Shervani Sugar Syndicate Ltd. vs Union Of India (Uoi) And Anr.
2002 Latest Caselaw 1250 Del

JUDGMENT

S.B. Sinha, C.J.

1. Levy-price of sugar in respect of petitioner's industry is in question in this writ petition, which is directed against Orders dated 27.01.1983 (Exhibit 'C') and 10.11.1981 (, Exhibit 'B') whereby and whereunder Neoli Sugar Factory belonging to the petitioner has been placed in the Fifth Schedule, treating it to be one of the factories, which would not come within the Sixth Schedule of the order dated 27.1.1983 (Annexure - C).

2. The basic fact of the matter is not in dispute.

Neoli Sugar Factory was allegedly established before 1955. In terms of the provisions of the Essential Commodities Act, 1955 (hereinafter for the sake of brevity referred to as 'the said Act') Sugar Control Order was made in terms whereof prices of levy sugar had been fixed. In terms of the control order framed under the said Act, the sugar manufacturers are required to sell a percentage of their production as "Levy sugar" at the prices fixed by the respondents and allowing them to sell the remaining production as "Freesale" sugar at the prevailing market price.

The fact that sugar is a controlled commodity is not in dispute.

The fixation of price of Levy sugar by the respondents was the subject matter of several writ petitions from 1977-78 onwards. The petitioners also filed three writ petitions in the Allahabad High Court being writ petition Nos. 1235 of 1978; 608 of 1980 and 609 of 1980 questioning the Levy Price Fixation Order for the years 1977-78; 1978-79 and 1979-80.

The respondent No. 1 with a purported view to ameliorate the hardship of the sugar industry, appointed a High Level Committee headed by the Chairman of the Bureau of Industries headed by the Chairman of the Bureau of Industrial Costs and Prices.

The said Committee recommended two-tier levy prices in each zone, one for efficient (average and above average) units and another for the less efficient units. The criteria determined for the less efficient units are:-

"(a) A capacity of less than 1,250 MT of cane crush per day: and

(b) the age of the plant over 25 years.

Essentially, the main purpose behind the two tier levy price system is to give relief to smaller old units."

The said recommendations were accepted by the Ministry of Agriculture.

3. According to the petitioner, the sugar required to be sold as levy sugar manufactured in the petitioners Neoli Sugar Factory, qualified for a higher levy price in terms of the aforementioned criteria. However, it was denied the said benefit by the respondents herein. It is contended:-

"Under the above policy higher "levy" price is to be paid to "Less Efficient Units" and a lower "Lovy" price to "Efficient Units". It was indicated that the criteria for deciding the "Less Efficient Units" was (a) the capacity being less than, 1,250 tonnes of cane crushed per day, and (b) the age of the plant being over twenty five years. Accordingly, in the order being the Sugar (Price Determination for 1980-81 Production) Order, 1981, issued on 13th November, 1980, a two tier "Levy" price was announced. The scheme of the said Sugar (Price Determination for 1980-81 Production) Order, 1981, being to divide the Sugar Factories in India in two Schedules, Schedule V being the list of Sugar Factories which were to get "Lower levy price" and Schedule VI being the list of sugar Factories which, because of their age and crushing capacity were to get "higher levy price", the difference between the two "Levy" prices" being Rs. 26/- per quintal. The Respondents have continued the said scheme of two tier "levy price" for the season 1981-82, as also for the season 1982-83, but have spelt out the criteria of smallness, i.e. crushing capacity."

4. According to the petitioner, although there is no dispute as regard the fact that the petitioner's factory was established in the year 1933, i.e., much prior to the cut off date 01.10.1955, its daily licensed cane crushing capacity being less than 1250 tonnes per day, it was entitled to the treated in the higher price zone. From various documents, it stands admitted, the respondents would contend, that the licensed cane crushing capacity of the petitioner's factory was 1250 tonnes per day. Our attention, in this connection, has also been drawn to a letter dated 26.10.1981 wherein again while asking the respondents to make inspection of the factory with a view to find out the actual cane crushing capacity of the petitioner's factory, it was stated:-

"5. The 1250 TCD capacity which has been licensed to us is a result of modernization balancing the additions, but has becomes virtually non-existant as it has never been put to test on account of non-availability of cane."

The said representation of the petitioner was rejected by the respondents by a letter dated 02.12.1981 in the following terms:-

"Sub:- Grant of incremental levy price @ 26/- per quintal over the above that fixed for the normal sugar factories - Regarding.

Dear Sir,

I am directed to refer to your letter No. SIS-80 dated the 26th October, 1981 on the above noted subject and to inform you that the case of the Neoli Sugar Factory has again been duly considered, but it is regretted that it is not possible for this Ministry to make any departure from the criteria of eligibility which have been kept keeping in view the weakness because of size and age and not because of sickness caused by under- utilization of capacity for whatever the reason it may be. As such, it is regretted that your Neoli Sugar factory is not entitled for grant of an additional levy price of Rs. 26/- per quintal.

Yours faithfully,

Sd/-

(A.K. Bose) Director (ST)"

5. The respondents, in this connection, has also drawn our attention to the license granted to the petitioner in form 'F' appended to the Industrial Development and Regulations Act, 1951 (in short, 'IDR Act'), which inter alia contends the following:-

"3. The industrial undertaking shall be expanded so as to increase its crushing capacity by 260 (two hundred and sixty) tons of sugarcane per day and its capacity after the substantial expansion has been effected shall be 1250 (one thousand two hundred and fifty) tons of sugarcane per day.

No section of the industrial; undertaking should have, except with the prior approval of the Government of India capacity substantially in excess of that specified in the license."

6. Yet again, the Deputy Director (Sugar), Government of India, Ministry of Food & Agriculture (Department of Food), Directorate of Sugar and Vanaspati in its letter dated 21.03.1964 stated that the petitioner is required to install filter press, air compressor and Calandria pan of 40 tons strike capacity and the same may be installed well in time so as to achieve cane crushing capacity of 1250 tonnes per day before 1964-65 season.

7. Mr. Shanti Bhushan, the learned senior counsel appearing on behalf of the petitioner, would argue that the respondents herein committed an error in arriving at the impugned decision insofar as it failed to take into consideration that the sugar factory of the petitioner was a sick one and further its daily cane crushing capacity was required to be judged only on the basis of the computation of 22 hours working in a day and not 24 hours.

The learned senior counsel would submit that from various documents, which have been appended to the writ petition, it would appear that the cane crushing capacity in the said factory had never reached the target of 1250 tonnes per day. Certain statements made by the petitioner in its correspondences with the respondents to the effect that it had been able to crush sugarcane to the extent of 1250 tonnes per day should not be taken to be an admission on its part inasmuch as in terms of the prevailing system, the same has to be computed for 22 hours and not 24 hours.

Referring to a statement made in the chart prepared by the petitioner showing cane crushing year-wise tonnes capacity per working day (22 hours), Mr. Shanti Bhushan would contend that it had never reached the figure of 1250 tonnes per day.

8. Our attention, in this connection, has also been drawn to an application for regularisation of excess capacity under Ministry of Industries, which is contained in 29.08.1980 (Exhibit 'U') wherein it had been shown:-

  "11. Production during    1978-79      1,150,925   Qtls.
    Last 3 yrs.           1979-80         87,422     " 
                          1980-81         65,375     "

16. Any other information         Note ;
  that may be relevant            990-1250 TCD. We did 
  for the purpose of              not install all machines 
  regularizing productive         required for achieving the
  capacity.                       above. Over the last 15
                                  years we have, therefore, 
                                  averaged 1083.2TCD This 
                                  proves our inherent 
                                  incapacity to achieve 1250
                                  TCD. We, therefore, request
                                  that an capacity be registered 
                                  afresh as per our average 
                                  crush achieved." 
 

9. Explaining the position that despite machines for expanding the cane crushing capacity of the said factory were installed, the same was not sufficient to achieve the capacity of cane crushing up to 1250 tonnes per day, as would appear from the letter dated 12.12.1981 addressed to the Joint Secretary (Sugar) (Exhibit 'K'); Clause (iv) whereof is to the following effect:-

"iv. After 1964, that though we had expanded the crushing capacity of our factory but the machines, which we had installed, were not sufficient to achieve the capacity of crushing up to 1250 tones per day. The plant thereafter is inherently incapable of doing so. In proof of this fact, we are enclosing 2 Charts. The first chart shown the actual crushing done by the factory during the year 1964-65 to 1980-81; It may also be stated that the crushing capacity never reached 1250 tones per day in respect of the maximum out put of which the machines were capable."

10. An affidavit has also been filed on 11.07.2002 so as to place certain further documents before this Court, which admittedly had not been placed before the respondents.

11. It is not in dispute that the High Level Committee constituted by the respondents had made the following recommendations:-

"5.6.3. The age distribution of sugar factories shows that 136 were erected prior to 1955-56. There was a spurt in the growth of sugar factories thereafter. Thereafter, the Committee considers that 1955-56 can be considered as the cut off year for distinguishing the factories in two strata over the 25 years and newer factories. As far as the unit capacity is concerned it is generally recognised that units below 1250 TCD have much higher costs of production and therefore these too have been put in the strata. The combined strata consists of units with less than 1250 TCD capacity erected prior to 1955-56 and the statistical analyses applied in arriving at the fair costs of production for the pricing period 1980-83 indicated that factories in this strata have a costs of production that is Rs. 26/- per quintal higher than others, (it may be noted that 'sickness' is specially prevalent in the sugar factories in this strata.) The Committee recommends that this differential of Rs. 26/- per quintal be permitted to the factories that are placed in this strata."

12. The Government of India by a circular letter dated 24.01.1981 addressed to all sugar factories in India issued clarifications in regard to the eligibility of the sugar factories to be granted on an extra levy price of Rs. 26/- per quintal to weak factories are:-

(a) the factory as a unit/undertaking must have been erected prior to the 1955-56 season i.e. before 1.10.1955, and

(b) its licensed capacity is less than 1250 TCD (subject to the conditions in paras 2(iii) & (iv) below)"

The said clarifications issued by the Government of India are self-explanatory.

13. The petitioner's licensed cane crushing capacity was 1250 tonnes per day is not in dispute. The prices had been fixed in terms of a statutory order known as Sugar (Price Determination for 1981-82 Production) Order, 1981 issued by the Central government in exercise of its power conferred upon it by Sub-section (3) of Section 3 of the said Act. Clause 2 of the said Order reads thus:-

"2. Price of sugar produced in 1980-81 season :-

The Central Government hereby determines the prices specified in columns 2 to 7 of Schedules I, II, III and IV hereto annexed, as the prices payable for the Indian Sugar Standard (ISS) grades of sugar mentioned therein, packed in 'A' Twill new gunny bags and produced in 1980-81 by all vacuum pan sugar factories situated in the areas specified in the corresponding entry in column 1 of the said Schedule, that is to say, that factories specified in Schedules V and VI hereto annexed, and required to be supplied to the persons, organizations of State Governments specified in the order made by the Central Government under Sub-clause (1) of Clause 2 of the Levy Sugar Supply (Control) Orders, 1979, for delivery at buyer's option into (i) railway wagons and (ii) the buyer's carts, lorries or other means of transport at the factory gate/ factory godown respectively;

Provided that where a sugar factory is situated at a distance exceeding five kilometers from the nearest railway station or an out agency of the railway or from the godown outside the factory not connected by rail, the producer may charge additional three paise per quintal of sugar per kilometer beyond five kilometers of the distance between the sugar factory and such railway station or out agency of the railway, in case of dispatches by rail or between the sugar factory and such godown in case of delivery ex-godowns.

Explanation : In this Order:-

(a) The prices specified in columns 2 to 7 of Schedules I, II, III and IV aforesaid do not include the duty of excise, additional duty of excise in lieu of sales tax, and the special duty of excise, which the producer can recover, at the rate in force at the relevant time, in addition to the price as determined by this Order;

(b) the prices specified in columns 2 to 7 of Schedules I and III aforesaid include transport from factory godowns and loading, at buyer's option, into railway wagons at the railway station or siding generally used by the producer and including siding or wagon hauling, dunnage and other incidentals;

(c) the prices specified in columns 2 to 7 of Schedules II and IV aforesaid include transport from factory godowns and loading of sugar, at buyer's option, into carts, lorries or other means of transport at the factory gate/factory godown and include all other incidentals;

(d) the Indian Sugar Standard grades (ISS grades) mean the grades represented by the Standard sealed samples of sugar in bottles issued by the Director, National Sugar Institute, Kanpur, conforming to the standards A-30, B-30, C-30, D-30, E-30 and A-29, B-29, C-29, D-29 and E-29 prescribed by the Indian Standards Institution."

Schedule V of Annexure - E categorically states that the said Schedule would apply to an industry who has a licensed daily cane crushing capacity of 1250 tonnes or more.

The Central Government also made a statutory order vide notification dated 27.01.1983 known as Sugar (Price Determination from 1982-83 Production) Order, 1983.

It is well settled that ordinarily validity or otherwise of a policy decision cannot be the subject matter of judicial review.

In no uncertain terms, the statutory order refers to licensed daily cane crushing capacity of 1250 tonnes or more; or less than 1250 tonnes, but have expanded the capacity up to 1250 tonnes or more either under the liberalized Licensing Policy or otherwise; or less than 1250 tonnes, but have crushed up to 1250 tonnes or more during each of the preceding five years.

14. The stand taken by the petitioner in some of their letters, in particular letter dated 18.07.1978, leaves no manner of doubt that it had admitted therein that its licensed cane crushing capacity is 1250 tonnes per day.

15. The petitioner cannot be permitted to take one stand for one purpose and another for another. In the instant case, the petitioner has not questioned the vires of the aforementioned Orders made under Section 3 of the said Act.

The question as to Whether in a given case the provisions of the said Order would be applicable or not is essentially a question of fact. Such questions cannot ordinarily be determined in a writ petition filed under Article 226 of the Constitution of India. Thus, the petitioner cannot be permitted to raise a contention that although its licensed cane crushing capacity is of 1250 tonnes per day, actually it had not been producing the said quantity.

16. The parliament had enacted the Industries (Regulation and Development) Act, 1951. The licenses are granted in terms of Section 11 thereof, which is in the following terms:-

"11. Licensing of new industrial undertaking. -- (1) No person or authority other than the Central Government, shall, after the commencement of this Act, establish any new industrial undertaking, except under and in accordance with a license issued in that behalf by the Central Government:

Provided that a Government other than the Central Government may, with the previous permission of the Central Government, establish a new industrial undertaking.

(2) A license or permission under Sub-section (1) may contain such conditions including, in particular, conditions as to the location of the undertaking and the minimum standards in respect of size to be provided therein as the Central Government may deem fit to impose in accordance with the rules, if any, made under Section 30."

Section 13 thereof envisages grant of a license for substantial expansion. In the instant case, the petitioner had filed applications for grant of substantial expansion. In terms of the provisions of the IDR Act and/or Registration and Licensing of Industrial Undertakings Rules, 1952 (in short, 'the said Rules') framed there under, the expression 'licensing capacity' had not been defined. However, a bare perusal of Section 11 thereof read with Rule 15 of the said Rules as also license granted in form 'F' would clearly go to show that the expressions 'license' and 'permission' are synonymous.

It would be relevant to notice that the dictionary meaning of 'license' as contained in Stroud's Judicial Dictionary of Words and Phrases, Fifth Edition, which read thus:-

"license means "When one finds the word 'license' used in a statute the presumption is that it is intended to designate a purely personal privilege" (per Black J., in Russel v. Ministry of Commerce for Northern Ireland (1945) N.I. 184, 193)

(2) A license "is an authority to do something which would otherwise be wrongful or illegal or inoperative" (per Latham C.J., in Federal Commissioner of Taxation v. United Aircraft Corporation (68 C.L.R. 525)

According to Webster's Third New International Dictionary of the English Language, Unabridged, license means:-

"License also license:- 1a to grant or issue a license to (someone) usually after special qualifications have been met (was licensed and later ordained to the ministry - J.C. Brauer)

bb to permit or authorize especially by formal license (patented processes were freely licensed in a general effort to do everything any anything to help win the war - Marquis James)

2a. to accord permission or consent to : allow (at a wedding everybody seemed licensed to kiss everyone else - Irwin Shaw) (a popular novelist may be licensed to draw on his imagination - A.T. Quiller - Couch ) etc.

Black's Law Dictionary, Fifth Edition gives it the meaning as:-

"License : The permission by competent authority to do an act which, without such permission, would be illegal, a trespass, or a tort. People v. Henderson , 391 Mich. 612, 218, N.W. 2d 2, 4. Certificate or the document itself which gives permission. Leave to do thing which licensor could prevent. Western Electric Co. v. Pacent Reproducer Corporation , C.C.A. N.Y., 42 F. 2d. 116, 118 . Permission to do a particular thing, to exercise a certain privilege or to carry on a particular business or to pursue a certain occupation. Blatz Brewing Co. v. Collins , 88 Cal. App. 2d. 438, 610 p. 2d 37, 39, 40 . Permission to do something which without the license would not be allowable. Great Atlantic & Pacific Tea Co. v. City of Lexington , 256 Ky. 595, 76 S.W. 2d. 894, 896 . Privilege from state or sovereign. M. Itzkowitz & Sons v. Gerahty , 139 Misc. 163, 247 N.Y.S. 703, 704 ; Alabama Power Co. v. Federal Power Commission , 75 U.S. App. D.C. 315, 128 F.2d. 280, 289) .

A permit, granted by an appropriate governmental body, generally for a consideration, to a person, firm, or corporation to pursue some occupation or to carry on some business subject to regulation under the police power. A license is not a contract between the state and the licensee, but is a mere personal permit. Rosenblatt v. California State Board of Pharmacy , 69 Cal. App. 2d 69, 158 P.2d. 199, 203) . Neither is it property or a property right. American States Water Service Co. of California v. Johnson , 31 Cal. App. 2d. 606, 88 P.2d 770, 774; Asbury Hospital v. Cass Country , 72 N.D. 359, 7 N.W. 2d 438, 452) .

License with respect to real property is a privilege to go on premises for a certain purpose, but does not operate to confer on, or vest in, licensee any title, interest, or estate in such property. Timmons v. Cropper , 40 Del. Ch. 29, 172 A.2d. 757, 759) ."

17. If the petitioner had been permitted to crush sugarcane up to 1250 tonnes per day, there cannot be any doubt that its licensing cane crushing capacity was the same and once it is held that the petitioners licensed cane crushing capacity was 1250 tonnes per day, in our opinion, no case has been made out for grant of any relief in favor of the petitioner.

18. The jurisdiction of this Court in the matter to interfere with a policy decision as regards fixation of price for levy sugar is well known. Reference in this connection may be made to Panipat Co-operative Sugar Mills etc. v. Union of India ;

Anakapalle Co-op. Agrl. & Industrial Society Ltd., etc. v. Union of India and Ors. ;

Shri Sitaram Sugar Co. Ltd. and Anr. v. Union of India and Ors. ; and a recent decision of the Apex Court in Association of Industrial Electricity Users v. State of A.P. and Ors. .

Furthermore, in this case, the petitioner had not questioned the price fixation, but has questioned its implementation. We, therefore, are of the opinion that no case has been made out for interfering in the matter nor any case has been made out for allowing the petitioner to rely on certain additional documents filed on 11.07.2002.

19. We may notice that by an order dated 18.09.1983, this Court passed the following Order:-

"The main question raised in the writ petition is whether the cane crushing capacity of the petitioner is less than 1250 tonnes per day, when in fact the factory had not achieved a cane crushing of 1250 tonnes a day for the last 10 years. The classification of the factory whether in Schedule V or Schedule VI would depend upon the crushing capacity. Whether the actual production is to be taken into consideration or the licensed capacity is to be taken into account or the installed capacity is the only criteria are questions, which nbeed examination. It is also to be seen whether the decision arrived at by the respondents is based on the material before them. We are, therefore, inclined to extend the ex-parte stay granted on April, 13, 1983 but conditional on the petitioner's furnishing a Bank Guarantee of the differential value of the price of the levy sugar @ Rs. 26 per quintal together with interest @ 12 percent per annum. The petitioner would furnish the bank Guarantee to the satisfaction of the Under Secretary Ministry of Food & Civil Supplies, Department of Food Krishi Bhawan, New Delhi on the basis of the release orders issued in the month of September, 1983 and thereafter. The Bank guarantee be furnished within one week of the end of the month in which the release orders have been issued. This order will operate till the disposal of the writ petition.

Liberty is granted to the parties to approach this Court in case of any difficulty in implementation of this order."

The petitioner pursuant to or in furtherance of the said Order had furnished bank guarantees as would appear from the Order dated 17.05.1985. The respondents now consequently must be permitted to recover the excess amount paid to the petitioner, if any.

20. This writ petition is disposed off accordingly without any order as to costs.