotment of 'Short name and
Plant Code'. The petitioner's case that IEM dated 17 March 2009 was dead,
is denied, stating that Jijamata in the year 2011-12 had manufactured RT-
8(C) for 187 quintals of sugar, which fact has been duly accepted,
acknowledged and mentioned in the letter of the Commissioner of Sugar.
The petitioner's case that no excise was paid on manufacture of sugar or on
sale of molasses, is denied to contend that the Superintendent of Central
Excise, Range IV of Satara Division at Lonand had issued a Certificate dated
9 August 2016, a copy of which is annexed to the said affidavit. It is next
contended that the crushing of sugarcane commenced for the year 2011-2012
and therefore, till 2011, Shivneri had not commenced the work of sugarcane
crushing. Also photographs of the site relied on behalf of the petitioner are
denied to contend that the said photographs are old photographs. It is
categorically contended that Shivneri had requested the Central Government
that Shivneri was facing problems to run the existing sugar factory due to
turbine and boiler being of inadequate capacity to run the existing plant after
sugar season 2016-2017, and accordingly the management of the Shivneri
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had decided that the existing plant be demolished / scrapped and the new
building at the place of existing plant establishing new plant of 4500 TCD
with co-gen with 60 MW and 200KLPD Ethanol capacity be built.
46. It is contended that Shivneri also requested for change in name
from M/s. Jijamata Sugar and Power Industries Ltd. to M/s. Shivneri Sugars
Ltd., and that, such request was examined by the Central Government and
NOC was issued to Department of Industrial Policy and Promotion for
change of such name vide letter dated 16 February 2021, and accordingly,
the IEM was issued in the name of M/s.Shivneri Sugars Ltd.
47. It is next stated that the IEM was issued for the factory which
earlier existed at Ganesh Tekadi area and the IEM is now transferred in the
name of Shivneri (respondent No.10) in respect of the sugar factory as it
existed in the year 2003. It is also contended that the report of the Deputy
Secretary, Government of Maharashtra addressed to the Under Secretary,
GOI, in connection with the visit of the representative of the Regional Joint
Director (Sugar), Pune, at the factory site, is of no consequence, as no such
letter was issued to Shivneri. It is stated that Shivneri is constructing a new
building as the old building was demolished by the Shivneri for increasing
the present capacity. It is categorically stated that there is no commercial
production of the sugar from the year 2017-18 till 2022-23, as already steps
are taken by Shivneri after purchasing the factory from Jijamata. It is further
6 June 2025
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stated that COVID-19 pandemic had struck the nation in March 2020 and
the entire business activities came to a standstill and the restrictions were
progressively relaxed. It is denied that the IEM granted to Jijamata and
Shivneri stood de-recognized as per Clause 6C of SCO 1966 as amended. It
is stated that the IEM was transferred in the name of Shivneri in the year
2021 and at present Shivneri is in the process of constructing a new building
and this falls in the category of taking steps as contemplated under Clause 6C
of the SCO 1966 as amended. It is contended that the respondent has total
time of two years to take effective steps to complete the on-going work of
construction of the new plant building at Ganesh Tekdi. This is also
supported by annexing photographs of on-going construction of new
building of plant at Ganesh Tekdi, which is being constructed at the place of
old sugar factory. It is next contended that Shivneri has placed various
purchase orders with respect to the plant and machinery to be installed in the
new factory building. It is further contended that Koyana Sahakari Bank in
consortium with three other banks has sanctioned a loan to the tune of
Rs.130 crores towards the construction of the factory building and
installation of the plant and machinery, and that purchase orders worth
Rs.147.74 crores have been issued and Shivneri had spent more than Rs.40
crores towards advances given for purchaser orders and constructions.
6 June 2025
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48. It is next contended that the petitioner has failed to disclose the
cause of action in filing of the present writ petition and has raised several
objections regarding IEM issued in favour of Jijamata now transferred in
favour of Shivneri, without disclosing how the petitioner is personally
aggrieved by the same. The petitioner has failed to demonstrate the manner
in which the petitioner's personally aggrieved by IEM / failure to cancel / de-
recognise the said IEM.
49. It is next contended that in the vicinity of the Shivneri as also in the
vicinity of the petitioner, there is huge area under sugarcane cultivation since
water is available through Dhom and Urmodi Irrigation Project Canals. It is
stated that the petitioner is unable to "lift and crush" thousands of tons of
sugarcane of agriculturist in the locality, more so near the unit of Shivneri. It
is stated that in the public hearing, many such agriculturists attended and
specifically stated that the petitioner is unable to lift and crush their
sugarcane resulting into a huge monetary loss to them on account of
reduction in weight. It is stated that even if Shivneri commences production,
it will not have any adverse effect on the petitioner since the petitioner is
unable to lift and crush the sugarcane in the vicinity. It is stated that Shivneri
has both financial capacity and will also have the requisite capacity of plant
and machinery to serve the sugarcane farmers in the vicinity and that would
greatly benefit said farmers. It is stated that Shivneri will generate direct
6 June 2025
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employment of around 500 to 700 employees on account of the said plant of
Shivneri as also provide indirect employment to at least 5000 people on
account of harvesting and transportation and allied services.
50. It is next stated that once Shivneri's plant commences commercial
production, the entire economy in the Koregaon Taluka will get boost, as
Shivneri expects to have a turnover of 1000 crores per annum, once the sugar
plant, distillery and cogeneration plant are operational. It is stated that the
cogeneration plant will supply electricity to the MSEDCL Grid which would
substantially enhance the electricity supply in the rural areas of Koregaon
Taluka. It is contended that it is imminently in the larger public interest that
Shivneri is allowed to start commercial production and any interference in
the erection of plant and machinery and commencement of production
would adversely affect not only Shivneri but also thousands of agriculturists
in Koregaon and adjoining Talukas. It is next contended that in Writ
Petition No. 7458 of 2022 filed by the petitioner therein, on behalf of Union
of India and its officers namely respondent Nos. 1 to 5 therein, a detailed
affidavit in reply dated 8 December 2022 was filed by Shri Dilip Kumar Jha,
Under Secretary to the Government of India, a copy of which is annexed to
the reply affidavit. It is stated that in such affidavit, it was clearly contended
by the Government of India that the IEM dated 18 September 2003 was
valid, and that it had not expired and that the amendment in the SCO 1966
6 June 2025
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made in the year 2006 will not affect the IEM issued to Jijamata. In the
aforesaid circumstances, it is contended that Shivneri has taken all necessary
measures for obtaining requisite permissions pursuant to purchase of the unit
from Jijamata which has led to issuance/ transfer of the IEM. It is accordingly
submitted that the petitioner is not entitled for any relief including on the
ground that the petitioner has failed to explain the delay and laches in
approaching this Court. It is stated that the petition be accordingly dismissed.
Rejoinder / Additional affidavit on behalf of thePetitioners
(I) Rejoinder to the reply affidavit filed by Shivneri, dated 12
June 2023 of Shri. Abasaheb Jotiram Patil, Managing Director of
the petitioner, is placed on record inter alia denying the case of the
respondent which is reiteration of the case in the writ petition.
(II) There is also an additional affidavit dated 28
August 2023 filed on behalf of the petitioner of Shri. Abasaheb
Jotiram Patil, to annex material which has been received under the
Right to Information Act, in regard to the contentions of the excise
duty as paid by Jijamata, to contend that Jijamata has not filed
excise returns which would substantiate the contention of the
petitioner that Jijamata did not commence any manufacturing
process during its entire tenure as also the contention that 187
quintals of sugar was manufactured in the year 2011 is not correct.
6 June 2025
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Also, documents as received from MPCB wherein Jijamata stated
that the plant was not economically viable and it was lying in idle
condition and required to be scrapped, is what is being canvassed.
Shivneri's Additional Affidavit
51. There is also an additional affidavit dated 5 March 2024 filed on
behalf of Shivneri inter alia contending that on 6 November 2023, the
Licensing Authority / the Commissioner of Sugar, Maharashtra State issued a
License for crushing case (Season 2023-24) bearing No.137/2023-24 in
Form B as per clause No.4(5). It is stated that the said licence for crushing
cane has been issued in exercise of powers vested by the Maharashtra Sugar
Factories (Reservation of Areas and Regulations of Crushing and Sugarcane
Supply) Order, 1984. It is stated that under such Cane Crushing License,
Shivneri is authorized to manufacture sugar by crushing sugarcane on various
terms and conditions as mentioned in the said license for crushing cane. It is
stated that on 9 November 2023 the Central Licensing Authority,
Government of India issued a license bearing No.115239970000475 as per
Form C of Food Safety and Standards Authority of India License under FSS
Act, 2006. It is stated that the said license has been issued in the name of
Shivneri as a manufacturer which is valid for one year upto 8 November
2024 which is for manufacture of sweeteners, refined and raw sugars, etc. It
is further stated that on 19 December 2023, Member Secretary for the
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MPCB granted consent to operate for 4200 TCD sugar unit and
cogeneration power plant of 8MW capacity in the name of Shivneri. It is
stated that the said consent by MPCB is granted under Section 26 of the
Water (Prevention and Control of Pollution) Act, 1974 and under Section 21
of the Air (Pollution and Control of Pollution) Act, 1981 and authorization
under Rule 6 and Rule 18(7) of the Hazardous and Other Wastes
(Management and Transboundary Movement ) Rules, 2016. It is stated that
the said consent is provided upto 31 July 2024 which is for manufacture of
sugar, co-generation of electricity, bagasse, press mud and molasses. It is next
contended that on 8 January 2024, the Collector, Satara, has issued a License
bearing No.24/2023-24 in form M-I (Rule 3) of the Bombay Prohibition
Act, 1949 in the name of Shivneri. It is contended that under such license,
Shivneri is permitted to possess and sell molasses under the provisions of
Bombay Prohibition Act, 1949. It is next stated that the Director (Sugar)
Government of India vide order dated 31 January 2024 under Section 3 of
the Essential Commodities Act, 1955 read with clause No.4 and 5 of the
SCO 1966 and order of the GOI, Department of Foods and Public
Distribution vide S. O. No.2347 (E) dated 7 June 2018 directed that every
producer of sugar by Vacuum Pan Process shall hold white / refined sugar
stock tentatively till 29 February 2024. It is contended that Shivneri is at
Serial No.343 bearing Plant Code no.69048. It is stated that till 4 March
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2024 Shivneri had crushed 1,32,385.516 metric tons of sugarcane and a copy
of the chart and crushing report is annexed to the reply. It is therefore,
submitted that such facts be considered and the petition be dismissed.
52. There is another additional affidavit dated 12 February 2025 filed
on behalf of Shivneri (respondent No.10) of Shri. Sushant Shrimant Patil,
Chairman & Managing Director, in which it is stated that in the crushing
season of 2024-2025 an area admeasuring 10,000 hectors of sugarcane
growing land is registered with Shivneri by more than 15,000 individual
farmers. It is stated that till filing of the affidavit, for the sugarcane crushing
season 2023-24, Shivneri crushed 1,68,131 metric tons of sugarcane and
produced 1,55,900 quintals / 1,55,90,000 kgs of white crystal sugar. A copy
of Final Manufacturing Report in form R.T.-8(C) Report is placed on record.
It is further contended that on 11 February 2025 for the year 2024-2025
crushing season, Shivneri has crushed 3,60,240 metric tons of sugarcane and
has produced 3,82,860 quintals / 3,82,86,000 kgs. of white crystal sugar. It is
stated that in the year 2023-2024, Shivneri paid FRP to the farmers with
respect to 1,68,131 metric tons of sugarcane to the tune of Rs.52,96,12,650/-
i.e. @ of Rs.3150/- per metric ton. It is further contended that for the year
2024-2025 specifically till 15 January 2025, Shivneri has paid FRP to the
farmers with respect to 2,35,304 metric tons of sugarcane to the tune of
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Rs.75,29,60,000/- i.e. @ of Rs.3200 per metric ton. The documents in that
regard are annexed to the affidavit.
53. It is on the aforesaid backdrop, we have heard learned Counsel for the
parties.
Submissions on behalf of the Petitioner
54. Mr. Kumbhakoni, learned Senior Counsel for the petitioner has made
extensive submissions. The thrust of his submission is that the IEM has stood
de-recognized in view of the legal fiction created by Clause 6(C) of the
Sugarcane Control Order, since Jijamata did not take "effective steps" within
the period of two years and in any case did not commence the "commercial
production" of sugar within four years of the issuance of the IEM on 18
September 2003. Also the claim of Jijamata as also of Shivneri that Jijamata
manufactured 187 quintals of sugar is not correct and it is only on paper as
contended by the petitioner. It is next submitted that there is unimpeachable
evidence produced by the petitioner, including the photographs and google
images of the relevant time, demonstrating that at the site in issue there has
always been complete vacant land and that not a brick was laid by Jijamata.
It is submitted that the defence adopted that the old structure has been
completely demolished and new structure is being built, ought not to be
believed which is in fact contrary to the case of Shivneri before the GOI that
6 June 2025
WP 13816-23.DOC
it has undertaken only 'expansion' activity, and not construction of a new
building.
55. It is next submitted that the chronology of events clearly would
demonstrate that as pleaded in the petition, the proviso to Clause 6A of the
SCO 1966 prescribing restrictions of radius of 15 kms on setting up of new
sugar factories from the existing sugar factory, is applicable, and as modified
by the State Government to an increased area of 25 kms. It is contended that
it is not in dispute that Shivneri is at 23 kms and as clearly hit by such
embargo as provided in Clause 6(A) of the SCO 1966. It is submitted that a
certificate to that effect issued by the Survey of India is conclusive. It is next
submitted that the SCO by incorporation of Clauses 6A to 6E, was amended
with effect from 10 November 2016 and only thereafter Shivneri had entered
into an agreement of sale dated 6 December 2016 and sale deed dated 3 May
2017 with Jijamata. It is submitted that at the time of this transaction being
entered into, Shivneri was fully aware about the aerial distance imposed by
SCO 1966 for setting up "new sugar factory" and for such reason Shivneri
alongwith its application for obtaining IEM being application dated 25
September 2017 did not disclose aerial distance in the application. It is
therefore submitted that thus the IEM issued in favour of Shivneri is for
setting up a new sugar factory, and it is in fact seeking a new IEM and not
transfer of IEM. Hence, the IEM as issued in favour of Shivneri falls within
6 June 2025
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the purview of the amended clauses of SCO and more particularly Clause 6A.
It is also submitted that the contents of the sale deed are necessary to be
looked into as there are specific recitals to the effect that there is alleged shed
and machinery etc. which would demonstrate that there is no purchase of an
existing factory. It is submitted that Shivneri's explanation is contrary to the
documents on record, in fact, it is the case of setting up of new unit. The
submission is that the Court needs to accept that Jijamata never commenced
the production as its IEM had stood de-recognized. It is next submitted that
the documents on record including Excise Certificate would clearly indicate
that there is no production by Jijamata and therefore, it could not be said that
it was an existing unit and the IEM of which could be transferred in favour of
Shivneri. It is next submitted that Shivneri has clearly admitted that there is
no commercial production from 2017-2018 till 2022-2023 despite which it
is contended that a claim was made that there was crushing in the first week
of July 2017 referring to the report of Shivneri as placed on record. It is next
submitted that having not purchased the plant and machinery, Shivneri's case
is silent as to how it has undertaken crushing at all and that too in the month
of April 2017, for which in fact no permission and licence are shown to have
been procured. It is next submitted that in terms of the GOI letter dated 22
September 2008, Jijamata was taken on record as "existing sugar factory" as
provided in explanation (i) to Clause 6A of SCO, only on the basis of
6 June 2025
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affidavit of Jijamata, that it had taken all effective steps in terms of
Explanation. It is , however, submitted that the same was conditional, being
subject to Jijamata enhancing its capacity from 500 TCD to 1250 TCD in
the next three years and further to 2500 within five years from the date of
issue of the said letter. It is submitted that the affidavit filed on behalf of
Shivneri has shown total ignorance on such compliances. It is next submitted
that Clause 6C of the SCO postulates that such conditions need to be
fulfilled, and the consequences for non-fulfillment is de-recognition, i.e. first
to take 'effective step' within two years and secondly 'to commence
commercial production' within four years from the date of filing of IEM with
the Central Government. It is submitted that fulfilling such condition is
conjunctive and disjunctive.
56. It is next submitted that it is clear that Jijamata did not start
commercial production in such stipulated time which is also stated in the
reply affidavit filed on behalf of GOI and that the sugar factory of Jijamata
was not able to commence commercial production. It is hence submitted that
due to non satisfaction of Clauses 6-A, the IEM as issued in favour of
Jijamata stood de-recognized. It is next submitted that Clause 6-E of the
SCO 1966 provides for application of Clauses 6-B, 6-C and 6-D to the
person whose Industrial Entrepreneur Memorandum has already been
acknowledged, as on date of notification by which the amendments to SCO
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WP 13816-23.DOC
1966 were notified namely Notification dated 10 November 2016. It is
submitted that admittedly as on 14 January 2016 the GOI has issued an
acknowledgment for IEM, however, it is submitted that after issuance of said
acknowledgment, the commercial production did not commence within four
years as provided in Clause 6-C, and even for such reason the IEM had stood
de-recognized. In supporting such submission, reliance is placed on the
decisions of the Supreme Court in M/s. Ojas Industries (P) Ltd. Vs. M/s.
Oudh Sugar Mills Ltd. & Ors. (supra) and Swami Samarth Sugars & Agro
Industries Ltd. Vs. Loknete Marutrao GPDSS Karkhana Ltd.5
Submissions on behalf of Respondent No.10-Shivneri
57. On the other hand Mr. Y. S. Jahagirdar, learned Senior Advocate
has made submissions on behalf of respondent no.10-Shivneri, opposing the
petition. He has placed reliance on the reply affidavit and additional affidavit
as filed on behalf of Shivneri. The thrust of Mr. Jahagirdar's submission is
that the petition is barred by delay and laches, as the petitioner has
challenged the IEM granted to Jijamata dated 18 September 2003 in the
petition which is filed on 8 February 2023. It is submitted that there is no
justification whatsoever from the petitioner for the delay from 2003 till
2022. It is next submitted that the petitioner has no locus standi to maintain
the petition inasmuch as the factory of the petitioner is located at an aerial
5 (2022)14 SCC 1
6 June 2025
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distance of 23 kms from Shivneri unit and that once there was no restriction
of aerial distance at the relevant time, there is no question of the petitioner
asserting any embargo of aerial distance being less than 25 kms is applicable.
For such reason, it is also submitted that the petitioner can never be called as
a 'person aggrieved' by IEM dated 18 September 2003. It is submitted that
Shivneri is lawfully holding the IEM dated 18 September 2003, as now
recognized to be transferred by GOI in favour of Shivneri. It is submitted
that as set out in the reply affidavit there are subsequent developments and
large scale investment made by Shivneri as also commercial production of
sugar has commenced. It is submitted that there is no illegality found by any
of the State or Government of India authorities either in Jijamata processing
its IEM by transfer of IEM in favour of Shivneri. It is next submitted that the
plant of Shivneri is fully operational and is now enuring to the benefits of
large number of farmers, as also it has contributed to the development of the
area and substantial revenue is being contributed to the State exchequer. It is
submitted that no prejudice would be caused to the petitioner by the
operation of Shivneri plant. It is thus submitted that considering the case of
Shivneri in the reply affidavit and additional affidavits, the petition needs to
be dismissed.
58. Mr. Y. S. Bhate, learned Counsel appearing for Government of India
(respondent Nos.1 to 5) has placed reliance on the detailed affidavits filed on
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WP 13816-23.DOC
behalf of the Government of India in opposing this petition to which we
have extensively adverted. It is submitted that all the steps taken by the GOI
in issuing IEM in favour of Jijamata and IEM in favour of Shivneri are legal,
valid and justified. The following paragraphs of the affidavit dated 5 June
2023 of Shri. Alok Kumar Tiwari, are in regard to the actions of the
Government of India in validly issuing the IEM in favour of Jijamata and
denying the case of any automatic de-recognition of the IEM as contended
by the petitioner, which read thus:
"20. That the contents of Para 20 to 23 of the writ petition are
Matter of records. The correct facts have narrated earlier.
21. That in reply of Para 24 to 26 of the writ petition, the
Petitioner, Interalia, wants to narrates that changes about the IEM issued in
favour of M/s. Jijamata Sugar & Powers Ltd. as increase in capacity of IEM
by M/s Jijamata Sugar & Power Industries Ltd. later on its purchase by M/s
Shivneri Sugars Ltd. In this context, it may be mentioned here that M/s.
Jijamata Sugar & Power Industries Ltd. Was taken on record as an existing
sugar mill with the condition that they have to increase their capacity in
next three years and then further in five years subject to availability of
sugarcane in the area. Therefore, the increase in the capacity by M/s
Jijamata sugars is completely under law.
22. That the contents of Para 26 to 32 of the writ petition as stated
are not admitted. The Petitioner, Interalia, wants to state that as the IEM
was granted to the sugar mill in year 2003 therefore, it stands de-
recognized as the commercial production was not started by the sugar mill
within 4 years (up to 2007). In this context, it is stated that IEM was
granted to the sugar mill on dated 18.09.2003. Further, as per SCO, 1966
sugar mill was required to take all effective steps up prescribed in clause
6(A) up to 17.09.2007 ( 4 years). Further, the case was examined by this
department and then it was found that the sugar mill namely M/s. Jijamata
Sugars & Powers Ltd. has taken all four effective steps before 17.09.2007
Therefore, the sugar mill was taken as an existing sugar mill in records of
this office."
Analysis and Conclusion
59. We have heard learned Counsel for the parties and with their
assistance we have perused the record.
6 June 2025
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60. At the outset the principal contention of the petitioner is that IEM
dated 18 September 2003 as originally issued in favour of Jijamata, having
stood de-recognized, needs to be considered. To determine this question it is
imperative that the relevant facts are noted in seriatim. As seen from the
record, the IEM dated 18 September 2003 was issued by the GOI, Ministry
of Commerce & Industry (Secretariat for Industrial Assistance) in favour of
Jijamata for production of white crystal sugar. The IEM reads thus:
Government of India
Ministry of Commerce & Industry
Secretariat for Industrial Assistance
Public Relation & Complaints Section
2654/SIA/IMO/2003 New Delhi,
Date: 18/09/2003
ACKNOWLEDGEMENT
receipt of your memorandum for the manufacture of following is hereby
acknowledged
Code
Proposed Item: WHITE CRYSTAL SUGAR
of Manufacture
falling under NIC - broad description
0 MANUFACTURE AND REFINING OF SUGAR (VACUUM PAN
SUGAR FACTORIES)
ProPosed Capacity 20000.00 TONSPA
Proposed Item: MOLASSES
of Manufacture
Falling under NIC - broad description
9 MANUFACTURE OF OTHER INDIGENOUS SUGAR CANE/
SUGARBEET/PALM JUICE PRODUCTS N.E.C
Rooposed Capacity : 8000.00 TONSPA
Proposed Item : BAGGASSE
of Manufacture.
falling under NIC - broad description
9 MANUFACTURE OF OTHER INDIGENOUS SUGAR CANE/
6 June 2025
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SUGARBEET/PALM JUICE PRODUCTS N.E.C.
Proposed Capacity : 8000.00 TONSPA:
******* No More Itess *******
Thus acknowledgement is subject to the provisions of Press Mote
No 5 dated 29th July 2003. Press Note No 17 dated 28th
November 1997 and Press Note No 12 dated 31 st August 1998
regarding the significance, implications and legal status of filing
of industrial Entrepreneur Memorandum.
M/s. JIJAMATA ETHANOL & AGRO
PROCESSING IND. LTD.
GANAPATICHA MALL, GANESH TEKADI,
AT PO PIMPARINHAVI
KOREGAON, SATARA
MAHARASHTRA"
(emphasis supplied)
61. The GOI thereafter issued an approval dated 22 September 2008
in favour of Jijamata for setting up of sugar factory, Ganesh Tekadi, Pimpari
(Nhavi), Tal. Koregaon, Distt. Satara, Maharashtra. By such communication
it was recorded that "effective steps" were taken by Jijamata as mentioned in
Explanation 4 to Clause 6-C of SCO 2006 notified on 10 November 2006,
before 10 May 2007 for setting up new sugar factory at the said location.
Accordingly, Jijamata was taken on record as existing sugar factory. The
record indicates that on 17 March 2008 the IEM dated 18 September 2003
issued to Jijamata was amended. The said communication dated 22
September 2008 is required to be noted which reads thus:-
File No. 25(1965)/2007-51525
Government of India
Ministry of Consumer Affairs, Food and PD
Department of Food and PD
Directorate of Sugar
6 June 2025
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Krishi Bhavan, New Delhi
Dated, 22nd September, 2008
To
M/s Jijamata Sugar and Power Industries Ltd.
Rajdhani Tower, Rajwada,
Satara - 415 002
Maharashtra
Subject: Setting up of sugar factory at Ganesh Tekdi, Pimpari (Nhavi), Tal.
Koregaon, Distt. Satara regarding
Sir,
I am to refer to your letter dated 06 th December, 2007 enclosing
therewith an affidavit dated 6 th December, 2007 on the above mentioned
subject and additional affidavit dated 19 th June, 2008. It is observed from the
affidavits dated 6th December, 2007 and 19th June, 2008 that you have taken
all the effective steps as mentioned in Explanation-4 to Clause 6A of the
Sugarcane (Control) (Amendment) Order, 2006, notified vide notification
S.O. 1940(E) dated 10.11.2006, before 10th May, 2007 (the closing date for
furnishing the Bank Guarantee as provided in Clause 6E) for setting up of a
new sugar factory at Village Ganesh Tekdi, Pimpari (Nhavi), Tal. Koregaon,
Distt. Satara. The Industrial Entrepreneur Memorandum (IEM) was
acknowledged by the Secretariat of Industrial Assistance (SIA), Department of
Industrial Policy and. Promotion, Ministry of Commerce and Industry, vide
acknowledgement No. 2664/SIA/IMO/2003 dated 18.09.2003 subsequently
amended vide Amendment No. 1 dated 17.03.2008. The Commissioner
Sugar, Government of Maharashtra vide his letter No. CS/Desk-15/ADC/SR-
74/08 dated 3rd May, 2008 has certified that the aerial distance between the
sites of other sugar factories adjacent to M/s Jijamata Sugar and Power
Industries Ltd. at Ganpaticha Mal, Ganesh Tekdi, Pimpri (Nhavi), Tal.
Koregaon, Distt. Satara is more than 15 Kms. Therefore, your sugar factory at
Ganesh Tekdi, Pimnart (Nhavi), Tal. Koregaon, Distt. Satara, Maharashtra is
taken on record as an existing sugar factory as provided Explanation 1 to
Clause 6A of the Sugarcane (Control) (Amendment) Order, 2006. However,
you are advised to enhance the capacity of your factory from 500 TCD to
1250 TCD in the next three years and further to 2500 TCD within five years
from the date of issue of this letter, if the cane avallability so permits.
Yours faithfully,
(R.P.Bhagria)
Chief Director (Sugar)"
(emphasis supplied)
62. It appears that the Commissioner of Sugar, Maharashtra State,
issued a crushing licence dated 29 October 2010 to Jijamata as also the
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Government of India (Ministry of Commerce & Industry) issued an
acknowledgment dated 14 January 2015 towards the receipt of memorandum
intimating commencement of commercial production of white crystal sugar
by Jijamata with effect from 3 April 2012, and accordingly, it was indicative
of Jijamata commencing crushing of sugarcane after receipt of licence granted
by Commissioner of Sugar on 29 October 2010. Also the Superintendent of
Central Excise, Range IV, Satara Division, issued a certificate that Jijamata
had started crushing of sugar from 3 October 2011 and during the period
from October 2011 to December 2011, 187 quintals of sugar was
manufactured.
63. It is on such backdrop, it appears from the record that, as it was not
feasible for Jijamata to continue with the sugar factory, Jijamata entered into
a registered sale deed dated 8 December 2016 with Shivneri with respect to
the lands for consideration of Rs. 20 crores. It also appears to be an admitted
position that steps were taken by Shivneri to transfer to itself permissions
issued in favour of Jijamata, and further after completion of the sale
transaction, steps were taken by Shivneri for transfering of IEM in its name.
64. It also appears from the record that on 3 July 2017 Shivneri started
crushing of sugarcane with the existing plant and machinery and undertook
certain production which was stated to be 107.55 quintals of sugar which
was sold in the open market to T.G. Sugars Limited and the consignment was
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delivered to one Sandeep Traders as directed by Purchaser T.G. Sugars
Limited, as seen from the tax invoices annexed to the reply affidavit. Also
GST Return in Form GSTR - 1 was uploaded to that effect and a
manufacturing report was submitted. Shivneri took further steps when it
submitted a proposal on 28 August 2017 for setting up unit with the change
in the ownership / name of the company in lieu of earlier IEM as issued in
favour of Jijamata, which was already acknowledged for manufacture of
White Crystal Sugar and Molasses. In pursuance thereto on 27 September
2017 the GOI [Ministry of Commerce and Industry, Department of
Industrial Policy and Promotion] issued an Office Memorandum to the
Department of Food and Public Distribution, Directorate of Sugar, recording
that Shivneri had requested to issue an IEM acknowledgment for White
Crystal Sugar although Distant Certificate was not enclosed with the
application. The Department of Food and Public Distribution, Directorate of
Sugar was requested to furnish its comments / NOC /recommendation. To
this, on 22 January 2018, the GOI [Ministry of Consumer Affairs, Foods and
Public Distribution, Department of Food and Public Distribution] addressed
a letter to the Commissioner of Sugar, State of Maharashtra, forwarding the
said communication dated 27 September 2017 along with the application
filed by Shivneri for amendment in IEM dated 18 September 2003 issued in
favour of Jijamata. In responding to such letter of GOI dated 22 January
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2018, the Commissioner of Sugar, Maharashtra State, addressed a
communication dated 23 February 2018 to Ministry of Consumer Affairs,
Foods and Public Distribution thereby furnishing information regarding
purchase of land by Shivneri from Jijamata, as also certificate of incorporation
submitted by Shivneri. On such backdrop on 28 January 2019, GOI
addressed a letter to Jijamata thereby allotting plant code number and short
name to Jijamata. It appears that this was done in favour of Jijamata as IEM
was yet to be transferred in favour of Shivneri.
65. On 28 February 2019 the GOI in its letter addressed to Jijamata
recorded that the short name and plant code allotted to Jijamata vide letter
dated 28 January 2019 was to be treated as final allotment of short name and
plant code. Also on this backdrop, on 3 April 2019 the MPCB took steps by
issuing a notice for public hearing on issuance of environmental clearance. In
such notice, it was recorded that a proposal for enhancement in production of
sugar by Shivneri was mentioned and further, suggestions, views and
objections of the public were called to be made. Thereafter, a Committee was
constituted for public hearing by MPCB which was held on 3 May 2019
which was attended by the representatives of the petitioner when objections
were raised. On 5 June 2019, Shivneri addressed a letter to the Chairman of
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the public hearing committee and Additional District Magistrate, Satara
regarding the IEM issue raised by petitioner and other objections.
66. On such conspectus, on 17 December 2019 the MPCB on the
application of Shivneri dated 16 October 2017 made by Shivneri, granted
consent to establish the sugar unit under Section 25 of Water (Prevention
and Control of Pollution) Act, 1974 and Section 71 of the Air (Prevention
and Control of Pollution) Act, 1981 and Rule 6 of Hazardous and Other
Wastes (Management and Transboundary Movement) Rules, 2016. On 16
February 2021 the GOI, Ministry of Consumer Affairs, Foods and Public
Distribution Department of Food and P.D. Directorate of Sugar and
Vegetable Oils through its Joint Director, issued an Office Memorandum in
response to the request for change of name from Jijamata to Shivneri inter
alia stating that the Directorate had no objection to the said change in name.
On all these steps being taken, on 19 February 2021, the GOI, Ministry of
Commerce and Industry issued a receipt for transfer of IEM
acknowledgment issued to Jijamata in the name of Shivneri for the
manufacture of the White Crystal Sugar. Further on 3 March 2021 MPCB
issued a letter to the Ministry of Environment, Forest and Climate Change,
stating therein that as per the submitted minutes the Chairman of public
hearing committee was of the opinion that the said public hearing was not
valid and therefore, as per the procedure under the Environment
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Notification No.2006 issued by MOEF mandating a public hearing to be
conducted, the MPCB was to hold a fresh hearing, and accordingly, on 3
November 2022 a hearing was held by the MPCB at the project site. After
deliberations, Shivneri's project was recommended for grant of
environmental clearance as per the minutes of meeting of Expert Appraisal
Committee dated 09-10th March, 2023. Also on 19 April 2023 the GOI,
MOEF granted environmental clearance to the project activity of Shivneri.
On such backdrop, Shivneri is now operating its plant and as noted
hereinabove has undertaken the production in the crushing season as follows:
Crushing Season Crushed Sugarcane Production of White
crystal sugar
2023-2024 1,68,131 MT 1,55,900 quintals
2024-2025 3,60,240 MT 3,82,860 quintals
67. It is thus clear that Shivneri is a fully operational sugar mill which is
not only undertaking substantial production of sugar and allied products but
also in the process benefiting large number of farmers as also has itself
generated employment and incidental employment as brought about by
several other businesses and works.
68. In our opinion, the petitioner's case relying on the amended
provisions of the SCO 1966 cannot be accepted for more than one reason.
Firstly, it is clearly seen that the GOI on the consideration of Jijamata's /
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Shivneri's case on all the relevant facts, took a decision on 19 December 2021
to transfer IEM, initially issued in favour of Jijamata, in favour of Shivneri. It
cannot be accepted that the GOI was not aware about the amended provision
of SCO 1966, as brought about vide Notification dated 10 November 2016
whereby Clauses 6-A to 6-E were incorporated. The relevance of such
amendment has been canvassed on behalf of the petitioner on two counts.
Firstly in regard to the aerial distance of Shivneri's factory is within the radius
of 25 kms namely at 23 kms, which is offending the provisions of Clause 6A
and secondly on the ground of non-compliances as mandated by clause 6C of
the SCO 1966. For convenience the Clauses 6A to 6E are required to be
noted which read thus:-
"6A. Restriction on setting up of two sugar factories within the radius of 15 Kms .
Notwithstanding anything contained in clause 6, no new sugar factory shall be set up
within the radius of 15 Kms of any existing sugar factory or another new sugar
factory in a state or two or more states:
Provided that the State Government may with the prior approval of the Central
Government, where it considers necessary and expedient in public interest, notify
such minimum distance higher than 15 Kms or different minimum distances not less
than 15 Kms for different regions in their respective States.
Explanation 1.- An existing sugar factory shall mean a sugar factory in operation and
shall also include a sugar factory that has taken all effective steps as specified in
Explanation 4 to set up a sugar factory but excludes a sugar factory that has not
carried out its crushing operations for last five sugar seasons.
Explanation 2.- A new sugar factory shall mean a sugar factory, which is not an
existing sugar factory, but has filed the Industrial Entrepreneur Memorandum as
prescribed by the Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry in the Central Government and has submitted a
performance guarantee of rupees one crore to the Chief Director (Sugar),
Department of Food and Public Distribution, Ministry of Consumer Affairs, Food
and Public Distribution for implementation of the Industrial Entrepreneur
Memorandum within the stipulated time or extended time as specified in clause 6C.
Explanation 3.- The minimum distance shall be determined as measured by the
Survey of India.
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Explanation 4.- The effective steps shall mean the following steps taken by the
concerned person to implement the Industrial Entrepreneur Memorandum for
setting up of sugar factory:-
(a) purchase of required land in the name of the factory;
(b) placement of firm order for purchase of plant and machinery for the factory and
payment of requisite advance or opening of irrevocable letter of credit with suppliers;
(c) commencement of civil work and construction of building for the factory;
(d) sanction of requisite term loans from banks or financial institutions;
(e) any other step prescribed by the Central Government, in this regard through a
notification.
6B. Requirements for filing the Industrial Entrepreneur Memorandum. (1) Before
filing the Industrial Entrepreneur Memorandum with the Central Government, the
concerned person shall obtain a certificate from the Cane commissioner or Director
(Sugar) or Specified Authority of the concerned State Government that the distance
between the site where he proposes to set up sugar factory and adjacent existing sugar
factories and new sugar factories is not less than the minimum distance prescribed by
the Central Government or the State Government, as the case may be, and the
concerned person shall file the Industrial Entrepreneur Memorandum with the
Central Government within one month of issue of such certificate failing which
validity of the certificate shall expire.
(2) After filing the Industrial Entrepreneur Memorandum, the concerned person
shall submit a performance guarantee of rupes one crore to Chief Director (Sugar),
Department of Food and Public Distribution, Ministry of Consumer Affairs, Food
and Public Distribution within thirty days of filing the Industrial Entrepreneur
Memorandum as a surety for implementation of the Industrial Entrepreneur
Memorandum as a surety for implementation of the Industrial Entrepreneur
Memorandum within the stipulated time or extended time as specified in clause 6C
failing which Industrial Entrepreneur Memorandum shall stand de-recognized as far
as provisions of this Order are concerned.
6C Time limit to implement Industrial Entrepreneur Memorandum. - The stipulated
time for taking effective steps shall be two years and commercial production shall
commence within four years with effect from the date of filing the Industrial
Entrepreneur memorandum with the Central Government, failing which the
Industrial Entrepreneur Memorandum shall stand de- recognized as far as provisions
of this Order are concerned and the performance guarantee shall be forfeited:
Provided that the Chief Director (Sugar), Department of Food and Public
Distribution, Ministry of Consumer Affairs, Food and Public Distribution on the
recommendation of the concerned State Government, may give extension of one year
not exceeding six months at a time, for implementing the Industrial Entrepreneur
Memorandum and commencement of commercial production thereof.
6D. Consequences of non-implementation of the provisions laid down in clauses 6B
and 6C.- If an Industrial Entrepreneur Memorandum remains unimplemented
within the time specified in clause 6C, the performance guarantee furnished for its
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implementation shall be forfeited after giving the concerned person a reasonable
opportunity of being heard.
6E. Application of clauses 6B, 6C and 6D to the person whose Industrial
Entrepreneur Memorandum has already been acknowledged.-
(1) Except the period specified in sub- clause (2) of clause 6B of this Order, the other
provisions specified in clauses 6B, 6C and 6D shall also be applicable to the person
whose Industrial Entrepreneur Memorandum has already been acknowledged as on
date of this notification but who has not taken effective steps as specified in
Explanation 4 to the clause 6A.
(2) The person whose Industrial Entrepreneur Memorandum has already been
acknowledged as on date of this notification but who has not taken effective steps as
specified in Explanation 4 to the clause 6A shall furnish a performance guarantee of
rupees one crore to the Chief Director (Sugar), Department of Food and Public
Distribution, Ministry of Consumer Affairs, Food and Public Distribution within a
period of six months of issue of this notification failing which the Industrial
Entrepreneur Memorandum of the concerned person shall stand de-recognized as far
as provisions of this Order are concerned."
(emphasis supplied)
69. From perusal of the aforesaid clauses it cannot be accepted that a sugar
factory which was issued an IEM on 18 September 2003 and which was
governed by the said IEM would be hit by the retrospective application of the
requirement of the amended provisions of Clause 6-A and Clause 6-C of
SCO 1966. In other words on both the counts namely of aerial distance and
secondly on the ground of commencement of production as contemplated by
Clause 6-C. At the relevant time, when the IEM was issued, there were no
restrictions on the aerial distance between the existing sugar factory and a
new sugar factory to be set up. It is not the petitioner's case that IEM dated
18 September 2003 was inherently illegal or defective insofar as the
restrictions on the commencement of the production. The conditions as
imposed under Clause 6-A and 6-C also cannot be said to be made applicable
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in the facts and circumstances of the present case, insofar as Jijamata is
concerned. This for the reason that Jijamata was bound by the terms and
conditions of the approval / IEM as granted to it. Jijamata had taken
appropriate steps as provided, to commence production, even assuming that
the amendments were made applicable to Jijamata, it had
commenced/undertaken sugar production upto 187 MT in the year 2011.
70. Further, we have already noted that Jijamata was accepted to be an
existing sugar factory as per Explanation 1 to Clause 6A under the
communication dated 22 September 2008. Such communication dated 22
September 2008 had remained legal and valid. This although with a
condition that Jijamata was advised to enhance capacity of the factory from
500 TCD to 1250 TCD in the next three years and further to 2500 within
five years from the date of issue of the said letter. The petitioner's contention
that the said condition was mandatory which was to be complied by Jijamata
and non compliance of IEM issued in favour of Jijamata is required to be de-
recognized, is misconceived and totally untenable, as such communication
indicates that it was merely an advice, however, the fact remains that IEM
issued in favour of Jijamata is taken as "existing sugar factory" as per
Explanation 1 to Clause 6-A of SCO 1966. We are thus not persuaded to
accept the petitioner's case of any alleged breach of the conditions of the
SCO 2006 Amendment 2006 and more particularly in Clause 6-A and 6-C.
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71. We also find substance in Shivneri's contention on the locus standi
of the petitioner to mount the challenge in question as we note that there are
no legal rights of the petitioner which stand adversely affected by Shivneri
running its sugar factory of a distance of 23 kms. Further no prejudice
whatsoever is caused to the petitioner by Shivneri's activity. It appears that
abundance of sugarcane is available to the petitioner as also to Shivneri, the
farmers are willing to supply sugarcane and it has been recognized by the
Government of Maharashtra, substantial FRP has been paid by Shivneri to
the farmers. Thus, in the absence of any illegality, which we see none, the
petitioner's submission on the IEM issued in favour of Jijamata having stood
lapsed and/or that the operations of Shivneri ought to be shut down, cannot
be accepted.
72. We also find much substance in the contention urged on behalf of
Shivneri on delay and laches. In such context, we may observe that IEM in
question was issued on 18 September 2003. It cannot be accepted that the
petitioner which is well established sugar factory, was not aware that within
23 kms, another sugar factory is coming up, and that, for the first time when
the MPCB issued a notice of public hearing in the context of enhancing the
capacity of production commenced by Shivneri, the petitioner received
knowledge. It is clear from the record that much water has flown under the
bridge between the period 2003 upto 2019, during which period the
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petitioner had not taken any steps whatsoever to assail the IEM on any
ground whatsoever including on the grounds which purportedly were
available in the year 2006, after the SCO 2006 Amendment was notified,
incorporating Clauses 6-A to 6-E to the SCO. In such context, we may
observe that setting up of sugar factory certainly cannot remain to be a
secretive process as all the relevant information in this regard is available with
every possible authority, which is required to consider such applications,
namely at the level of Collector, Commissioner Sugar (State Government),
Government of India etc. It is difficult to accept that for a seasoned and
established player like petitioner, all this was not noticed for a period from
2003 to 2019 more particularly, when the first petition (Writ Petition
No.7458 of 2022) was filed on 6 June 2022 and the present petition being
filed on 8 February 2023. This more particularly in the light of the
averments as made in the reply affidavit filed on behalf of Shivneri to the
effect that the petitioner is controlled by Mr. Shamrao alias Balasaheb Patil,
who is the Chairperson of the petitioner and who was holding the portfolio
of Minster of Corporation, Marketing and Textiles in 2019 when the
Government was framed by the Mahavikas Aghadi in Maharashtra till June
2022. Thus, certainly the contention of delay and laches as urged on behalf
of Shivneri assumes significance and needs to be accepted. In cases such as
this wherein substantial investments are made by Jijamata / Shivneri, before
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the petitioner could take a call to file the present petition assailing IEM,
much water had flown under the bridge. The writ Court needs to hence
consider such pleas as urged by the petitioner with care and caution, in the
context of the reliefs, a writ Court can grant in the facts and circumstances of
the case. We may also observe that when the petitioner filed the first petition,
it did not assail the IEM and the only prayer as made was that the
representation made by the petitioner be decided. On such backdrop, in our
opinion, second petition also ought to be hit by principles of constructive res
judicata or principles analogous thereto, when such prayer assailing the IEM
was not asserted at the relevant time when the first petition was filed, when
admittedly, the cause of action had accrued much prior thereto, when the
petitioner contends that within a period of five years of the IEM dated 18
September 2003 being issued, Jijamata had not commenced the sugar
production. We are therefore of the considered opinion that it would be
difficult for the writ Court to grant any relief to the petition in this glaring
facts of the case.
73. Insofar as the reliance on the decisions as placed on behalf of the
petitioner i.e. M/s. Ojas Industries (P) Ltd. Vs. M/s. Oudh Sugar Mills Ltd.,
& Ors. (supra) and Swami Samarth Sugars & Agro Industries Ltd. Vs.
Loknete Marutrao GPDSS Karkhana Ltd. (supra) are concerned, we are of
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the clear opinion that they do not assist the petitioner. We discuss these
decisions.
74. In Ojas Industries (P) Ltd. (supra) the issue before the Supreme
Court was in the context of Press Note No.12 dated 31 August 1998 issued
by GOI, whereby it was decided to delete sugar industry from compulsory
licensing under the Industries (Development and Regulation) Act, 1951,
clarifying that in order to avoid unhealthy competition among sugar factories
to procure sugarcane, a minimum distance of 15 kms has to be observed
between an existing sugar mill and a new mill (factory). Further, the
entrepreneur who desires to avail of the de-licensing of sugar industry was
required to file an Industrial Entrepreneur Memorandum ('IEM') with the
Ministry of Industry, and in such context a Notification dated 11 September
1998 was issued under Section 29B(1) of the said 1951 Act which was
required to be read with Press Note No.12 dated 31 August 1998. In the facts
of such case on 13 May 2004 M/s. Ojas Industries (P) Ltd. filed its IEM for
setting up a sugar mill and after four days the respondent Oudh Sugar Mills
filed its IEM for setting up a sugar mill (factory). This led to the dispute
between two industries in regard to applicability of Press Note 12 read with
Notification dated 11 September 1998, on the ground that the proposed
factories were within 15 kms from each other. Both Ojas and Oudh had
approached the High Court. The Division Bench of the High Court held that
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Press Note No.12 read with the said notification prescribing 15 kms distance
between the existing sugar mill and new sugar mill, applied in the case where
a new mill (factory) is proposed to be set up within 15 kms of the existing
sugar mill (factory). Hence, in the absence of existing sugar mill, it was held
that Press Note 12 has no application. It is in such context, the Supreme
Court analysing the provisions of SCO (Amendment) Order 2006, made the
following observations:-
"28. Suffice it to state, that the Sugarcane (Control) (Amendment)
Order, 2006 shall apply retrospectively to all cases, including the present
cases in which IEMs are pending.
29. In this connection, the question which arises for determination is :
firstly, whether the Sugarcane (Control) (Amendment) Order, 2006 operates
retrospectively and if so whether the effective steps enumerated in
Explanation 4 to Clause 6A are adequate. In this connection, we have to keep
in mind the conceptual difference between the distance certificate, the
concept of effective steps to be taken by an IEM Holder and the question of
bona fides.
30. Sugarcane (Control) (Amendment) Order, 2006 inserts Clauses
6A to 6E in Clause 6 of the Sugarcane (Control) Order, 1966. It retains the
concept of "Distance". This concept of "Distance" has got to be retained for
economic reasons. This concept is based on demand and supply. This concept
has to be retained because the resource, namely, sugarcane, is limited.
Sugarcane is not an unlimited resource. "Distance" stands for available
quantity of sugarcane to be supplied by the farmer to the sugar mill. On the
other hand, filing of bank guarantee for Rs.1 crore is only as a matter of proof
of bona fides. An entrepreneur who has genuinely interested in setting up a
sugar mill has to prove his bona fides by giving bank guarantee of Rs.1 crore.
Further, giving of bank guarantee is also a proof that the businessman has the
financial ability to set up a sugar mill (factory). Therefore, giving of bank
guarantee has nothing to do with the Distance Certificate.
31. As far as effective steps are concerned we may point out that apart from
the steps enlisted in the earlier Notification dated 11.9.98 read with Press
Note No.12 dated 31.8.98, the Sugarcane (Control) (Amendment) Order,
2006 has laid down such steps like purchase of required land in the name of
the factory (mill), placement of a firm order for purchase of plant and
machinery for the factory, payment of advance or opening of letter of credit
with suppliers, commencement certificate of civil work and construction of
building, sanction of requisite term loans from the banks or financial
institutions and any other step prescribed by the Central Government in this
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regard. In our view Clauses 6A to 6E have been introduced in Clause 6 of
Sugarcane (Control) Order, 1966. In our view Clauses 6A to 6E are
clarificatory in nature. There are certain norms mentioned in the Accounting
Standards of Institute of Chartered Accountants for setting up industries.
They may be sugar mills, paper mills, textile mills etc. When effective steps
are enlisted in Sugarcane (Control) (Amendment) Order, 2006 dated
10.11.06 vide Explanation 4 to Clause 6A those in-built norms are made
explicit, therefore, Explanation 4 to Clause 6A is clarificatory. Therefore, it is
retrospective.
32. There is one more reason why we hold that the Sugarcane
(Control) (Amendment) Order, 2006 is retrospective. The Central
Government has taken note of various pending matters in different courts on
the interpretation of Sugarcane (Control) Order, 1966, Press Note No.12 and
the Notification dated 11.9.98 issued under Section 29B(1) of the said 1951
Act to put an end to litigations and keeping in mind the concept of "Distance
Certificate" as distinct from the concept of "effective steps", the Central
Government has issued the Sugarcane (Control) (Amendment) Order, 2006.
It is to plug the loophole that the said Order has been issued on 10.11.06. In
our view, therefore, the Sugarcane (Control) (Amendment) Order, 2006 is
retrospective. In all pending cases the Central Government now seeks to put
a bar for setting up new sugar factory (mill) for a limited period during which
the Former or Earlier IEM Holder is required to take effective steps. The said
Order of 2006 is not putting a ban on setting up of new units. It is only
giving a priority in the matter of setting up of new units. Therefore, the said
2006 Order operates retrospectively. It will not apply to mills which are
already functioning. The said 2006 Order will apply only to cases where
IEMs are pending in disputes in various courts. The said 2006 Order will also
apply after our judgment to those cases which are under dispute and where
milling has not commenced or permitted to commence."
75. It is clear from the aforesaid observations of the Supreme Court
that the SCO Amendment Order, 2006 has been held retrospectively
applicable in which IEM's were pending. The present is not the case of
issuance of IEM remaining pending. It is a case where respondent No.9 is an
existing sugar factory (Jijamata) and the IEM issued to Jijamata, which was
much prior to 2006 Amendment notification. Further, the distance between
the petitioner's existing factory and Jijamata (now Shivneri) is 23 kms. In the
2006 Amendment Notification the distance prescribed was 15 kms, and
therefore, such restriction was not offending setting up of Jijamata sugar
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factory. Moreover, it appears that for a substantial period of time both the
petitioner and Jijamata co-existed. The amendment as incorporated by the
State Government was by virtue of Notification dated 3 December 2011
prescribing an aerial distance of 25 kms for setting up a new sugar factory
from the location of an existing sugar factory which was almost 7 years after
the IEM was issued in favour of Jijamata and after about 5 years of the SCO
2006 Amendment being notified on 10 November 2006. It is in these
circumstances, certainly the observations as made by the Supreme Court in
the aforesaid paragraphs, would not assist the case of the petitioner. In fact,
Jijamata has taken all appropriate steps as per the Notification dated 11
September 1998 read with Press Note 12 dated 31 August 1998 like
purchase of land, installation of plant and also consequent unsuccessful
manufacturing of sugar. It is in these circumstances the entire unit alongwith
the land was sold to Shivneri. In any event, it is clearly held by the Supreme
Court that the 2006 Amendment would apply to the cases where IEM are
pending in dispute in various Courts and has categorically observed that the
2006 Amendment Order would apply after such judgment of the Supreme
Court to those cases which are under dispute and where milling had not
commenced and they were permitted to commence.
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76. Insofar as the decision in Swami Samarth Sugars & Agro Industries
Ltd. Vs. Loknete Marutrao GPDSS Karkhana Ltd. (supra) is concerned, the
proceedings before the Supreme Court was arising from three writ petitions
which were decided by the High Court out of which two petitions were filed
by the respondents which were the existing sugar factories whereas the third
one was filed by one of the members of the existing sugar factory. In the writ
petitions filed before the High Court, directions were sought that IEM dated
8 September 2010 be de-recognized / cancelled in view of the provisions of
Clause 6C of the SCO 1966 on the ground that the time limit for a new
factory to be set up was 2 years and to commence production was within 4
years, but the appellant had failed to take any effective steps to set up and
commence production within such time frame contemplated by the SCO. A
another ground was that the State of Maharashtra had issued a circular on 3
December 2011 under Clause 6-A of the SCO that no sugar factory shall be
set up within the radius of 25 kms of any existing sugar factory or any other
new factory substituting the provisions that the minimum distance was for 15
kms existing on the date of grant of IEM, therefore, the proposed sugar
factory did not meet the norm of 25 kilometers. It was also contended that
in the absence of steps for setting up of a sugar factory and commencement
of the commercial production, the IEM stood de-recognised by operation of
the provision of the SCO and therefore, the grant of extensions to set up the
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sugar factory issued on 14 November 2018 followed by another extension of
time, to change the location on 17 October 2019 by the Central
Government, was contrary to the SCO 1966. In this case there were
extensions which were granted by the Government of India, on the
recommendations of the State Government as set out in paragraphs 16 and
17 of the said decision and it is in such contexxt the High Court held that the
IEM should be de-recognized before the SCO was amended on 24 August
2016. The existing sugar factory (which is akin to the petitioner's sugar
factory in the facts of the present case) has canvassed a proposition that IEM
stood lapsed as the entrepreneur failed to set up factory and commenced the
production, however, the Court did not accept its contention, in the facts of
the said case and in terms of what was observed by the Court in paragraph 56
of the decision which reads thus:
56. The existing sugar factory had argued that IEM stands lapsed as the
appellant has failed to set up the factory and to commence the commercial
production. However, we are unable to agree with such interpretation. Though
Clause 6C as applicable on 10.11.2006 as well as on 24.08.2016 and 12.08.2018
contemplates the IEM shall stand de- recognised and the performance guarantee
shall be forfeited, the performance guarantee is to be forfeited in terms of Clause 6D
after providing the reasonable opportunity of being heard. We find that twin
conditions have to be fulfilled- (i) failure to set up plant and to commence
production and then (ii) the forfeiture of the performance guarantee. Second will
not arise unless the first is satisfied and the second step cannot be undertaken,
without complying with an opportunity of personal hearing in terms of Clause 6D
of the Control Order. Unless the performance guarantee is forfeited, there is no
lapsing of IEM. Thus, unless the necessary consequences of de- recognition of IEM
are undertaken, there is no automatic lapsing of IEM. Such is the language in the
subsequent amended Control Orders as well. The appellant had furnished a
performance guarantee of Rs. 1 crore, however no steps were taken either by the
State Government or by the Central Government to forfeit such performance
guarantee inasmuch as not even a show cause notice was issued. Thus, a conclusion
cannot be drawn that the IEM is deemed to be lapsed automatically only on account
of lapsing of time."
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77. In our opinion insofar as Jijamata was concerned, none of the steps
as observed by the Supreme Court in the aforesaid decision in the IEM to be
de-recognized were taken, and in fact steps were taken to transfer IEM in
favour of Shivneri. In these circumstances, we fail to understand as to how
the decision would support the petitioner's case.
78. We may also observe that Shivneri is right in its contention that
many of the facts which are pleaded on behalf of the petitioner are in the
nature of disputed question of facts, and more particularly on the issue as to
whether prior to the transfer of sugar factory alongwith the land by Jijamata
to Shivneri, what was the factual position in regard to the machinery and
operations of Jijamata. The petitioner certainly did not take steps at the
appropriate time to assail its contentions. The petitioner's case on such issue,
which is merely on the affidavits cannot be accepted by the writ court in
adjudication of the present proceedings. The dispute being factual disputes
and the petitioner's case in that regard is not supported by the State
Government or the Government of India.
79. Before parting we may observe that this is certainly a case where the
petitioner appears to be pursuing a commercial interest, as we see that no
prejudice whatsoever is being caused to the petitioner including the several
expansions the petitioner has obtained to increase its crushing capacity. The
6 June 2025
WP 13816-23.DOC
industrial activity which Shivneri is pursuing with due approval from the
Central Government as also the State Government, at a cost of huge
investment cannot be scuttled on such pleas as urged by the petitioner, which
in our opinion, are totally untenable. As a writ court we cannot be oblivious
to the benefit such legitimate industrial activity is benefitting the different
stake holders like farmers, labourers, transporters and several other allied
industries and the generation of the revenues for the State Government from
such activities. As discussed hereinabove, the relief that the IEM dated 18
September 2003 stood de-recognized by operation of law, is thus patently
misconceived. In the facts of the case, it would be a travesty of justice, if the
pleas as urged by the petitioner are accepted. We have also observed that the
petitioner lacks locus standi in the absence of any legal right of the petitioner
being infringed by permitting the operations at Shivneri under IEM is
concerned. This is certainly not a Public Interest Litigation.
80. In the light of the above discussion, we reject the petition. It would in
fact deserve to be dismissed with costs, however, we refrain from doing so.
(ADVAIT M. SETHNA, J.) (G. S. KULKARNI, J.)
6 June 2025
