Karnataka High Court
Nsl Sugar Limited - Unit Ii vs Shri. Shivanand H Kalakeri And Ors on 1 December, 2023
Author: B.M.Shyam Prasad
Bench: B.M.Shyam Prasad
-1-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 1ST DAY OF DECEMBER, 2023
PRESENT
THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD
AND
THE HON'BLE MR. JUSTICE UMESH M ADIGA
WRIT APPEAL NO. 200021 OF 2023 (GM-RES)
C/W
CIVIL CONTEMPT PETITION NO. 200037 OF 2022
CIVIL CONTEMPT PETITION NO. 200014 OF 2023
WRIT APPEAL NO. 200168 OF 2022 (GM-RES),
WRIT APPEAL NO. 200169 OF 2022 (GM-RES),
WRIT PETITION NO. 200423 OF 2023 (GM-RES)
Digitally
signed by
NARASIMHA IN WRIT APPEAL NO.200021/2023
MURTHY
VANAMALA BETWEEN:
Location:
HIGH K.P.R. SUGAR AND APPARELS LTD
COURT OF CHINAMGERA VILLAGE
KARNATAKA AFZALPUR TALUK, GULBARGA DISTRICT
(KALABURAGI) - 585 265
... APPELLANT
(BY SRI C.A. SUNDARAM SR. COUNSEL AND SRI S.S.
NAGANAND, SR. COUNSEL FOR SRI VEEREH R. BUDIHAL,
ADVOCATE)
-2-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
AND:
1. THE COMMISSIONER FOR
CANE DEVELOPMENT AND DIRECTOR OF SUGAR
5TH FLOOR, KARNATAKA HOUSING BOARD
BUILDING, KAVERI BHAVAN,
BENGALURU-560 001.
2. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI - 585 101
3. SHRI DATTA MAHANTESHWAR SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, GHANGAPUR,
TALUK: AFZALPUR-585 213
KALABUARAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
4. THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU - 560 001.
5. SAHAKARI SAKKARE KHARKHANE NIYAMITA
ALAND(SSKN), A CO-OPERATIVE SOCIETY
REGISTERED UNDER CO-OPERATIVE SOCIETIES
ACT, 1959, HAVING ITS REGISTERED OFFICE AT
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT - 585 302
REPT. BY THE MANAGING DIRECTOR.
6. NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUK, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.AMARNATH .V
... RESPONDENTS
(BY SRI KIRAN V. RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1, R2 AND R4;
SRI. DAMA SESHADRI NAIDU, SR. ADVOCATE FOR
SRI KRUPA SAGAR PATIL, ADVOCATE FOR R5;
-3-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
SRI BASAVA PRABU S.PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL, AND SRI.B.B. PATIL ADVOCATES FOR
C/R6;
NOTICE TO R3 HELD SUFFICIENT V/O DATED: 09.02.2023)
THIS WRIT APPEAL IS FILED UNDER SECTIONS 4 OF
THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET
ASIDE THE JUDGMENT DATED 28/09/2022 IN W.P
NO.201052/2022 PASSED BY THE LEARNED SINGLE JUDGE
AND DISMISS THE SAID WRIT PETITION.
IN CCC NO.200037/2022
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.AMARNATH H.V
... COMPLAINANT
(BY SRI BASAVA PRABU S.PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL AND SRI B.B.PATIL, ADVOCATES)
AND:
1. SHRI SHIVANAND H.KALAKERI
THE COMMISSIONER FOR CANE DEVELOPMENT
AND DIRECTOR OF SUGAR, 5TH FLOOR,
KARNATAKA HOUSING BOARD BUILDING
KAVERIBHAVAN, BENGALURU-560 001.
2. SHRI YESHWANT V. GURUKAR
THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE DC, KALABURAGI.
3. MR. P. SELVAKUMAR
MANAGING DIRECTOR
-4-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
K.P.R. SUGAR AND APPARELS LIMITED
CHINMMGERA VILLAGE
AFZALPUR TALUQ, GULBARGA DISTRICT.
4. MR. SURYAKUMAR SHIVASAGARAN
DIRECTOR, SHRI DATTA MAHANTESHWAR
SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, GHANGAPUR,
TALUQA: AFZALPUR-585 213
KALABUARAGI DISTRICT.
5. SHRI PANKAJ KUMAR PANDEY
SECRETARY, C& I DEPARTMENT
THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS
VIDHANA SOUDHA
BENGALURU-01.
... ACCUSED
6. THE STATE OF KARNATAKA
REPT. BY ITS CHIEF SECRETARY
VIDHANA SOUDHA, BENGALURU -01.
... FORMAL PARTY
(BY SRI KIRAN V. RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR A1, A2, A5 AND R6;
SRI C.A. SUNDARAM, SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR
A3;
A4 IS DELETED V/O DATED: 13.06.2022)
THIS CCC IS FILED UNDER SECTIONS 11 AND 12 OF
THE CONTEMPT OF COURTS ACT, R/W ARTICLE 215 OF THE
CONSTITUTION OF INDIA, PRAYING TO INITIATE CONTEMPT
PROCEEDINGS AGAINST THE RESPONDENTS HEREIN, FOR
WILLFUL DISOBEDIENCE OF THE ORDER DATED 02.02.2022
PASSED BY THIS HON'BLE HIGH COURT IN WRIT PETITION
NO.200210/2022.
-5-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
IN CCC NO.200014/2023
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.AMARNATH H.V.
... COMPLAINANT
(BY SRI BASAVA PRABU S.PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL AND SRI.B.B. PATIL, ADVOCATES)
AND:
1. SHRI YESHWANT V. GURUKAR
THE DEPUTY COMMISSIONER
AND DISTRICT MAGISTRATE, KALABURAGI
DEPUTY COMMISSIONER'S OFFICE
VIKAS BHAVAN, MINI VIDHAN SOUDHA
KALABURAGI.
2. SHRI SHIVANAND H.KALAHERI
COMMISSIONER FOR CANE DEVELOPMENT
AND DIRECTOR OF SUGAR,
HOUSING BOARD 'F' BLOCK,
5TH FLOOR, CPAB COMPLEX,
KAUVERY BHAVAN, K.G.ROAD
BENGALURU - 560 009.
3. SRI KALIAMPUDUR PALANISAMY
RAMASAMY,
CHAIRMAN AND DIRECTOR
K.P.R. SUGAR AND APPARELS LTD
CHINMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
4. SRI PALANI GOUNDER SELVAKUMAR
WHOLE TIME DIRECTOR
K.P.R. SUGAR AND APPARELS LTD
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
5. SHRI PANKAJ KUMAR PANDEY
SECRETARY, C& I DEPARTMENT
-6-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS, VIDHAN SOUDHA
BENGALURU - 01
... ACCUSED
6. SECRETARY
STATE OF KARNATAKA
BENGALURU - 01
... FORMAL PARTY
(BY SRI SRI KIRAN V RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR A1, A2, A5 AND R6;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR A3 AND A4)
THIS CCC IS FILED UNDER SECTIONS 11 AND 12 OF
THE CONTEMPT OF COURTS ACT 1971, R/W ARTICLE 215
OF THE CONSTITUTION OF INDIA, PRAYING TO INITIATE
CONTEMPT PROCEEDINGS AGAINST THE RESPONDENTS
FOR WILLFUL DISOBEDIENCE OF THE ORDER DATED
04.11.2022 PASSED IN W.A.NO.200168-200169/2022 VIDE
ANNEXURE-Q, AS MODIFIED BY ORDER DATED 16/12/2022
IN SLP(C) NO.22782-22783/2022 VIDE ANNEXURE-S.
IN WRIT APPEAL NO.200168/2022
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.AMARNATH H.V.
... APPELLANT
(BY SRI BASAVA PRABU S. PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL AND SRI.B.B. PATIL, ADVOCATES)
-7-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
AND:
1. THE COMMISSIONER FOR
CANE DEVELOPMENT OF SUGAR
5TH FLOOR, KARNATAKA HOUSING BOARD
BUILDING, KAUVERY BHAVAN, K.G.ROAD
BENGALURU-560 001.
2. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI
3. K.P.R. SUGAR AND APPARELS LIMITED
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
4. SHRI DATTA MAHANTESHWAR SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, GHANGAPUR,
TALUQ: AFZALPUR-585 213
KALABUARAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
5. THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU-01.
6. SAHAKAARI SAKKARE KHARKHANE NIYAMITA
ALAND(SSKN), A CO-OPERATIVE SOCIETY
REGISTERED UNDER CO-OPERATIVE SOCIETIES
ACT, 1959, HAVING ITS REGISTERED OFFICE AT
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT-585 302.
... RESPONDENTS
(BY SRI KIRAN V RON, AAG A/.W
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1, R2 AND R5;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR R3;
SRI. DAMA SESHADRI, NAIDU, SR. COUNSEL FOR
-8-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
SRI KRUPA SAGAR PATIL, ADVOCATE FOR R6)
THIS WRIT APPEAL IS FILED UNDER SECTIONS 4 OF
THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET
ASIDE THE JUDGMENT DATED 28/09/2022 IN W.P
NO.200210/2022 AND ALLOW THE SAID WRIT PETITION IN
TERMS PRAYED.
IN WRIT APPEAL NO.200169/2022
BETWEEN:
NSL SUGARS LIMITED- UNIT II
ALAND, BHUSNOOR VILLAGE
ALAND TALUQ, KALABURAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.AMARNATH H.V.
... APPELLANT
(BY SRI BASAVA PRABU S. PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL, ADVOCATE AND
SRI.B.B. PATIL, ADVOCATE)
AND:
1. THE COMMISSIONER FOR
CANE DEVELOPMENT AND DIRECTOR OF SUGAR,
5TH FLOOR, KARNATAKA HOUSING BOARD
BUILDING, KAVERI BHAVAN, BENGALURU-560 001.
2. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI.
3. K.P.R. SUGAR AND APPARELS LIMITED
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
(REPRESENTED BY ITS AUTHORIZED SIGNATORY).
4. SHRI DATTA MAHANTESHWAR SUGARS LIMITED.,
REGISTERED OFFICE AT: H.NO.2-30,
(GUDUR) STATION, CHAGAPUR,
-9-
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
TALUKA: AFZALPUR - 585 213
KALABUARAGI DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
5. THE GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU - 560 001.
6. SAHAKAARI SAKKARE KHARKHANE NIYAMITA
ALAND(SSKN), A CO-OPERATIVE SOCIETY
REGISTERED UNDER CO-OPERATIVE SOCIETIES
ACT, 1959, HAVING ITS REGISTERED OFFICE AT
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT-585 302.
... RESPONDENTS
(BY SRI KIRAN V RON, AAG A/W
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1, R2 AND R5;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEEREH R. BUDIHAL, ADVOCATE FOR R3;
SRI. DAMA SESHADRI NAIDU, SR. COUNSEL FOR
SRI KRUPA SAGAR PATIL, ADVOCATE FOR R6)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF
THE KARNATAKA HIGH COURT ACT, 1961 PRAYING TO SET
ASIDE THE JUDGMENT DATED 28.09.2022 IN WP NO.
201052/2022 AND ALLOW THE SAID WRIT PETITION
INTERMS PRAYED.
IN WRIT PETITION NO.200423/2023
BETWEEN:
NSL SUGARS LIMITED- UNIT II
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956 AND CONTINUING
UNDER THE COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT # 60/1,
2ND CROSS, RESIDENCY ROAD, BENGALURU-560 025
- 10 -
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
KARNATAKA
HAVING ITS FACTORY AT:
BHUSNOOR VILLAGE, ALAND TALUK
KALABURAGI DISTRICT, KARNATAKA
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.AMARNATH H.V. ... PETITIONER
(BY SRI BASAVA PRABU S. PATIL, SR. COUNSEL FOR
SRI A.M. NAGRAL, AND
SRI. B.B.PATIL, ADVOCATE)
AND:
1. GOVERNMENT OF KARNATAKA
REPRESENTED BY ITS SECRETARY,
C& I DEPARTMENT, VIDHANA SOUDHA
BENGALURU-01.
2. DEPUTY SECRETARY
GOVERNMENT OF KARNATAKA
DEPARTMENT OF COMMERCE
AND INDUSTRIES (SUGAR)
VIKAS SOUDHA, BENGALURU-560 001.
3. DEPUTY COMMISSIONER
KALABURAGI DISTRICT
OFFICE OF THE D.C, KALABURAGI
4. COMMISSIONER FOR CANE DEVELOPMENT
AND DIRECTOR OF SUGAR, 5TH FLOOR,
KARNATAKA HOUSING BOARD
BUILDING, KAVERI BHAVAN,
BENGALURU-560 001.
5. K.P.R. SUGAR AND APPARELS LIMITED
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956 AND CONTINUING
UNDER THE COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT # 5, AKS NAGAR
THADAGAM ROAD,COIMBATORE-641 001
TAMIL NADU
- 11 -
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
HAVING ITS FACTORY AT:
CHINMMAGERA VILLAGE
AFZALPUR TALUK, GULBARGA DISTRICT
REPRESENTED BY ITS AUTHORIZED SIGNATORY
... RESPONDENTS
(BY SRI KIRAN V RON, AAG A/W.
SRI SHIVAKUMAR R. TENGLI, AGA FOR R1 TO R4;
SRI C.A. SUNDARAM SR. COUNSEL AND
SRI S.S. NAGANAND, SR. COUNSEL FOR
SRI VEERESH R. BUDIHAL, ADVOCATE FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
ISSUE A WRIT CERTIORARI OR ANY OTHER WRIT ORDER OR
DIRECTION QUASHING (I) CRUSHING LICENSE DATED
19/10/2022 BEARING NO. VAKAI 13 SGF 2022 ISSUED BY
RESPONDENT NO. 2. VIDE ANNEXURE-A: II) ORDER DATED
2/11/2022 BEARING NO. NIL PASSED BY RESPONDENT NO.4
VIDE ANNEXURE-B; AND III) ORDER DATED 12/01/2023
BEARING NO. NIL PASSED BY RESPONDENT NO.3 VIDE
ANNEXURE-C.
THESE WRIT APPEALS, THE CIVIL CONTEMPT CASES
AND THE WRIT PETITION COMING ON FOR ADMISSION
HAVING BEEN HEARD AND RESERVED ON 26.07.2023, AND
COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS
DAY, B.M. SHYAM PRASAD J., DELIVERED THE FOLLOWING:
- 12 -
NC: 2023:KHC-K:8950-DB
WA No. 200021 of 2023
C/W CCC No. 200037 of 2022
CCC No. 200014 of 2023
WA No. 200168 of 2022
WA No. 200169 of 2022
WP No. 200423 of 2023
JUDGMENT
These intra court appeals, the writ petition and
the contempt proceedings emanate from the interim
orders and the common final order in writ petitions in
WP Nos.200210/2022 and 201052/2022 as also the
interim order in these intra court appeals. These
proceedings are because of the dispute between M/s
NSL Sugars Limited - Unit II [M/s NSL] and M/s
K.P.R Sugars and Apparels Limited [M/s KPR] over
the exclusive right to procure sugarcane from certain
44 villages in Kalaburagi and Afzalpur Taluks [the
Subject Cane Area]. The writ Court's first interim
order dated 02.02.2022 in writ petition in WP
No.200210/2022 is to maintain status quo inter alia
on "diversion" of sugarcane from the Subject Cane
Area, and the Writ Court's later interim order on
10.05.2022 in writ petition in WP No.201052/2022 is
- 13 -
NC: 2023:KHC-K:8950-DB
directing the authorities to seize sugar, molasses and
ethanol from M/s KPR's factory.
2. The writ Court has disposed of these writ
petitions in WP Nos.200210/2022 and 201052/2022
by the common Order dated 28.09.2022 directing the
State Government to decide on the dispute between
M/s NSL and M/s KPR over the Subject Cane Area.
The writ Court has also directed disposal of sugar,
molasses and ethanol seized pursuant to its interim
order in WP No.201052/2022 under the provisions of
the Essential Commodities Act, 1955 [for short, the
'EC Act']. In the present proceedings, this Court, by
the interim order dated 13.06.2023 [after the earlier
interim orders and orders of the Hon'ble Supreme
Court in SLP Nos.22782-22783/2022], has provided
for sale of the seized sugar, molasses, and ethanol on
certain terms.
- 14 -
NC: 2023:KHC-K:8950-DB
3. These products are sold and 40% of the
proceeds received from the sale of sugar and
molasses are being deposited with this Court in
compliance with this Court's order on 13.06.2023,
and this deposit is subject to this Final Order. The
submission on behalf of the State Government is that
as and when the proceeds from the sale of ethanol
are received, the same are deposited with this Court
to comply with the directions. The office informs that
a sum of Rs.103,06,20,487/- is deposited as of
27.10.2023. This Court has directed the remaining
60% of the sale proceeds be given directly to M/s KPR
subject to the outcome in these proceedings, but in
the SLP Nos. 14359-14360/2023 filed by M/s NSL
against this Court's interim order dated 13.06.2023,
the Hon'ble Supreme Court has modified this order
directing M/s KPR to maintain the proceeds received
in its account without disbursing the same.
- 15 -
NC: 2023:KHC-K:8950-DB
4. If the writ appeals in WA
Nos.200168/2022, 200169/2022 and 200021/2023
are against the common Order dated 28.09.2022 in
WP Nos.200210/2022 and 201052/2022, the
contempt proceedings in CCC Nos.200037/2022 and
200014/2023 are commenced complaining that there
is violation of the interim order dated 02.02.2022 in
the said writ petition and the interim order dated
04.11.2022 in the intra court appeals in WA
Nos.200168/2022, 200169/2022 and 200021/2023.
The writ petition in WP No.200423/2023 is as
against the order dated 12.01.2023 by the Deputy
Commissioner, Kalaburagi after the writ Court's
common Order dated 28.09.2022.
5. Sri. Basava Prabhu Patil, the learned
Senior Counsel for M/s NSL, Sri Dama Seshadri
Naidu, the learned Senior Counsel for M/s Sahakaari
Sakkare Karkhane Niyamita, Aland [M/s SSKN], Sri
- 16 -
NC: 2023:KHC-K:8950-DB
C.A. Sundaram and Sri S.S. Naganand, the learned
Senior Counsels for M/s KPR, and Sri Kiran Ron, the
learned Additional Advocate General [who is assisted
by Sri Shivakumar Tengli, the learned Additional
Government Advocate], are heard for final disposal as
requested. The learned counsels on record for the
parties have filed voluminous record, and therefore,
the facts and circumstances presented as
uncontested and contested in the convenience
compilations filed, on perusal of the pleadings, are
recorded as hereinafter followed by the questions for
consideration, the corresponding rival submissions,
this Court's opinion and the final conclusions.
6. The contest in these proceedings, as
aforesaid, is essentially between two sugar factories
viz., M/s NSL and M/s KPR, but neither have
established the respective factories themselves, and
they have either acquired rights from the other or
- 17 -
NC: 2023:KHC-K:8950-DB
because the other has withdrawn its rights. The
details in this regard are as follows:
Reg: M/s NSL
6.1 M/s SSKN is established and registered
under the Karnataka Co-operative Societies Act,
1959. According to the pleadings, the State
Government represents 65% of the total share
capital of M/s SSKN, and in addition, the State
Government has provided loans to the extent of
Rs.15,31,00,000/-. The State Government has
nominated one of the Joint Registrars of Co-
operative Societies to officiate as the Managing
Director of M/s SSKN. M/s SSKN has about a
membership of 11,131 farmers with 5462 amongst
them being cane growers and the others being non-
cane growers, and the cane growing members, in
terms of the byelaws that they have subscribed to,
- 18 -
NC: 2023:KHC-K:8950-DB
have agreed to supply sugarcane grown by them to
M/s SSKN.
6.2 The State Government, on 25.02.1987,
has notified the Karnataka Sugarcane [Regulation of
Distribution] [Aland] Order, 1986 allocating to M/s
SSKN 369 villages in different talukas, including the
villages in the talukas of Kalaburagi and Afzalpur as
its Cane Area. This Order, which is hereinafter
referred to as 'the Aland Order', is issued in exercise
of the jurisdiction under Clause-3 of the Sugarcane
Control Order, 1966 [hereinafter referred to as the
'Sugarcane Control Order 1966'] notified by the
Central Government in exercise of its jurisdiction
under Section 3 of the EC Act.
6.3 M/s SSKN has commenced crushing
sugarcane at its factory at Bhusnoor village, Aland
taluk with the capacity to crush 1250 Tons of
Sugarcane per Day [TCD]. M/s NSL has operated its
- 19 -
NC: 2023:KHC-K:8950-DB
factory at Bhusnoor village for about 15 [fifteen]
years but has stopped its operations thereafter
because of financial difficulties with the State
Government resolving to lease this factory [as in the
case of other co-operative sugar factories]. On
17.11.2005, the State Government has granted
lease of M/s SSKN's factory at Bhusnoor village to
M/s Shree Renuka Sugars Limited [M/s Renuka] for
a period of seven years, but this company has
discontinued the lease after two years.
6.4 On 13.10.2009 the State Government has
issued orders to 'Lease, Rehabilitate, Operate and
Transfer' [LROT] for a period of 30 [thirty] years, and
consequent to this order, bids are invited
representing that the lease would be for a period of
30 [thirty] years and the Cane Area would comprise
- 20 -
NC: 2023:KHC-K:8950-DB
of 331 villages1 with the possibility of increase in the
number of villages. There are pre-bid discussions
between M/s NSL [the successful highest bidder in
offering Rs. 75 crores] and M/s SSKN to incorporate
the assurance to bring back 38 villages into the fold
of 369 villages originally allotted.
6.5 On 06.03.2010, a lease deed is executed
in favour of M/s NSL granting lease of the Sugar
Factory at Bhusnoor village for a period of 30 [thirty]
years with terms such as that M/s NSL would take
measures to expand the crushing capacity from
1250 TCD to 2500 TCD at the minimum and that
the State Government would issue appropriate
notification for restoring 38 villages of Afzalpur
taluk. This Lease Deed is executed referring to
certain government orders issued permitting lease.
1 M/s SSKN is initially allocated 369 villages, but later
certain villages are allotted to M/s Renuka, another Sugar
Factory in the Area, and there are litigations in this regard.
- 21 -
NC: 2023:KHC-K:8950-DB
The State Government, on 31.10.2012, has rejected
M/s NSL's request for allocation of the aforesaid 38
villages notwithstanding a recommendation by the
Deputy Commissioner, Kalaburagi. M/s NSL has
filed the writ petition in W.P.No.101201/2013
impugning the State Government's order dated
31.10.2012 and arraying M/s Renuka Sugars as a
respondent. This writ petition is disposed of on
04.10.2021 but it is stated that the dispute in this
regard is presently pending consideration in writ
appeals in WA Nos.200043/2022 and
200177/2022.
6.6 M/s NSL contends that, in accord with the
covenant in the lease deed to increase the capacity
over a period of years, it has infused huge amounts
to enhance the factory's crushing capacity. The
- 22 -
NC: 2023:KHC-K:8950-DB
details2 in this regard are that it has a crushing
capacity of 7500 TCD requiring a minimum
sugarcane of 13.5 lakh MT per year, and it has
commenced activities to increase the crushing
capacity to 12000 TCD requiring a minimum
sugarcane of 20-24 lakh MT per year. However,
M/s NSL contends it has not been able to crush
more than 6.5 lakh MT of sugarcane over the last
two sugar seasons because of the Government's
refusal to re-allocate the 38 villages from M/s
Renuka and because M/s KPR is illegally diverting
sugarcane from 44 villages in Kalaburagi and
Afzalpur talukas [the Subject Cane Area].
Reg: M/s KPR:
6.7 Sri Datta Mahanteshwara Sugars Limited
[the fourth respondent - M/s SDMSL] has filed an
2 These details are as per the Report of the Joint Director of
Agriculture, Kalaburagi and which is referred to in the
Order of the Commissioner for Cane Development.
- 23 -
NC: 2023:KHC-K:8950-DB
Industrial Entrepreneur Memorandum [IEM]3, to
start a sugar factory at Chinmigera Village, Afzalpur
Taluk, Kalaburagi District. M/s SDSML, without
setting up a factory after filing IEM, has consented
to M/s KPR, which has its factory [Unit No.1] at
Almel in Sindagi taluk, Vijayapura District with a
capacity of 10,000 TCD and eco-friendly co-
generation plant of 50 MWs, to set up its factory
[Unit No.2] at Chinmigera Village.
6.8 M/s KPR has filed its separate IEM to
start another factory [Unit-2] plant at Chinmigera
Village, Afzalpur Taluk, Kalaburagi in the month of
December 2020 with the validity for a period of four
years but subject to further extension by another
year. This IEM is filed to set up the factory with a
crushing capacity of 10,000 TCD to manufacture
3 A declaration filed by those industrial undertakings which
are exempted from the requirements of industrial licensing
as contemplated under the Industries [Development and
Regulation] Act,1951.
- 24 -
NC: 2023:KHC-K:8950-DB
white crystal sugar with co-generation of 50 MW
power and distilling of 220 KLPD of ethanol.
6.9 M/s KPR contends that it has mobilized
funds in excess of Rs.800 crores from M/s Bank of
Baroda and M/s ICICI Bank after filing the IEM with
the Union Government [which is acknowledged by
the Government of India on 14.12.2022] and after
obtaining the Distance Certificate dated 10.12.2020.
M/s KPR has also referred to the different
permissions and approvals obtained from the
concerned for commencing production under the
applicable laws. The details of the permissions and
approval obtained by M/s KPR prior to
commencement of the dispute are as follows:
07.10.2020
The Joint Director of Agriculture, Department of
Agriculture, Government of Karnataka has
furnished data pertaining to availability of
- 25 -
NC: 2023:KHC-K:8950-DB
sugarcane area in response to M/s KPR's
request.
11.12.2020
The Commissioner for Cane Development and
Director of Sugar, Karnataka has issued the
Distance Certificate as required under Sub-Clause
[1] of Clause 6-B of the Sugarcane [Control] Order,
1966 to M/s KPR.
14.12.2020
The date of acknowledgement from the Ministry of
Commerce and Industry, Government of India
about the receipt of the IEM for manufacture of
sugarcane.
22.12.2020
The date on which M/s KPR has submitted a
Performance Guarantee for Rs. One crore to the
Chief Director [Sugar], Ministry of Consumer
Affairs, Food and Public Distribution as required
under sub-Clause [2] of Clause 6-B of the
Sugarcane [Control] Order, 1966.
06.02.2021
The date of in-principle approval for M/s KPR to
establish its Unit at Chinmigera, Afzalpur Taluk
- 26 -
NC: 2023:KHC-K:8950-DB
under the provisions of the Karnataka Industries
[Facilitation]Act, 2002.
01.03.2021
The date on which M/s KPR has applied for Cane
Allocation Area for its factory at Chinmigera
Village.
17.11.2021
The date on which M/s KPR has applied for
Crushing Licence to commence crushing at its
factory at Chinmigera Village.
27.01.2022
The date of permission for running the factory
by the Industries, Boiler, Industrial Security
and Health Department, Government of
Karnataka.
6.10 If these are the permissions and
approvals taken before the commencement of the
present dispute, M/s KPR has also referred to certain
permissions obtained during the pendency of the writ
petitions in WP Nos.200210/2022 and 201052/2022
- 27 -
NC: 2023:KHC-K:8950-DB
and the present proceedings. These details are as
follows:
31.03.2022
The date of the release order for domestic sale
of sugar of 2351 MT for the month of March-
2022 by the Government of India, Department
of Food and Public Distribution.
29.04.2022
The date of the release for domestic sale of
sugar of 3970 MT for the month of April-2022
by the Government of India, Department of Food
and Public Distribution.
25.05.2022
The date of final allotment of Plant Code and
Short Name 'KPRSAL/69061' by the
Government of India.
13.07.2022
The date of temporary allocation of Cane Area
to M/s KPR comprising of 28 villages, excluding
the 44 villages that form part of the present
dispute.
- 28 -
NC: 2023:KHC-K:8950-DB
19.10.2022
The date on which the Cane Crushing Licence is
issued for a period of 1 [one] year for the period
between 01.07.2021 and 30.06.2022.
The circumstances leading to the dispute over
the allocation of the Subject Cane Area:
7. In the year 2016, a proposal is mooted to
withdraw some of the villages from the 369 villages
originally allotted to M/s SSKN under the Aland
Order and allot the same to M/s SDMSL. M/s SSKN,
with this proposal receiving publicity, has filed its
objections. M/s NSL, which by then had acquired
leasehold rights to the sugar factory at Bhusnoor set
up by M/s SSKN, has also filed its objections on
03.09.2016. The Commissioner for Cane
Development and Director of Sugar [for short, 'the
Commissioner for Cane Development'] has sent a
proposal for allocation of 78 villages to M/s SDMSL
[now represented by M/s KPR], including the 44
- 29 -
NC: 2023:KHC-K:8950-DB
villages within the 369 villages [the Subject Cane
Area] originally allotted to M/s SSKN by the Aland
Order.
7.1 The State Government, as part of its
consideration of the aforesaid proposal to allot 78
villages to M/s SDMSL, has called upon the
Commissioner for Cane Development to answer
certain queries by its Communication dated
15.03.2017, and the Commissioner for Cane
Development has responded to such queries by his
communication dated 07.04.2017. M/s NSL
contends that at this stage the proposal to allot 78
villages to M/s SDMSL is abandoned.
7.2 M/s NSL has filed its writ petition in
W.P.No.200346/2021 contending that it has applied
for allotment of Cane Area for the year 2021-22 and
this application is not considered. M/s NSL has also
- 30 -
NC: 2023:KHC-K:8950-DB
sought for directions to the authorities to stop M/s
KPR and M/s Renuka Sugars from diverting
sugarcane from its Cane Area. The writ petition in
W.P.No.200346/2021 is disposed of on 12.07.2021
directing the authorities to consider M/s NSL's
application within a period of three months. During
the pendency of these proceedings i.e., on
13.07.2022, the State Government has allocated
certain villages to M/s KPR, that is excluding the 44
villages which are referred to as the Subject Cane
Area. It is submitted that this is a temporary
allotment.
8. This Court, because of the contempt
proceedings and the questions raised for
consideration, must record in detail the different
petitions leading to these proceedings, and these
details are recorded thus.
- 31 -
NC: 2023:KHC-K:8950-DB
The details of the writ petition in WP
No.200210/2022:
9. M/s NSL has filed this writ petition for
different reliefs, but in filing the memo dated
27.06.2022, M/s NSL has confined the writ petition
for issuance of mandamus to the Government
authorities not to withdraw any portion of the cane
area allotted to M/s SSKN and to take effective
measures to ensure that no other factory receives or
accepts sugarcane from such area. M/s NSL has
asked for interim order to maintain status quo in the
matter of re-allotment/re-allocation of cane area and
withdrawal of villages contending that M/s KPR is
likely to commence crushing encouraging the farmers
in the villages that are already allotted to M/s SSKN
to divert their produce.
9.1 M/s NSL has sought for the interim prayer
in these terms:
- 32 -
NC: 2023:KHC-K:8950-DB
"Pending disposal of the instant Writ Petition,
the Petitioner most humbly prays that this
Hon'ble Court may kindly be pleased to direct
the Respondents to :
i) maintain status quo in the matter of re-
allotment/re- allocation of cane area that
has already been made in favour of the
Petitioner herein and further not to
withdraw any villages from the cane
area of the petitioner, in the interest of
justice and equity.
ii) Ensure that there is no diversion of cane
from the cane area of the petitioner to
any other sugar factory, in the interest of
justice and equity."
The writ Court on 02.02.2022 has granted interim
order as prayed for without elaboration.
The conclusion in the impugned Common Order
dated 28.09.2022 insofar as the petition in WP
No.200210/2022:
9.2 The writ Court, with M/s NSL giving up
the prayer for issuance of a writ of mandamus to the
authorities not to withdraw the villages that are
already allotted to M/s SSKN and limiting the writ
- 33 -
NC: 2023:KHC-K:8950-DB
petition for directions to the authorities to take steps
to ensure that no other sugar factory receives or
accepts sugarcane from the Cane Area allotted to
M/s SSKN, has recorded that it should decide
whether in the circumstances of the case a writ could
be issued to the authorities to refrain them from
discharging their duties. The writ Court has also
considered the canvass that a writ of mandamus
cannot be issued when M/s NSL has not even filed a
representation with the authorities.
9.3 The writ Court, recording that the State
Government has the power to consider a request by a
new factory for allotment/reservation of cane area
under the provisions of the Sugarcane Control Order
1966, has concluded that the State Government has
not taken any decision to withdraw the Subject Cane
Area which was reserved for M/s SSKN and allot the
same to M/s KPR; and because no decision is taken,
- 34 -
NC: 2023:KHC-K:8950-DB
the only direction that can be issued to the State
Government is to hear all the affected persons and
take a decision on the application for reservation of
the Subject Cane Area in the backdrop of the Aland
Order dated 25.02.1987 [an order in favour of M/s
SSKN under the Sugarcane Control Order 1966] and
the subsequent Lease Deed dated 06.08.2020 in
favour of M/s NSL. The writ Court has also observed
that the State Government will have to take a
decision in accordance with law and without being
influenced by any earlier recommendation on
allotment of Cane Area.
The details of the writ petition in WP
No.201052/2022:
10. M/s NSL has filed the second writ petition
in WP No.201052/2022, during the pendency of the
first writ petition in WP No.200210/2022, for
directions to the Commissioner for Cane Development
- 35 -
NC: 2023:KHC-K:8950-DB
to seize the stock of sugar, molasses and other by-
products at M/s KPR's factory at Chinmigera Village,
Afzalpur Taluk, with further directions to ensure that
effective steps are taken to prevent M/s KPR from
selling the stock sugar or the by-products.
10.1 On 10.05.2022, the writ Court, while
calling for a report, has directed the Cane
Commissioner [or the Deputy Commissioner] to
inspect M/s KPR's aforesaid factory at Chinmigera
and take inventory of sugar and other by-products
stocked at this unit with further direction to
confiscate the stock. The Commissioner for Cane
Development and the Deputy Commissioner,
Kalaburagi have inspected the factory/godown and
confiscated sugar and other by-products.
10.2 However, there is some controversy about
how the seized stock is dealt with M/s NSL
contending that M/s KPR has deliberately violated
- 36 -
NC: 2023:KHC-K:8950-DB
the interim order and removed some part of the stock
and M/s KPR contending that there was damage
because of high winds and otherwise the stock is not
altered. Ultimately, on 10.06.2022, it is placed on
record that the Deputy Commissioner has visited M/s
KPR's factory at Chinmigera and it is ascertained that
the seal put on 12.05.2022 was intact and that prima
facie the stock remained the same as it was on
12.05.2022 [the date of seizure].
The conclusion in the impugned Common Order
dated 28.09.2022 insofar as the petition in WP
No.201052/2022:
10.3 The writ Court has opined that it cannot
express any opinion on M/S NSL's contention that
M/s KPR should be denied the opportunity of hearing
because it is in violation of the interim order dated
02.02.2022 in WP No.200210/2022 as the contempt
- 37 -
NC: 2023:KHC-K:8950-DB
proceeding in CCC No. 200037/20224 in this regard
is pending consideration, and that all questions on
whether M/s KPR has violated the interim order in
WP No.200210/2022 will have to be examined in
these contempt proceedings.
10.4 The writ Court, as regards M/s NSL's case
that M/s KPR has started crushing sugarcane
without obtaining licence for crushing and that it is
poaching [diverting] sugarcane from the Subject Cane
Area, has opined, after adverting to the provisions of
Section 6A and Section 6B of the EC Act, that a
separate mechanism is provided thereunder, and
because sugar is an essential commodity, M/s NSL's
grievance will have to be examined in the proceedings
under Section 6A of the EC Act and this will be an
efficacious remedy.
4 One of the two of the present Contempt Proceedings.
- 38 -
NC: 2023:KHC-K:8950-DB
10.5 The writ Court, consequent to its opinion
as aforesaid, has issued a set of directions for
disposal of the seized sugar, molasses, and ethanol.
The writ Court, with Sri Basava Prabhu Patil
expressing apprehension [after the pronouncement of
the Common Order dated 28.09.2022] that M/s KPR
may continue to poach sugarcane from the Subject
Cane Area, has observed that if there is any such
instance, M/s NSL would be at liberty to lodge a
complaint with the competent authority. The writ
Court's direction on disposal of seized sugar,
molasses and ethanol must be extracted as certain
interim orders are passed in the present proceedings
in view of the same, and these directions read as
under:
"64. Since the sugar is an essential commodity
and the petitioner has an efficacious
alternative remedy under the Essential
Commodities Act, under that circumstance, I
pass the following order:
- 39 -
NC: 2023:KHC-K:8950-DB
(i) The Commissioner for Cane Development
and Director of Sugar is directed to submit
a report of the seizure of the sugar to the
Deputy Commissioner, Kalaburagi under
Section 6A of the Essential Commodities
Act. In turn, the Deputy Commissioner is
directed to hear the petitioner and
respondent No.3 and pass appropriate
orders in accordance with the provisions
of Essential Commodities Act.
(ii) In respect of ethanol and molasses, the
by-products of the sugarcane is
concerned, the Commissioner for Cane
Development and Director of Sugar is
directed to sell the same in open auction
between the petitioner and the third
respondent and release the ethanol and
molasses in favour of the highest bidder
after taking the bank guarantee to that
amount.
(iii) If the Deputy Commissioner under Section
6A of the Essential Commodities Act holds
that the third respondent has crushed the
sugarcane contrary to the Essential
Commodities Act and Control Order 1966
and passes an order for confiscation of
the sugar, then, the Commissioner for
Cane Development and Director of Sugar
is directed to release the confiscated
sugar and bank guarantee in favour of
the petitioner. If he passes an order
holding that the third respondent has not
violated any provisions of the Essential
Commodities Act, then he can release the
- 40 -
NC: 2023:KHC-K:8950-DB
sugar and the bank guarantee in favour
of the third respondent."
The details of the appeals in WA No.
200168/2022 and WA No. 200169/2022 and the
interim orders therein:
11. M/s NSL, being aggrieved by the Writ
Court's aforesaid common order dated 28.09.2022
has filed the intra court appeals in WA No.
200168/2022 [this relates to the order in WP
No.200210/2022] and WA No. 200169/2022 [this
relates to the order in WP No.201052/2022]. M/s
KPR has also filed its intra court appeal in WA
No.200021/2023 as against the writ Court's common
order dated 28.09.2022, and although this appeal is
filed on 02.11.2022, it is assigned a regular number
only in 2023.
11.1 M/s NSL has filed its appeals impugning
the writ Court's direction to the State Government to
consider the rival claims to the Subject Cane Area
- 41 -
NC: 2023:KHC-K:8950-DB
and the directions issued for enquiry under Section
6A of the EC Act on whether M/s KPR has legally
crushed sugarcane at its factory at Chinmigera
Village. This Court on 04.11.2022, has granted
interim order in NSL's appeals directing the State
Government not to pass any order in any manner
reducing or altering the cane area/villages allotted to
M/s NSL [M/s SSKN]. Insofar as the sale of sugar,
ethanol and molasses, this Court has directed the
Commissioner for Cane Development to dispose of
the sugar, ethanol and molasses in a manner known
to law and deposit the entire amount with this Court.
11.2 M/s KPR impugned this interim order
dated 04.11.2022 before the Hon'ble Supreme Court
in SLP Nos.22782-22783/2022. Though the Supreme
Court on 16.12.2022 modified the interim order only
insofar as the manner in which ethanol is sold,
neither of the goods were sold. On an application by
- 42 -
NC: 2023:KHC-K:8950-DB
M/s KPR, this Court, on 13.06.20235, has directed
the Commissioner for Cane Development to sell the
seized sugar, molasses, and ethanol. These are
presently sold in compliance with the order, and 40%
of the sale proceeds is deposited with this Court and
the other 60% of the proceeds is paid to M/s KPR
subject to the outcome of these proceedings.
11.3 M/s NSL has filed these appeals
contending that the writ Court should not have
directed an enquiry on M/s KPR's claim for allotment
of the Subject Cane Area because, it has acquired a
vested interest to procure sugarcane from the Subject
Cane Area consequent to the Aland Order and the
terms of the Lease Deed dated 06.03.2010 which is
executed after negotiations on restoring the entire
allotment. M/s NSL, apart from contending that it
5 In the light of the unanimous submissions made for the
disposal of the applications
- 43 -
NC: 2023:KHC-K:8950-DB
has vested rights as aforesaid, has also contended
that the writ Court should have seen that the State
Government was acting in a premeditated manner in
permitting M/s KPR to commence crushing without
licence and in procuring sugarcane without allotment
of cane area and that the State Government is
estopped from allotting any village because of the
assurances held. M/s NSL has relied upon different
circumstances to contend that M/s KPR has
commenced crushing without licence and allocation
of cane area despite interim orders against procuring
sugarcane from the Subject Cane Area.
11.4 M/s KPR has filed the writ appeal in WA
No.200021/2023 being aggrieved by the writ Court's
direction to the Commissioner for Cane Development
to file a report under the EC Act on seizure of sugar,
molasses and ethanol at its factory and the directions
to the Deputy Commissioner, Kalaburagi to pass
- 44 -
NC: 2023:KHC-K:8950-DB
orders under Section 6A of the EC Act with the
observation that there must be an auction between
M/s KPR and M/s NSL and release of these products
to the highest bidder against Bank Guarantee
subject to the outcome of the enquiry.
11.5 M/s KPR has essentially contended that
the writ Court could not have opined that an enquiry
is necessitated because [a] it has filed an application
for crushing and it is presumed that it will be granted
unless rejected, [b] M/s NSL, which has defaulted in
payments to the sugarcane growers, has not entered
into agreements with the growers and unless such
agreement is entered into M/s NSL cannot assert any
exclusive interest, and [c] the concerned officers, even
before the commencement of the first writ petition,
have ascertained that the growers within the Subject
Cane Area on their own volition have supplied
sugarcane. M/s KPR also contends that the writ
- 45 -
NC: 2023:KHC-K:8950-DB
Court should have seen that the allocation of Cane
Area is not permanent, and that the sugarcane
growers' interest must be paramount.
The details of W.P. No.200423/20236:
12. The Commissioner for Cane Development,
after the writ Court's common order dated
28.09.2022, has filed his report on 02.11.2022, and
the Deputy Commissioner, Kalaburagi, after this
report dated 02.11.2022 and hearing M/s NSL and
M/s KPR, has passed the order dated 12.01.2023
recording inter alia the different permissions and
approvals obtained by M/s KPR and opining that it
has not illegally crushed sugarcane at its factory at
Chinmigera Village. M/s NSL has filed this writ
petition in WP No. 200423/2023 calling in question
the report dated 02.11.2022 and the Deputy
This Writ petition is filed before the writ Court but is placed
before this Court by order dated 15.02.2023 because of the
pendency of these proceedings.
- 46 -
NC: 2023:KHC-K:8950-DB
Commissioner's order dated 12.01.2023 inter alia on
the grounds of lack of jurisdiction and being arbitrary
because of the stand taken by these officers in the
earlier proceedings, including the contempt
proceedings in CCC No.200037/2022.
The details of the Deputy Commissioner's
Statement of objections7:
12.1 The Deputy Commissioner has referred to
the complaint filed by M/s NSL with the Deputy
Superintendent of Police, Aland even before the date
of the writ petition in WP No. 200210/2022 [the first
writ petition], and the closure of this complaint after
due enquiry. The Deputy Commissioner has adverted
to the statements by the representatives of M/s NSL,
M/s KPR and M/s Renuka Sugars to the Police
during this investigation. According to the Deputy
7 Neither the Deputy Commissioner nor the Commissioner for
Cane Development has filed statement of objections in W.P.
No.200210/2022 and W.P. No.201052/2022.
- 47 -
NC: 2023:KHC-K:8950-DB
Commissioner, M/s NSL's representative has stated
that its factory at Bhusnoor has to crush 10 LMT of
sugarcane in a year, but it is able to crush only 5
LMT because M/s KPR and M/s Renuka Sugar are
illegally poaching sugarcane from the villages allotted
to M/s SSKN/ M/s NSL. The Deputy Commissioner
has furnished the details of sugarcane crushed by
M/s NSL from the year 2013-13 as follows.
Year Cane Crushed by Year Cane Crushed by M/s
M/s NSL in Metric NSL in Metric Tonnes
Tonnes
2013-2014 7,33,921 2018-2019 5,27,773
2014-2015 8,81,828 2019-2020 2,38,850
2015-2016 4,01,542 2020-2021 4,18,038
2016-2017 1,35,474 2021-2022 8,95,193
2017-2018 4,06,500
12.2 The Deputy Commissioner, insofar as the
outcome of the inquiry into the complaint by M/s
NSL, has stated that the jurisdictional Deputy
Superintendent of Police has conducted an enquiry in
the last week of January 2022 and this officer has
also recorded the statements of M/s KPR's
- 48 -
NC: 2023:KHC-K:8950-DB
representative. The representative in these
proceedings has stated that there was
communication with the Commissioner for Cane
Development for allotment of 78 villages in Afzalpur
and Aland, but the orders were awaited; that M/s
KPR has established office in these villages, but no
sugarcane is procured illegally; and that the
sugarcane growers on their own initiative have been
supplying sugarcane which is crushed for trial
production.
12.3 The Deputy Commissioner has also
stated that this representative has stated that M/s
KPR has received sugarcane because the growers had
insisted upon supplying sugarcane as they have not
received payment from M/s NSL. The statements
recorded on 27.01.2022, and the copies of these
statements are produced as Annexures to the
Statement of Objections. The Deputy Commissioner
- 49 -
NC: 2023:KHC-K:8950-DB
has next referred to the writ petition in WP No.
200346/2021 filed by M/s NSL contending that this
company is in the habit of filing multiple writ
petitions alleging diversion of sugarcane though it
was in default in paying the sugarcane growers
compelling certain sugarcane growers/Association to
file complaints.
12.4 The Deputy Commissioner has submitted
that M/s NSL, as of March 2021, was due in a sum
more than Rs. 27 crores to the sugarcane growers,
and because M/s NSL is not prompt in paying
sugarcane growers, the District Administration must
handle strikes and dharnas by the sugarcane
growers. Insofar as the proceedings culminating
with the order dated 12.01.2023, the Deputy
Commissioner has adverted to the different
approvals taken by M/s NSL asserting that this
order dated 12.01.2023 is in the light of the different
- 50 -
NC: 2023:KHC-K:8950-DB
approvals and permissions, including IEM accepted
by the Central Government, refuting all allegations
of bias.
The details of the Statement of Objections by
the Commissioner for Cane Development:
12.5 The Commissioner for Cane Development,
while emphasising the increase in the sugarcane
acreage and yield not just in India but also in
Karnataka, has emphasized that Kalaburagi district
is a dry semi-arid agro climatic region with very
marginal rainfall and traditionally the sugarcane
cultivation was very restricted. However, due to
implementation of irrigation projects, sugarcane
growing area has increased, and 56,333 hectares
are brought under sugarcane cultivation during the
year 2021-2022. The sugarcane available in the
district, even with a yield of 80 -100 metric tonnes
an acre, would be between 45 and 56 LMT. The
- 51 -
NC: 2023:KHC-K:8950-DB
combined crushing capacity of all the four sugar
factories in the district is only 27,500 TCD, and 42
LMT of sugarcane would be sufficient to meet the
requirement of all these factories.
12.6 The Commissioner for Cane Development
has also stated that in the year 1986, M/s NSL is
allotted the entire district as its Cane Area because
of the situation present then. However, with the
establishment of more sugar factories, the allotment
cannot be restricted to one factory, and if it is
restricted, sugarcane farmers would be exploited.
Significantly, the Cane Commissioner has
mentioned that the Aland Order would be subject to
amendments from time to time and has also stated
that action could be taken against the sugarcane
growers if they violate orders issued under Clause-6
of the Sugarcane Control Order 1966, but no action
can be taken against a factory for receiving cane at
- 52 -
NC: 2023:KHC-K:8950-DB
its Gate if sugarcane is supplied by the sugarcane
growers on their own volition.
M/s NSL's reasons for the contempt proceedings
13. M/s NSL has initiated contempt
proceedings in CCC No. 200037/2022 contending
that the Commissioner for Cane Development, the
Deputy Commissioner for Kalaburagi, the concerned
Secretary and the representatives of M/s KPR are in
deliberate disobedience of the writ Court's interim
order dated 02.02.2022 alleging that notwithstanding
the direction to maintain status quo, M/s KPR, with
the active connivance of the official respondents, has
diverted to itself sugarcane from the farmers in the
Subject Cane Area [44 villages] which is part of the
Cane Area which is initially allocated to M/s SSKN.
13.1 On 11.04.2022, the Commissioner for
Cane Development has filed an affidavit, and insofar
- 53 -
NC: 2023:KHC-K:8950-DB
as the crushing at M/s KPR's factory in Chinmigera
Village in violation of the interim order dated
02.02.2022 in WP No.200210/2022, the
Commissioner has stated thus:
"9. I state that prior to the passing of the
interim order in W.P.No.200210/2022
when it came to my notice that the
Respondent No.3 illegally had started
operating its factory before obtaining
required due permissions from both the
Central Government and the State
Government, I had deputed our officers to
visit the factory and submit a fact-finding
report. The officers of my department
visited the factory and submitted their
report confirming the fact that the
Respondent No.3 was operating without
taking any due permissions.
10. I state that on 21.01.2022 I have directed
the Tahashildar, Afzalpur Taluk,
Kalaburgi District, to take immediate
action and to stop the sugarcane
crushing forthwith and to lodge a
criminal case against the Respondent
- 54 -
NC: 2023:KHC-K:8950-DB
No.3 for the violation of the provisions of
Karnataka Sugarcane [Regulation of
Purchase and supply] Act, 2013,
Sugarcane [Control] Order, 1966, and
Karnataka Sugar [Regulation of
production] Order, 1975. Copy of the said
letter is produced and marked as
Annexure-R1. Another reminder dated
28.01.2022 sent through R.P.A.D. to the
Tahasildar is produced along with postal
acknowledgement as Annexure-R2 and
R3. Therefore, I have taken all due steps
within my purview to stop the
Respondent No.3 factory from functioning
further without due permissions and not
to intrude into the cane area of the
petitioner."
13.2 The Commissioner for Cane Development
has also referred to the Show Cause Notice dated
21.01.2022 issued to M/s KPR to show cause against
initiation of proceedings under Section 9 of the
Karnataka Sugarcane (Regulation of Purchase and
Supply) Act, 2013, and he has further stated that
- 55 -
NC: 2023:KHC-K:8950-DB
M/s KPR in response thereto has filed its reply
stating that the trial crushing is commenced and
necessary applications have been filed for Plant Code
and Short Name with the Central Government. The
Commissioner for Cane Development has also
adverted to the notice dated 29.01.2022 issued to
M/s KPR against crushing and the communication by
the jurisdictional Tahsildar about a complaint lodged
with the concerned police station.
13.3 The Deputy Commissioner has also filed a
counter affidavit denying deliberate disobedience with
the writ Court's Order dated 02.02.2022 contending
that, pursuant to the directions given to the
jurisdictional Tahsildar on 29.01.2022, the
jurisdictional police have issued Endorsement dated
30.01.2022 stating that they will register a complaint
after obtaining legal opinion. It must be observed
that the Deputy Commissioner, like the
- 56 -
NC: 2023:KHC-K:8950-DB
Commissioner for Cane Development, has essentially
stated that all measures are taken to ensure that
there is due compliance and denied any deliberate
violation of the writ Court's interim order.
13.4 M/s KPR's representative, a director and
its authorized signatory, has filed response in these
contempt proceedings on 25.01.2023 contending that
with the writ Court's interim order dated 02.02.2022
having merged with the final order dated 28.09.2022,
the contempt proceedings cannot continue. M/s KPR
without a statement on whether it has procured
sugarcane from the Subject Cane Area has asserted
that M/s NSL which has not entered into agreement
with the sugarcane growers with this area cannot
assert any exclusive right to procure sugarcane. In
the counter affidavit, there is detailed reference to the
law in this regard.
- 57 -
NC: 2023:KHC-K:8950-DB
M/S NSL's reasons for the complaint in CCC No.
200014/2023:
14. M/s NSL has filed this complaint in effect
alleging that M/s KPR's representatives, the
incumbent Commissioner for Cane Development and
the Deputy Commissioner are in contempt because
they have deliberately violated the interim order
dated 04.11.2022 in the present proceedings and the
orders of the Hon'ble Supreme Court on 16.12.2022
in SLP Nos.22782-83/2022. M/s NSL contends that
in the face of these orders, the Deputy Commissioner
could not have issued notice dated 22.12.2022 for
completion of the enquiry under Section 6A of the EC
Act or passed the impugned order dated 12.01.2023.
14.1 M/s NSL also contends that both its
representative and the representative of M/s KPR
have participated in the proceedings, and the Deputy
Commissioner is informed that he cannot proceed
- 58 -
NC: 2023:KHC-K:8950-DB
with the enquiry in view of the interim orders. The
Deputy Commissioner, despite being put on notice
that continuation of the enquiry tantamount to
violation of the interim orders of this Court, has
concluded the enquiry by his order dated 12.01.2023
opining that M/s KPR has not illegally crushed
sugarcane.
14.2 As against the Commissioner for Cane
Development, M/s NSL contends that this officer,
with the different directions on 04.11.2022 in these
proceedings and the orders of the Hon'ble Supreme
Court on 16.12.2022, should have taken immediate
action to bring the seized sugar, molasses and
ethanol for sale, but this officer, despite receiving
representations from M/s NSL, has not initiated any
action for bringing the aforesaid products to sale and
this is only to help M/s KPR.
- 59 -
NC: 2023:KHC-K:8950-DB
The Deputy Commissioner's explanation
14.3 The Deputy Commissioner has filed his
affidavit in these contempt proceedings contending
that, according to his understanding and reading of
the interim order dated 04.11.2022 in the present
proceedings and the orders of the Hon'ble Supreme
Court on 16.12.2022, the interim order is as against
the State Government considering the rival claims
over the Subject Cane Area as directed by the writ
Court while disposing of the writ petition in W.P.
No.200210/2022 and for sale of the seized sugar,
ethanol and molasses with the modification permitted
by the Hon'ble Supreme Court. As such, the enquiry
is completed resulting in the order dated 12.01.2023,
and he has not acted with any premeditation.
The explanation by the Commissioner for Cane
Development:
14.4 The Commissioner for Cane Development,
almost in reiteration of the counter affidavit filed in
- 60 -
NC: 2023:KHC-K:8950-DB
CCC No.200037/2022, has stated that his office has
acted swiftly to ensure compliance with the interim
order dated 10.05.2022 in W.P. No.201052/2022.
His report dated 02.11.2022 is for the purposes of
Section 6A[1] of the EC Act in view of the directions
by the writ Court. The State Government has issued
different circulars from time to time calling upon all
the sugar factories in the State to enter into
agreements as required under Clause-6 of the
Sugarcane Control Order 1966 and notwithstanding
these circulars, M/s NSL has not entered into
agreements with the sugarcane growers. M/s. NSL,
which has not entered into agreement with the
sugarcane growers is trying to take advantage in
initiating multiple proceedings.
14.5 The Commissioner for Cane Development
has once again reiterated that the prohibition under
the Sugarcane Control Order 1966 is as against the
- 61 -
NC: 2023:KHC-K:8950-DB
export of sugarcane from a cane area by the
sugarcane growers and there is no prohibition
restraining the factories receiving the sugarcane at its
gate and as such, if M/s NSL could plead any cause
of action, it is against the sugarcane growers.
The State Government's Communication dated
26.11.2018.
15. During the course of the argument, a copy
of the Communication dated 26.11.2018 is placed on
record by Sri C.A. Sundaram [the learned Senior
Counsel for M/s KPR] alluding to the statement by the
Commissioner for Cane Development. Sri C.A.
Sundaram submits that this Communication dated
26.11.2018, with the appended format for the
agreement, is issued reiterating the requirement
under the provisions of Clause 6[1][a] of the
Sugarcane Control Order 1966.
- 62 -
NC: 2023:KHC-K:8950-DB
15.1 It is seen from this communication dated
26.11.2018, which is addressed to the Managing
Director/Chief Executive Officers of all the sugar
factories, that draft guidelines for bilateral agreement
between the sugar factories and the sugarcane
growers are sent from the office of the Director for
Sugar with instructions to implement, but it is learnt
that, despite such communication, the sugar
factories are not entering into the prescribed
agreement.
15.2 This Communication dated 26.11.2018
further records that the Hon'ble Chief Minister, who
chaired the meeting, has directed all the factories to
enter into bilateral agreements as per the prescribed
format. Sri. C.A. Sundaram draws the attention of
this Court to Clause-3 of this agreement, and the
translation of this Clause reads as under:
- 63 -
NC: 2023:KHC-K:8950-DB
"The cultivator agrees to grow sugarcane on
the land shown in the schedule and to sell the
full quantity of sugarcane contracted to the
Sugar Mill, and the Sugar Mill is bound to
purchase from the cultivator the full quantity
grown in the land mentioned in the above
schedule. The cultivator agrees not to sell to
the sugar factory other than the sugarcane
grown in the land mentioned in the schedule.
Similarly, the sugar factory also agrees not to
buy the sugarcane grown in any other tank by
the farmer except the sugarcane grown in the
land mentioned in the schedule."
Questions for consideration:
16. Upon hearing Sri. Basava Prabhu Patil,
the learned Senior Counsel for M/S. NSL and Sri C.A.
Sundaram and Sri. S.S. Naganand, the learned
Senior Counsels for M/S. KPR, Sri Dama Seshadri
Naidu, the learned Senior Counsel for M/s SSKN,
and Sri Kiran V Ron, the learned Additional Advocate
General, the following questions are framed, and the
learned Senior Counsels and the learned Additional
- 64 -
NC: 2023:KHC-K:8950-DB
Advocate General are informed that the following
questions are brought into focus by the rival
submissions. The questions are as follows.
I. Whether M/s KPR should be denied the
opportunity of being heard in the writ appeals
in WA Nos. 200168/2022, 200169/2022,
200021/2023 and WP No.200423/2023
because it is in contempt of the writ Court's
interim order dated 02.02.2022 in WP No.
200210/2022 and this Court's interim order
dated 04.11.2022 in the present proceedings.
II. Whether the contempt proceedings in CCC
Nos. 200037/2022 and 200014/2023
should be continued against.
• the representatives of M/s KPR
for diverting sugarcane from
the Subject Cane Area for the
period commencing from
02.02.2022 until seizure
pursuant to the next interim
order dated 10.05.2022 in W.P.
No. 201052/2022,
• the Commissioner for Cane
Development and Director of
- 65 -
NC: 2023:KHC-K:8950-DB
Sugars and the Deputy
Commissioner, Kalaburagi for
failing to take measures to
prevent M/s KPR from
procuring sugarcane as
aforesaid, and
• the Deputy Commissioner,
Kalaburagi for continuing the
enquiry under Section 6A of the
Essential Commodities Act and
passing the order dated
12.01.2023 which is impugned
III. Whether, in the facts and circumstances of
the case, the writ Court should have held that
M/s NSL has vested right to procure
sugarcane exclusively from the Subject Cane
Area and that the Subject Cane Area cannot
be allotted to any other sugar factory because
of the doctrines of promissory estoppel and
legitimate expectation.
IV. If the answer to the afore is in the affirmative,
and if it is shown that the authorities are
acting in a premeditated manner against M/s
NSL, could it be opined that the writ Court8
8 The writ Court has essentially opined that because the
State Government is vested with the power under the
- 66 -
NC: 2023:KHC-K:8950-DB
has erred in concluding that the State
Government should decide on the rival claims
for the reservation of the Subject Cane Area.
V. Whether the Government of Karnataka has
erred in granting licence dated 19.10.2022 in
favour of M/s KPR for the year 2021-22, and
whether the Deputy Commissioner has erred
in holding that M/s KPR has not contravened
the provisions of the EC Act and it has not
crushed sugarcane illegally.
The rival Whether M/s KPR should be denied
submissions on
the right of hearing
Question No. I:
17. Sri Basava Prabhu Patil submits that it is
undeniable that M/s KPR has violated the writ
Court's interim order, and therefore, this Court must
deny the right of hearing, especially when M/s KPR
has refused to disgorge the benefits received by it in
Sugarcane Control Order 1966, and no decision is taken
for the allotment of cane area to M/s KPR, the State
Government should take a decision in accordance with
law.
- 67 -
NC: 2023:KHC-K:8950-DB
violation of the interim orders. Sri. Basava Prabhu's
elaborate submissions in support of the same are as
follows:
17.1 The writ Court by its interim order dated
02.02.2022 has directed M/s KPR, as also the
authorities, to maintain status quo in view of the
interim prayer not only as regards re-
allotment/reallocation of the Subject Cane Area but
also against withdrawal of any village from such area
and against diversion of sugarcane from the aforesaid
cane area. Notwithstanding this interim order, M/s
KPR has undeniably diverted sugarcane from there.
This conduct is undeniably contumacious.
17.2 There cannot be any doubt about M/s
KPR poaching/ diverting sugarcane from the Subject
Cane Area because a substantial quantity of
sugarcane is crushed between the months of
February 2022 and May 2022 with the Central
- 68 -
NC: 2023:KHC-K:8950-DB
Government permitting M/s KPR to domestically sell
sugarcane produced at its factory at Chinmigera
village. The Government of India has issued orders
for release of domestic sale of sugar manufactured by
M/s KPR during this period. The orders in this regard
are undisputed, and the orders are for the following
quantities:
31.03.2022 2351 MT
29.04.2022 3970 MT
17.3 The Commissioner for Cane Development
on 11.04.2022 has filed an affidavit in CCC
No.200037/2022 reporting that M/s KPR has illegally
procured and crushed sugarcane without a crushing
licence. M/s KPR would have continued to divert
sugarcane from the Subject Cane Area but for the
interim order dated 10.05.2022 in W.P. No.
201052/2022 for seizure of the sugar cane, molasses
and ethanol and the consequential seizure.
- 69 -
NC: 2023:KHC-K:8950-DB
17.4 M/s KPR cannot be permitted to take
support of the impugned common order dated
28.09.2022 or plead ambiguity in the interim order
dated 02.02.2022 or mitigating circumstances
especially when it has derived an advantage to itself
in violation of the interim orders to M/s NSL's
detriment. Even if M/s KPR could be heard, it can
only be after it has disgorged the benefits received by
it in violation of the interim order.
17.5 As regards the legal propositions in
support of these contentions, Sri Basava Prabhu Patil
relies upon the following propositions:
[a] An order by a competent Court,
whether interim order or final, is
binding until it is varied by the court
that has granted the order or set
aside by a competent higher court. A
party to the proceedings in which
interim order is granted must adhere
to such order and there cannot be
- 70 -
NC: 2023:KHC-K:8950-DB
any exception. If there is violation or
breach, the party committing the
breach cannot be heard. In support
of this proposition, reliance is placed
upon the decision of the Hon'ble
Supreme Court reported in Ravi S
Naik v. Union of India and Others9;
[b] The Courts would not be unjust in
denying hearing to a person where
lack of worth is demonstrated by
attacking the court [or disobeying the
orders of the court] unless he or she
has agreed to beat a retreat and the
court concerned is convinced that
such a retreat is genuine. In support
of this proposition reliance is placed
upon the decision of the Hon'ble
Supreme Court in Anil Panjwani in
Re10.
[c] A party to the litigation cannot be
allowed to take an unfair advantage
by committing breach of the interim
9 1994 Suppl [2] SCC 641.
10 [2003] 7 SCC 375
- 71 -
NC: 2023:KHC-K:8950-DB
order and escape the consequences
thereof pleading misunderstanding or
mitigating circumstances, and
disobedience must be put to an end
with an iron hand, and the reliance is
on the decision of the Hon'ble
Supreme Court in All Bengal Excise
Licencees Association v.
Raghabendra Singh and others11.
18. Sri C.A. Sundaram, responding to the
afore, canvasses that the submissions on behalf of
M/s NSL is based in the premise that M/s KPR is in
disobedience of the interim order dated 02.02.2022 in
diverting sugarcane from the Subject Cane Area and
illegally crushing sugarcane without a crushing
licence. The question whether there is diversion of
sugarcane as alleged, or the question whether the
crushing by M/s KPR is illegal, was yet to be decided
by the writ Court as of the date of the seizure
11 [2007] 11 SCC 374
- 72 -
NC: 2023:KHC-K:8950-DB
pursuant to the interim order in W.P.
No.201052/2022. Until it is conclusively held that
M/s NSL has a vested right to procure sugarcane
from the Subject Cane Area, there cannot be any
allegation of disobedience. Sri. C.A. Sundaram's
further submissions in this regard are as follows.
18.1 This Court must consider the canvass for
denial of the opportunity of hearing in the light of the
law exposited in Anil Panjwani in re supra. The
rule as regards the denial of an opportunity of
hearing to a contemnor, unless contempt is purged,
is not a rule of law, or a statutory rule, and it is only
a rule of practice for protecting the sanctity of the
Court proceedings and the dignity of the Courts. This
rule to deny the opportunity of being heard is a
flexible rule of practice and not a rigid rule of law.
18.2 The concerned Court, guided and
governed by the facts and circumstances of a given
- 73 -
NC: 2023:KHC-K:8950-DB
case, must form an opinion that a contemnor is
persisting his behavior and initiation of proceedings
for contempt has had no deterrent or reformatory
effect or that the disobedience has continued for so
long that it impedes the course of justice or that the
conduct of the contemnor makes it impossible for the
Court to enforce the orders. M/s NSL has not placed
on record any material to opine that any of the
circumstance is established and conclude that M/s
KPR must be denied the opportunity of hearing.
18.3 M/s KPR has crushed 6.00 LMT after
commencing trial crushing, and out of this quantity
only 1.75 LMT [Lakh Million Tones] of sugarcane i.e.,
just 25% of the total sugarcane crushed is received
from the Subject Cane Area. M/s KPR over a period
of over 4 months prior to the order dated 02.02.2022
had entered into contracts with cane growers from
this area paying different sums to them towards
- 74 -
NC: 2023:KHC-K:8950-DB
plantation, harvesting and transportation costs, and
about 0.22 LMT was delivered by the sugarcane
growers as of 09.02.2022. M/s KPR after this date
has received about 1.50 LMT of sugarcane that was
agreed to be delivered, not even a single order is
placed after 09.02.2022.
18.4 M/s KPR has commenced trial crushing
after filing an application for crushing and has
continued crushing in anticipation of licence being
granted with retrospective effect as is the general
practice. These circumstances are to be considered
compendiously, and unless they are considered
accordingly and conclusively held that M/s KPR's
representatives are indeed in contempt, it would not
be reasonable to apply a rule, which is flexible in its
application, and deny the opportunity of hearing.
18.5 M/s NSL is asserting a vested right to
procure and utilize sugarcane from the Subject Cane
- 75 -
NC: 2023:KHC-K:8950-DB
Area to the exclusion of every other factory, but this
claim, at the best, is tenuous because of the Scheme
in Clause-6 of Sugarcane Control Order 1966, which
mandates reserving a cane area, a yearly
determination of the quantity that a sugarcane
factory will require for crushing during the year with
further decision on fixing the quantity or percentage
of sugarcane grown by a grower that should be
supplied to a factory leading to an agreement. M/s
NSL does not, and cannot, plead that these are
established. In the absence of the circumstances, no
vested right, can be pleaded, much less established.
M/s NSL in that event cannot contend that there
must be denial of opportunity of hearing.
The rival Whether the contempt proceedings in
submissions on
CCC Nos. 200037/2022 and
Question No. II:
200014/2023 should be continued.
- 76 -
NC: 2023:KHC-K:8950-DB
19. Sri Basava Prabhu Patil, reiterating that
M/s NSL shall rely upon the other contentions in
support of initiation of contempt proceedings, argues
that M/s NSL has brought on record materials that
demonstrate that the representatives of M/s KPR
have, in deliberate violation of the interim order dated
02.02.2022 in W.P.No.200210/2022, have procured
sugarcane from the Subject Cane Area for the period
commencing from 02.02.2022 until seizure pursuant
to the next interim order dated 10.05.2022 in W.P.
No. 201052/2022, and the authorities mentioned in
CCC NO.200037/2022 are guilty of deliberate
disobedience with the orders of the writ Court on
02.02.2023 in W.P.No.200210/2022 because they
have deliberately not taken measures to prevent M/s
KPR from procuring sugarcane as aforesaid.
19.1 Sri Basava Prabhu Patil submits that the
proceedings in CCC No. 200014/2023 are well
- 77 -
NC: 2023:KHC-K:8950-DB
founded because it is shown that both the
Commissioner for Cane Development and the Deputy
Commissioner have failed to initiate action to prevent
M/s KPR from diverting sugarcane from the Subject
Cane Area; that these officers, deliberately and in
willful disobedience of the interim order dated
04.11.2022, have also failed to take any measure to
dispose of sugar, molasses and ethanol despite
definite and unequivocal directions; and that the
Deputy Commissioner has deliberately concluded the
proceedings under Section 6A of the EC Act and has
passed the order dated 12.01.2023, which is
impugned in WP No. 200423/2023.
19.2 Sri Basava Prabhu Patil submits that the
Commissioner for Cane Development and the Deputy
Commissioner were informed through the months of
November and December 2022 that M/s KPR was
procuring sugarcane from the Subject Cane Area as
- 78 -
NC: 2023:KHC-K:8950-DB
could be seen by the fact that representations as per
Annexure - AB have been received by them but
without taking any action. Similarly, during the
enquiry under Section 6A of the EC Act, the Deputy
Commissioner is informed about the interim order
dated 04.11.2022 with a request to defer the enquiry.
19.3 Sri Basava Prabhu Patil argues that in
the circumstances of the case this Court must opine
that there is prima facie material on record to
conclude that specific charges must be framed
against the representatives of M/s KPR, the
Commissioner for Cane Development, the Deputy
Commissioner and the concerned Secretary as
contemplated under Rule 10 of the High Court of
Karnataka [Contempt of Court Proceedings} Rules,
1968 [for short, 'the Contempt of Court Rules'].
- 79 -
NC: 2023:KHC-K:8950-DB
20. Sri C.A. Sundaram, on the other hand,
submits that this Court must opine that there is no
prima facie case and absolve the representative of
M/s. KPR of the allegations of contempt in the light of
the following grounds; and the learned Senior
Counsel also submits that he would emphasize every
ground urged in answer to each of the questions
framed for consideration to demonstrate that there
can be no justification to allege disobedience, either
willfully or wantonly or otherwise. The learned
Senior Counsel relies upon the following as specific
circumstances that demonstrate that the contempt
proceedings cannot be sustained.
a. The writ Court's interim order dated
02.02.2022 in these terms directs the parties to
maintain status quo, and in the circumstances of the
case it was capable of being read that M/s KPR could
not have entered into fresh contracts to receive
- 80 -
NC: 2023:KHC-K:8950-DB
sugarcane growers from the Subject Cane Area after
the communication of the interim order dated
02.02.2022. M/s KPR is categorical that the order
dated 02.02.2022 is served only on 09.02.2022 and
that not a single order is placed with any of the
sugarcane growers from any of the villages in the
Subject Cane Area after this date. If 1.5 LMT of
sugarcane is delivered and received after 09.02.2022,
it is only because the contract for this quantity was
concluded over a period of four months prior to
09.02.2022 incurring costs to the growers towards
plantation, harvesting and transportation with the
sugarcane growers volunteering to deliver sugarcane
to M/s KPR on their own volition for their reasons.
b. The order dated 02.02.2022 is in the
context of the interim prayer for order against
diversion of the sugarcane from the M/s NSL's
asserted cane area. M/s KPR, in the absence of a
- 81 -
NC: 2023:KHC-K:8950-DB
reservation of the cane area including the Subject
Cane Area specifically to M/s NSL and in the absence
of an agreement between M/s NSL and sugarcane
growers, has bona fide believed that it could receive
the sugarcane for which contract was concluded with
the growers from the Subject Cane Area even prior to
the intimation of the order dated 02.02.2022.
c. The endeavour is to persuade this Court
to opine, given the Scheme as contained in Clause-6
of the Sugarcane Control Order 1966, that there
cannot be any vested right in favour of any factory to
procure sugarcane from any particular area for an
indefinite time unless the reservation of the Cane
Area is periodically revisited, the requirement of
sugarcane by a factory in a year is re-determined, the
quantity of sugarcane grown [or percentage of the
sugarcane by a grower] be supplied to a factory is re-
fixed and a direction to both the sugarcane grower
- 82 -
NC: 2023:KHC-K:8950-DB
[the society of sugarcane growers] is issued to
conclude agreement based on the fulfillment of the
aforesaid pre conditions.
d. M/s KPR is categorical that the question
of reserving the Subject Cane Area in favour of M/s
NSL is still pending open as none of the above
exercise is complete and it cannot be disputed that
there is no agreement because M/s NSL has caused
public notice in the month of March 2023 calling
upon the growers within the Subject Cane Area to
enter into agreements with it for supply of sugarcane
grown by them. In any event, even according to M/s
NSL only 95% of the sugarcane grown could be
bound to M/s NSL and there cannot be any embargo
in law on the sugarcane growers to supply the
remaining 5% of the sugarcane grown to any other
factory.
- 83 -
NC: 2023:KHC-K:8950-DB
e. If the order dated 02.02.2022 is construed
as creating a bar against supply of 5% of the
sugarcane grown, it would be an unreasonable
restriction even within the framework of the Scheme
under the Sugarcane Control Order 1966 and the
delegated subordinate legislation. As such, M/s KPR
bona fide believed that it was not violating the interim
order dated 02.02.2022 in receiving about 1,50,000
MT of contracted sugarcane after receipt of the
intimation of the aforesaid order. This Court must
consider the aforesaid circumstances in the light of
the settled proposition that an order, because of the
serious consequences that would befall as a
culmination of the contempt proceedings, must be
strictly construed.
20.1 Sri C.A. Sundaram, emphasizing that the
writ Court's interim order dated 02.02.2022 is terse,
submits that this order is capable of being read that
- 84 -
NC: 2023:KHC-K:8950-DB
M/s KPR could not have entered into fresh contracts
to receive sugarcane growers from the Subject Cane
Area after the communication of the interim order
dated 02.02.2022, and in any event this order is not
clear. The learned Senior Counsel submits that it is
a settled principle of law that if two interpretations
are possible of an order that is ambiguous, a
proceeding for contempt would not be maintainable,
especially if a party has acted on the basis of one of
the possible interpretations12; that this proposition is
because a contempt action is in the nature of a
quasi-criminal proceeding and the guilt must be
established, as in the case of a criminal charge,
beyond reasonable doubt13, and an ambiguous and
equivocal order, because it admits of interpretation,
12 Sushila Raje Holkar vs. Anil Kak (Retired) [2008] 14
SCC 392.
13 T.C. Gupta Vs. Bimal Kumar Dutta & Others. [2014]
14 SCC 446.
- 85 -
NC: 2023:KHC-K:8950-DB
cannot be a reason for sustaining contempt
proceedings.
20.2 Sri C.A. Sundaram concludes that willful
disobedience is established when intentional,
conscious, calculated and deliberate action with the
full knowledge of the consequences that would follow
is established, and this is in contrast when an action
is thoughtless or inadvertent or negligent or
involuntary14, and in the circumstances of the case,
there cannot be any allegation of willful disobedience
and hence, the contempt proceedings must be
dropped.
21. The Deputy Commissioner has filed Reply
Affidavit contending that this Court on 04.11.2022
has only modified the directions of the writ Court for
sale of sugar, molasses and ethanol and there is no
other interim order except insofar as the liberty
14 Abhishek Kumar Singh Vs. G. Pattanaik & Ors. [2021]
7 SCC 613.
- 86 -
NC: 2023:KHC-K:8950-DB
granted to M/s NSL to challenge the Crushing
Licence dated 19.10.2022; that M/s NSL has
impugned the order dated 04.11.2022 before the
Hon'ble Supreme Court in SLP(C) Nos.22782-
83/2022 and these SLPs are disposed of without
altering the order dated 04.11.2022 in the light of the
submissions made on behalf of M/s NSL recording
the opinion that the Commissioner for Cane
Development can sell ethanol and deposit the entire
consideration with this Court.
21.1 The Deputy Commissioner thus asserts
that neither this Court nor the Hon'ble Supreme
Court has stayed the further proceedings in an
enquiry under Section 6A of the EC Act, and hence,
no exception can be taken with the conclusion of the
enquiry and the culmination thereof in the order
dated 12.01.2023. As regards the action taken
against M/s KPR because of the complaint of
- 87 -
NC: 2023:KHC-K:8950-DB
procurement of sugarcane from the Subject Cane
Area, the Deputy Commissioner has once again
referred to the complaint lodged against M/s KPR
and M/s Renuka Sugars and the investigation by the
Deputy Superintendent of Police.
21.2 The Deputy Commissioner has denied all
the allegations of acting in violation of the interim
orders to assist M/s KPR. The Reply Affidavit filed by
the Commissioner for Cane Development is also in
similar lines, and the Statement of Reply filed on
behalf of the representatives of M/s KPR is also a
reiteration of the objections filed otherwise. As such,
there is no detailed reference to the same in this part
of the order.
This Court's conclusion on Question No I:
22. M/s NSL's contention that M/s KPR
should not be heard in these proceedings is based on
the allegation that it has violated the writ Court's
- 88 -
NC: 2023:KHC-K:8950-DB
interim order dated 02.02.2022 in procuring
sugarcane from the Subject Cane Area and in
crushing such sugarcane until 10.05.2022 without
obtaining crushing licence. M/s KPR's essential
defense is that upon receiving information about the
writ Court's interim order dated 02.02.2022 it has
not entered into contract with any sugarcane growers
within the Subject Cane Area to procure sugarcane;
that in the months preceding the date of information
of such interim order [09.02.2022] it had entered into
contracts with the sugarcane growers within the
Subject Cane Area to procure about 1.75 LMT and
received about 20-25% of such sugarcane; that after
09.02.2022, it has only received the remaining
sugarcane. It is also contended that M/s KPR, as of
the date of the seizure in the month of May 2022, had
crushed a total of 6 LMT of sugarcane and only 1.53
LMT thereof is received from the Subject Cane Area.
- 89 -
NC: 2023:KHC-K:8950-DB
22.1 This Court must observe that the M/s
KPR relies on these assertions which are presented
for the first time during the course of the hearing
without the detailed pleadings, but this Court is of
the considered view that, because the test to deny the
opportunity of hearing in Court proceedings is the
test of gross persistence and the denial of an
opportunity of hearing [which is an extreme step in
any judicial proceeding where the maxim, no man is
to be condemned unheard, is one of the bulwarks],
the defense as put forth, even without the detailed
pleadings must receive some consideration. This
Court in this context must refer to the decision of the
Hon'ble Supreme Court In the matter of Anil
Panjwani supra wherein it is held as follows:
"To our mind, the rule as to denying hearing
or withholding right of participation in the
proceedings to the contemnor may briefly be
summed up and so stated. It lies within the
discretion of the Court to tell the contemnor
- 90 -
NC: 2023:KHC-K:8950-DB
charged with having committed contempt of
Court that he will not be heard and would
not be allowed participation in the Court
proceedings unless the contempt is purged.
This is a flexible rule of practice and not a
rigid rule of law. The discretion shall be
guided and governed by the facts and
circumstances of a given case. Where the
Court may form an opinion that the
contemnor is persisting in his behaviour and
initiation of proceedings in contempt has had
no deterrent or reformatory effect on him
and/or if the disobedience by the contemnor
is such that so long as it continues it impedes
the course of justice and/or renders it
impossible for the Court to enforce its orders
in respect of him, the Court would be justified
in withholding access to the Court or
participation in the proceedings from the
contemnor. On the other hand, the Court may
form an opinion that the contempt is not so
gross as to invite an extreme step as above,
or where the interests of justice would be
better served by concluding the main
proceedings instead of diverting to and giving
priority to hearing in contempt proceeding the
Court may proceed to hear both the matters
- 91 -
NC: 2023:KHC-K:8950-DB
simultaneously or independently of each
other or in such order as it may deem
proper."
Thus, even if M/s KPR can demonstrate, even as a
mere possibility, that it has not entered into any
contract with the sugarcane growers within the
Subject Cane Area after 09.02.2022, it would not be
reasonable to opine that there is gross precipitation to
justify the denial of opportunity.
22.2 It remains undisputed that M/s KPR, on
06.02.2021 is granted in-principle approval for
establishing its factory at Chinmigera under the
provisions of the Karnataka Industries [Facilitation]
Act, 2002 after being issued with the Distance
Certificate on 11.12.2020 and that it has applied for
cane allocation area and cane crushing licence on
01.03.2021 and 17.11.2021 respectively. It also
remains indisputable that as of 12.05.2022 M/s KPR
has crushed 6.00 LMT of sugarcane, including the
- 92 -
NC: 2023:KHC-K:8950-DB
sugarcane procured from the Subject Cane Area, as of
12.05.2022 when, pursuant to the writ court's order
dated 10.05.2022, sugar, molasses and ethanol were
seized at its premises.
22.3 In an enquiry by the jurisdictional police
in the proceedings initiated on a complaint by M/s
NSL and certain correspondence by the authorities
on such complaint, the representatives of M/s KPR in
their statements to the jurisdictional police on
27.01.2022 have stated that the sugarcane growers
in certain villages of Afzalpur Taluk [which are part of
the Subject Cane Area] on their own initiative have
harvested sugarcane and delivered at M/s KPR's Unit
at Chinmigera because M/s NSL's unit is at a
distance of 60 km and M/s KPR's unit is at a
distance of 20 km, and M/s KPR has received such
sugarcane also to mitigate the difficulties of these
- 93 -
NC: 2023:KHC-K:8950-DB
farmers. These proceedings are before the writ
Court's interim order dated 02.02.2022.
22.4 This Court cannot opine that M/s KPR's
case that the sugarcane growers from some of the
villages in the Subject Cane Area, on their own
initiative, have delivered sugarcane is contrived, and
in fact, at this stage this Court must refer to the
communication dated 12.03.2021 addressed by M/s
NSL to the Deputy Director, Food and Civil Supplies,
Kalaburagi District stating that it was in certain
arrears to the sugarcane growers for sugarcane
season 2020-21 but it will take measures to clear
within a certain timeline. This Court must record
that, for the purpose of answering the questions
under consideration, that there is a strong possibility
of the sugarcane growers, because of the default in
the payment for the previous crushing season and
the relative ease of delivering sugarcane to a factory
- 94 -
NC: 2023:KHC-K:8950-DB
closer to their lands, could be encouraged to enter
into contracts with M/s KPR.
22.5 Further, this Court must opine that
nothing significant is brought on record to doubt M/s
KPR's case that its contracts for procurement of 1.75
LMT of sugarcane from the Subject Cane Area were
concluded before it was informed about the writ
Court's order dated 02.02.2022 or that it has not
entered into any contract with the sugarcane growers
from this area after it was informed about this order.
These circumstances, as also the other facets
discussed later, do not persuade this Court to opine
that it would not be reasonable to conclude that there
is gross precipitation by M/s KPR to justify the denial
of the opportunity of hearing in the present
proceedings.
- 95 -
NC: 2023:KHC-K:8950-DB
This Court's conclusion on Question No II
23. The next question for consideration is
whether the contempt proceedings in CCC No.
200037/2022 and 200014/2023 must be continued
against the representative of M/s KPR and the official
respondents. A person accused of being in civil
contempt may, as contemplated under the provisions
of the Rule 1015 of the Contempt of Court Rules, can
file an affidavit to deny such allegation, and the
Courts, after hearing the parties and upon
consideration of the reply, may drop the proceedings
and discharge the person, but if the court is satisfied
15 Hearing of Cases and Trial.- (i) The accused may file his
reply duly supported by an affidavit on or before the first
date of hearing or within such extended time as may be
granted by the Court.
(ii) Upon consideration of the reply filed by the accused
and after hearing the parties, the Court may drop the
proceeding and discharge the accused;
(iii) if the court, upon hearing, is satisfied that there is
prima facie case, it shall proceed to frame the charge
and furnish a copy of the same to the accused;
- 96 -
NC: 2023:KHC-K:8950-DB
that there is a prima facie case, it must frame charges
for continuation of the proceedings. The material
circumstances and the rival submissions are
considered in the light of the afore.
23.1 As against continuation of the contempt
proceedings, two propositions are strongly relied
upon. It is canvassed that if an order is possible of
two or more interpretations and therefore ambiguous,
and if one of the interpretations is bona fide adhered
to, the concerned cannot be held to be in contempt.
It is next canvassed that the contempt proceedings
cannot be sustained when the action complained is
either thoughtless or negligent unlike in cases where
there is intentional, calculated, conscious and
deliberate action with full knowledge of the
consequences that would ensue.
23.2 The merits of these propositions are not
contested, and as such, there is no detailed
- 97 -
NC: 2023:KHC-K:8950-DB
discussion in that regard, but the application of these
propositions is considered in the light of the
allegation that M/s KPR and the official respondents
have deliberately and consciously violated the writ
Court's order dated 02.02.2022. The merits of this
allegation is examined as against the backdrop of the
following undisputed facts as also the opinion
recorded in answering the first question viz., that the
sugarcane growers from the Subject Cane Area could
have on their volition supplied sugarcane to M/s
KPR.
23.3 As aforesaid, the in-principle approval for
establishing M/s KPR's unit at Chinmigera on
06.02.2021 under the provisions of Karnataka
Industrial [Facilitation] Act, 2002 is granted with the
Department of Industries, Boilers, Industrial
Security, and Health, Government of Karnataka
granting permission on 27.01.2022 to commence
- 98 -
NC: 2023:KHC-K:8950-DB
operations. It is contended that in the light of these
permissions and other compliances, and in
anticipation of the permissions for crushing and
allotment of inclusive Cane Area, M/s KPR has
commenced trial crushing.
23.4 The Government of India has issued
release orders on 31.03.2022 and 29.04.2022 and
has permitted M/s KPR to domestically sell 6321 MTs
of sugar. The Commissioner for Cane Development
has temporarily allocated certain villages to M/s KPR
on 13.07.2022, and the crushing licence for the
period up to 30.06.2022 is issued on 19.10.2022.
M/s KPR has filed application for crushing licence on
17.11.2021. The merits of the allocation of Cane
Area and issuing of Crushing Licence is being
examined in these proceedings.
23.5 The Commissioner for Cane Development
and the Deputy Commissioner, in response to the
- 99 -
NC: 2023:KHC-K:8950-DB
allegation of deliberate violation of the writ Court's
order dated 02.02.2022, have filed affidavits stating
that on 21.01.2022 i.e., before the writ Court's order
dated 02.02.2022, he has directed the jurisdictional
Tahsildar to take immediate action and stop
sugarcane crushing by M/s KPR and that on coming
to know about the writ Court's order dated
02.02.2022, he has directed the officers from the
Department to visit M/s KPR's factory and take
immediate actions to stop crushing. In support of
these assertions, the Commissioner for Cane
Development has also referred to the notices dated
21.01.2022 and 29.01.2022 issued to M/s KPR.
23.6 The Deputy Superintendent of Police on
28.01.2022 has filed a report on the complaint filed
by M/s NSL stating that he has recorded the
statements of the representative of M/s NSL, M/s
KPR and M/s Renuka Sugars; that the farmers
- 100 -
NC: 2023:KHC-K:8950-DB
within the 360 villages [including the Subject Cane
Area] have harvested and transported sugarcane to
the factories of these concerns because of the
advantages that would inure to them in harvesting
sugarcane and supplying the same to them; that M/s
KPR, has indeed established its offices in the Subject
Cane Area, but its representative is categorical that
no sugarcane would be procured by them on their
own volition without allotment orders. In the
circumstances of the case, these prior circumstances
will be crucial as would establish intendment and
must have a decisive role.
23.7 M/s NSL has sought for multiple interim
prayers viz., for direction to maintain status quo in
the matter of [a] the allotment/re-allocation of Subject
Cane Area, [b] the withdrawal of the villages from the
Subject Cane Area, and [c] to ensure that there is no
diversion of sugarcane from such area to any other
- 101 -
NC: 2023:KHC-K:8950-DB
factory. The writ Court 02.02.2022, has granted
interim order 'as prayed for', and this order is
without elaboration. There is no dispute that status
quo as regards the allotment and withdrawal of the
villages in the Subject Cane Area is maintained, and
the dispute is with regard to the diversion of
sugarcane from this area. This Court must observe
that if the directions are not elaborate, in the
circumstances of a given case and as in the present
case, it could allow for different reading of the import
of the directions leading to bona fide decisions and
conduct which could perhaps in prudence be avoided
to avert allegations of being in contempt.
23.8 As against diversion of sugarcane from
the Subject Cane Area after the order dated
02.02.2022, M/s KPR's case is that as of the date of
information of the writ Court's order [09.02.2022], it
had concluded contracts to procure 1.75 LMT from
- 102 -
NC: 2023:KHC-K:8950-DB
the Subject Cane Area, and that after coming to know
about the interim order, it has not entered into any
further contracts. If M/s KPR had in fact entered
into any further contracts after coming to know about
the writ Court's order, undoubtedly, the concerned,
including the representative of M/s KPR, would be on
a greater onus to establish bona fides and dispel
doubts about deliberate violation of the order.
However, if M/s KPR in due deference to the writ
Court's order, as understood by its representatives,
has not entered into any further contract this aspect
must receive due consideration.
23.9 There is nothing on record, as
discussed while considering the first question, to
reasonably opine that M/s KPR has entered into
contracts after coming to know about the writ Court's
order dated 09.02.2022, and this aspect must be
considered in the backdrop of the undisputed
- 103 -
NC: 2023:KHC-K:8950-DB
proposition that mere violation of the Courts' orders
will not be contumacious unless it is shown such
violation is deliberate and is intended to derive
advantage irrespective of the consequences in that a
sense of bravado unmindful of the consequences
must be too obvious to even refute. This proposition
initially comes into force when directions of the
Courts are not detailed and precise.
23.10 This Court, while considering whether
contempt proceedings in CCC No. 200023/2022
must be continued must also consider that M/s NSL
had filed writ petition in WP No. 200346/2021 [a writ
petition filed prior to the present proceedings
commenced in 2022] arraying M/s KPR and M/s
Renuka Sugars as respondents for directions to the
authorities to consider its application for allotment of
Cane Area and for directions to the aforesaid not to
divert sugarcane from its Cane Area/Subject
- 104 -
NC: 2023:KHC-K:8950-DB
Cane Area. This writ petition in WP No.200346/2021
is disposed of on 12.07.202116 directing the
authorities to consider such application, but no such
decision is taken. However, M/s KPR after this order
on 12.07.2021 is allotted sugarcane area excluding
the Subject Cane Area.
23.11 Further, M/s NSL asserts that only
it is entitled to procure sugarcane from the Subject
Cane Area, and this question, and every other related
question, was open for consideration at that stage of
the interim order dated 02.02.2022, especially with
M/s NSL having not entered into agreements with the
growers within the Subject Cane Area in the recent
times and causing a public notice in the month of
March 2023 calling upon the sugarcane growers
within the Subject Cane Area to enter into agreement.
The Commissioner for Cane Development and the
16 KPR and M/s Renuka Sugars, as verified from the order,
are not issued notice.
- 105 -
NC: 2023:KHC-K:8950-DB
Deputy Commissioner have filed counter affidavits
explaining the action taken by them prior to the writ
Court's interim order dated 02.02.2022 and tendering
an unconditional apology.
23.12 These circumstances are considered
holistically and in the light of the fact that the writ
Court in its order dated 28.09.2022 has left open all
questions to be considered in the enquiry enabled
under Section 6A of the EC Act observing that sugar
is an essential commodity and the petitioner, under
the provisions of Section 6A has an efficacious
remedy. The conduct of a party after the
orders/interim orders are granted must be examined
to decide whether such party must answer the charge
of being in contempt, but this Court is of the
considered view that the conduct alleged must also
be seen in conjunction with all the attendant
circumstances.
- 106 -
NC: 2023:KHC-K:8950-DB
23.13 It is often said that a particular
conduct, or the relative quality of a conduct, would
be crucial but the intendment behind such conduct
must be examined in the circumstances surrounding
such conduct in deciding on the culpability and the
consequences that must visit such culpability. In the
present case, insofar as the allegation of deliberate
and willful disobedience of the writ court's order
dated 02.02.2022, this Court is of the considered
view that there is no prime facie case for framing of
charges either against the representative of M/s KPR
or the Commissioner for Cane Development and the
Deputy Commissioner.
23.14 As regards the alleged deliberate and
willful disobedience with this Court's order dated
04.11.2022, it would suffice for this Court to observe
that no view be expressed at this stage because M/s
NSL, which has challenged this Court's aforesaid
- 107 -
NC: 2023:KHC-K:8950-DB
interim order before the Hon'ble Supreme Court in
SLP (C) Nos. 22782 - 83/2022 that is disposed of by
the order dated 16.12.2022, has filed contempt
proceedings in Contempt Petition [C] Nos. 886-
887/2023 before the Hon'ble Supreme Court and
these proceedings are pending with the parties filing
their respective pleas.
The rival Whether M/s NSL has vested
submissions on right to procure sugarcane
Question No. III exclusively from the Subject
and IV Cane Area and whether the
writ Court17 has erred in
concluding that the State
Government should decide on
the rival claims for the
reservation of the Subject
Cane Area
17 The writ Court has essentially opined that because the
State Government is vested with the power under the
Sugarcane Control Order 1966, and no decision is taken
for the allotment of cane area to M/s KPR, the State
Government should take a decision in accordance with
law.
- 108 -
NC: 2023:KHC-K:8950-DB
24. Sri Basava Prabhu Patil argues the
following in support of M/s NSL's case that it has a
vested right to purchase sugarcane from the Subject
Cane Area, that its legitimate expectation to
exclusively procure sugarcane from this area cannot
be derived and that promissory estoppel must be
applied against withdrawing any extent from this
area. The learned Senior Counsel first argues that
the State Government, with the issuance of Aland
Order, has determined and reserved the area for
supply of sugarcane to M/s SSKN. Accordingly, 369
villages, including the 44 villages that comprise of the
Subject Cane Area, is reserved for the benefit of M/s
SSKN. The State Government by this order has not
only thus reserved the cane area, but it has also fixed
the quantity of sugarcane to be supplied by each
sugarcane growers in these villages, and the reliance
in this regard on Clauses - 3 and 4 of this order
which read as under:
- 109 -
NC: 2023:KHC-K:8950-DB
"3. The Factory shall also secure the sugarcane
from the area specified in Schedule-I except
during the period when the concerned
Khandasari Units in these areas were
allowed to operate by the Government.
4]. Fixation of quantity of sugarcane to be
supplied by the Growers:
1]. Every grower of sugarcane in the
reserved area specified in Schedule-I
shall supply to the Factory ninety five
percent of the Sugarcane grown by
each such grower by himself or if he is
a member of sugarcane growers Co-
operative society operating in the
reserved area through such society.
2]. Every grower of sugarcane in the
reserved area specified in Schedule-1
shall supply ninety five percent of the
Sugarcane grower by each such
grower, which he has not contracted
or has not actually supplied to the
Khandasari Units".
24.1 Sri Basava Prabhu Patil contends that
every sugarcane grower in the aforesaid villages will
have to enter into an agreement with M/s SSKN in
terms of Clause 518 of the Aland Order, and this
Agreement to supply or purchase the determined
quantity of sugarcane. Every grower of Sugarcane, or
Sugarcane Growers Co-operative society supplying
- 110 -
NC: 2023:KHC-K:8950-DB
agreement is indisputably constituted with each of
the sugarcane growers in these villages being
members of M/s SSKN and the byelaws of this
Society stipulating that its members [the sugarcane
growers] shall enter into an agreement to supply
sugarcane to M/s SSKN at such rate and such place
as may be fixed by the aforesaid Co-operative Society
with the further stipulation that there shall be
liability to pay penalty and damages if there is failure.
24.2 Sri Basava Prabhu Patil argues that
these circumstances bring about the initial right in
M/s SSKN to procure sugarcane from the Subject
Cane Area [as also the entire extent of 369 villages
mentioned in Schedule-I of the Aland Order], and this
right is crystallized in M/s NSL, which has secured
leasehold rights from M/s SSKN under the Lease
sugarcane to the Factory, and the Factory shall enter into
agreement to supply or purchase, as the case may be, the
quantity of sugarcane determined under Clause - 4.
- 111 -
NC: 2023:KHC-K:8950-DB
Deed dated 06.03.2010, because of the following
circumstances:
a. The State Government has issued a tender
notification for grant of lease of M/s SSKN factory for
a period of 30 years. M/s NSL [the highest bidder]
and the State Government are parties to pre-bid
discussions as is provided for under the notification.
The State Government has specifically assured that
M/s NSL would be entitled to "procure sugarcane
available within the area allotted" under the Aland
Order with the further assurance that a separate
notification would be issued to ensure that 38 villages
[out of the total 369 villages] allotted to M/s Renuka
Sugars would also be restored to M/s NSL soon after
the execution of the lease deed.
b. Therefore, the Clause-3 of the Lease Deed
dated 06.03.2010 is executed with stipulations such
as the following:
- 112 -
NC: 2023:KHC-K:8950-DB
• The Lessee is entitled to procure the
sugarcane available within the area
allocated under the provisions of
Sugarcane [Control] Order, 1966, to the
Lessor.
• The Lessee shall have right to procure
additional sugarcane required, from any
other sources, but subject to the
permissions of the competent authorities
if required and in accordance with the
prevailing laws in this regard.
• The State Government shall issue a
separate notification restoring 38
villages which are temporarily allocated
to M/S Renuka Sugars Ltd., in favour of
lessee soon after signing of this lease
deed.
c. M/s NSL has been pursuing not only for
restoration of the aforesaid 38 villages but also
ensuring that no village within the 369 villages is
allotted to any other sugar factory. The petitioner has
filed writ petition in WP No.101201/2013 for securing
the assurance of restoration of the 38 villages allotted
to M/s Renuka Sugars, and this writ petition stands
disposed of by order dated 04.10.2021 directing the
State Government to hold an enquiry and pass
- 113 -
NC: 2023:KHC-K:8950-DB
appropriate orders. M/s NSL has also filed another
writ petition in WP No. 200346/2021 for a set of
directions to consider its representation against M/s
KPR19 diverting sugarcane from the Subject Cane
Area. This writ petition is disposed of on 12.07.2021
with directions to the authorities [including the
Commissioner of Cane and Director Sugar] to hear all
the concerned and pass appropriate orders.
d. In the meanwhile, M/s SDMSL, after filing
IEM for establishing a sugar factory with a crushing
capacity of 2005 TCD, has mooted a proposal for
withdrawal of the Subject Cane Area to be allotted to
it, and M/s SSKN as also M/s NSL, which by then
had acquired lease hold rights, have filed their
objections to this proposal. The Commissioner for
Cane Development, notwithstanding the objections,
has sent a proposal for allotment of the Subject Cane
19 M/s KPR is the sixth respondent in this petition. It is
served but has remained unrepresented.
- 114 -
NC: 2023:KHC-K:8950-DB
Area. There are exchanges between the Government
of Karnataka and the Commissioner for Cane
Development on certain queries, but no decision is
taken.
24.3 Sri Basava Prabhu Patil argues that the
aforesaid circumstances not only demonstrate a
vested right in M/s NSL to procure sugarcane
exclusively from the Subject Cane Area, but that M/s
NSL also has been pursuing for restoration of all the
villages and it is vindicated in asserting legitimate
expectation of being secured the entire 369 villages
mentioned in Schedule-I of Aland Order, including
the Subject Cane Area. He further canvasses that
because M/s NSL has a vested right backed by a
promise by the State Government to restore and
secure the entire 369 villages, the State Government
is estopped from allocating any extent in the Subject
Cane Area to any other factory or permit any other
- 115 -
NC: 2023:KHC-K:8950-DB
factory from procuring sugarcane from the villagers.
Therefore, the writ Court could not have directed
consideration of allotting any village in the Subject
Cane Area to M/s KPR.
24.4 Sri Basava Prabhu Patil, in support of the
proposition that even a government will not be
exempted from the liability to carry out the
representation made by it as to its future contract,
and that the government cannot, on some undefined
and undisclosed ground of necessity of expediency,
fail to carry out the promise or be a judge of its own
obligation to a citizen to reappraise its obligations,
relies upon the following paragraph in the decision of
the Hon'ble Supreme Court in Union of India and
others v. Indo-Afghan Agencies Ltd.20:
"Under our jurisprudence the
Government is not exempt from liability
to carry out the representation made by
20 [1968] 2 SCR 366
- 116 -
NC: 2023:KHC-K:8950-DB
it as to its future conduct and it cannot
on some undefined and undisclosed
ground of necessity or expediency fail to
carry out the promise, solemnly made by
it, nor claim to be the judge of its own
obligation to the citizen on an ex parte
appraisement of the circumstances in
which the obligation has arisen."
24.5 Sri Basava Prabhu Patil further relies
upon the decision of the Hon'ble Supreme Court in
National Buildings Construction Corporation v. S.
Raghunathan21, to canvass that the doctrine of
legitimate expectation, which has its genesis in the
field of administrative law based on the equitable
principles of fairness and reasonableness, gives rise
to a cause to an aggrieved person to show that a
decision of a public authority has effected some
benefit/advantage which in the past he has been
permitted to enjoy and which he legitimately expects
21 [1998] 7 SCC 66
- 117 -
NC: 2023:KHC-K:8950-DB
to be permitted to continue to enjoy until he is given
reasons for withdrawal and an opportunity to
comment on such reasons.
24.6 Sri Basava Prabhu Patil lastly submits
that the host of circumstances emphasized establish
that the authorities, who are expected in law to act
fairly and reasonably, are acting in a premeditative
manner despite the risk of being in contempt of
interim orders and the final orders22 to help M/s
KPR, and when premeditative action is demonstrated,
directing the authorities to decide on the question [as
is done in the present case by the writ Court in the
impugned order] would not yield any reasonable
conclusion and would only result in a frustration of
rights, and therefore, this Court must decide all
questions and hold that M/s NSL has an inviolable
22 The circumstances relied upon by Sri Basava Prabhu Patil
to bring forth premeditation is discussed while addressing
other questions relating to contempt.
- 118 -
NC: 2023:KHC-K:8950-DB
and exclusive right to procure sugarcane from the
Subject Cane Area. In this regard the learned Senior
Counsel relies upon the following paragraphs in the
decision of the Hon'ble Supreme Court in Siemens
Ltd. vs State of Maharashtra and Others23:
"9. Although ordinarily a writ court may not
exercise its discretionary jurisdiction in
entertaining a writ petition questioning a
notice to show cause unless the same
inter alia appears to have been without
jurisdiction as has been held by this Court
in some decisions including State of U.P.
v. Brahm Datt Sharma [[1987] 2 SCC 179:
[1987] 3 ATC 319: AIR 1987 SC 943],
Special Director v. Mohd. Ghulam Ghouse
[[2004] 3 SCC 440: 2004 SCC [Cri] 826]
and Union of India v. Kunisetty
Satyanarayana [[2006] 12 SCC 28: [2006]
12 Scale 262], but the question herein has
to be considered from a different angle
viz. when a notice is issued with
premeditation, a writ petition would be
maintainable. In such an event, even if
23 [2006] 12 SCC 33
- 119 -
NC: 2023:KHC-K:8950-DB
the court directs the statutory authority to
hear the matter afresh, ordinarily such
hearing would not yield any fruitful
purpose. [See K.I. Shephard v. Union of
India [[1987] 4 SCC 431: 1987 SCC [L&S]
438: AIR 1988 SC 686]. It is evident in the
instant case that the respondent has
clearly made up its mind. It explicitly said
so both in the counter-affidavit as also in
its purported show-cause notice."
25. Sri C.A. Sundaram, at the very
outset submits, that he would not have any quarrel
with the doctrines of promissory estoppel and
legitimate expectations as canvassed on behalf of M/s
NSL. However, the learned Senior Counsel submits
that he would endeavor to demonstrate that those
doctrines would not apply in the present case
because M/s NSL has primarily failed to establish a
vested right, and if a vested right is not established,
the doctrine would be inapplicable.
- 120 -
NC: 2023:KHC-K:8950-DB
25.1 Sri C.A. Sundaram also contends that
this Court must consider the contentions on behalf of
M/s NSL in the light of the decision of the Hon'ble
Supreme Court in Dhampur Sugar [Kashipur] Ltd.
v. State of Uttaranchal and Others24 wherein,
considering the provisions of U.P. Sugarcane
[Regulation of Supply and Purchase] Act, 1953 and
U.P. Khandsari Sugar Manufacturers' Licensing
Order, 1967, it is exposited that the area reserved for
a sugar factory is not permanent in nature and no
sugar factory can claim that the area reserved for a
particular year would remain with it for all the times.
25.2 Sri C.A. Sundaram argues that the
provisions of Clause-6 of the Sugarcane Control Order
1966 first contemplate reservation of an area for a
sugar factory based on such factory's crushing
capacity, the availability of sugarcane in the area and
24 [2007] 8 SCC 418.
- 121 -
NC: 2023:KHC-K:8950-DB
the need for production of sugar. If there is
reservation of an area under Clause-6[1][a] of the
Sugarcane Control Order 1966 only a contingent right
is created because there will have to be further
compliances before it can even be said that there is a
right to procure sugarcane exclusively from such
area, and in that event the right that is conferred is
limited both with regard the quantity of the
sugarcane that can be procured and the time over
which such quantity can be procured.
25.3 Sri C.A. Sundaram submits that after the
reservation of the cane area as contemplated under
Clause-6[1][a] of the aforesaid Order, there must be
[i] determination of the quantity of sugarcane
required by a factory for crushing during a given
year, [ii] fixation of the quantity of sugarcane or
percentage of sugarcane grown that shall be supplied
to the factory concerned, and [iii] crucially, after the
- 122 -
NC: 2023:KHC-K:8950-DB
aforesaid exercise there must be a direction to both
the sugarcane grower [in case there is a co-operative
society, to such co-operative society] and the factory
concerned to enter into an agreement incorporating
the afore details.
25.4 Sri C.A. Sundaram canvasses that the
requirement of yearly evaluation of a factory's
requirement, the fixing of the percentage of the
sugarcane grown to be supplied and a direction for a
concluded agreement demonstrates that there can be
never be a vested right in a factory to procure
sugarcane exclusively from a particular cane area for
ever, and hence, reading a vested right in a factory to
procure sugarcane exclusively from a reserved area
would be reading a rigour into the Scheme under
Clause-6 of the Sugarcane Control Order 1966
without regard to the sugarcane growers' interest and
the object of this Order which is also to ensure that
- 123 -
NC: 2023:KHC-K:8950-DB
the rights of the sugarcane growers are not sacrificed
to the market forces.
25.5 Sri C.A. Sundaram next contends that
M/s NSL, even if it could assert any right to
exclusively procure sugarcane from the Subject Cane
Area for any limited period, it must establish an
agreement with the sugarcane growers. This would
follow not only from the reading of the provisions of
Clause-6[1] of the Sugarcane Control Order 1966 but
also from Clause 6[2] of this Order and M/s NSL's
own documents. The learned Senior Counsel
emphasizes that the provisions of Section 6[2]
stipulate that every sugarcane grower, sugarcane
growers' co-operative society and factory, to whom or
to which an order made under paragraph [c] of sub-
Clause [1] applies, shall be bound to supply or
purchase, as the case may be, that quantity of
sugarcane covered by the agreement entered into
- 124 -
NC: 2023:KHC-K:8950-DB
under the paragraph, and the provisions further
stipulate any willful failure on the part of the
sugarcane growers' cooperative society or the factory
to supply or purchase, shall constitute a breach of the
provision of the Order; as such, he contends that it is
imperative that there is an agreement to bind the
sugarcane growers to a particular factory and for
penal consequences.
25.6 As regards the documents relied upon by
M/s NSL, Sri C.A. Sundaram draws this Court's
attention to certain provisions of the byelaws of M/s
SSKN to contend that the Board of Directors are
required to draw a program of sugarcane cultivation
within its area of its operation and every member,
who is assigned an area, must enter into a contract
to grow crop according to such program and to
deliver the same to M/s SSKN at such place and
price as may be specified from time to time. Sri C.A.
- 125 -
NC: 2023:KHC-K:8950-DB
Sundaram argues that unless these circumstances
are also established beyond doubt, M/s NSL cannot
assert any vested right and in the absence of such
right it cannot claim that the propositions of
legitimate expectation or promissory estoppel must
be applied.
The State's response during the course of the
hearing:
26. In the light of the canvass as aforesaid,
and the specific contention that once an application
is filed for grant of crushing licence, crushing is
commenced in anticipation of such licence being
granted with retrospective effect, the Commissioner
for Cane Development is called upon to make known
the Government's stand and the officer is even
permitted to file an affidavit. However, the affidavit is
not placed, and reliance is placed on the defence
- 126 -
NC: 2023:KHC-K:8950-DB
taken in the Statement of Objections by the
authorities.
26.1 Sri Kiran V Ron, the learned Additional
Advocate General, submits that the exercise as
envisaged under the provisions of the Sugarcane
Control Order 1966 need not be undertaken by the
government each year but where the circumstances
make it incumbent, it would be inevitable. Insofar as
the present case, he invites this Court's attention to
the specific stand taken as regards the increase in
sugarcane growing and the potential for growth. This
Court must mention that in Para 5(iv) of the
Statement of Objections by the Commissioner for
Cane Development the following is specifically stated:
"The order reserved (sic) the cane area to
M/s SSKN viz., Karnataka Sugarcane
(Regulation of Distribution) Order, 1996 is
subject to amendments as may be made from
time to time".
- 127 -
NC: 2023:KHC-K:8950-DB
26.2 Sri Kiran Ron submits that for a factory to
claim exclusive right to procure from an area it must
necessarily [as contemplated under Clause-6[2] of the
Sugarcane Control Order 1966] enter into agreement
with the sugarcane growers from such area and
therefore, the State government has issued
Order/Communication dated 28.11.2018 to ensure
that the sugar factories in the State must enter into
bilateral agreements with the sugarcane growers in
the prescribed format. The learned Additional
Advocate General submits that if the factory in
signing the contract agrees to purchase sugarcane
grown in a given land for a particular year, the
concerned grower also binds himself/herself to
supply sugarcane to such factory, and because M/s
NSL has not entered into such agreement it cannot
claim any vested right.
- 128 -
NC: 2023:KHC-K:8950-DB
This Court's conclusion on Question No III and IV:
27. The reserving of a sugarcane growing area
for a particular factory has been in vogue even from
the days prior to independence. As observed by the
Supreme Court in the U.P. Co-operative Cane
Unions Federations Vs. West U.P. Sugar Mills
Association and Others25, the provisions of the
Sugarcane Act, 1934 contemplated inter alia a
controlled area and purchase of sugarcane from
factories at minimum price from the growers in such
controlled area, and different provinces in the
Country, in exercise of the delegated powers, brought
into force respective statutory mechanism to bring
about a controlled area. The Central Government,
with the promulgation of the EC Act, in exercise of
the powers conferred under Section 3 thereof, has
brought into force the Sugarcane Control Order 1966
25 [2004] 5 SCC 430
- 129 -
NC: 2023:KHC-K:8950-DB
stipulating, amongst others, the power to regulate
distribution and movement of sugarcane [Clause 6 of
this Order].
27.1 Insofar as the State of Karnataka, the
Government of Karnataka, in exercise of the powers
conferred under Clause 3 of the Sugarcane Control
Order 1966 and the delegated power thereunder
insofar as Clauses 6, 7, 8 and 9 the aforesaid Order,
has been issuing separate Orders after determining
the quantity of sugarcane required by a specific
factory and reserving the area for supply of
sugarcane factory, while providing for an agreement
to supply/purchase the determined quantity of
sugarcane between a factory and the sugarcane
growers within the particular area [the reserved area]
prohibiting movement of sugarcane from such reserve
area except in accordance with the permission
granted by the concerned Deputy Commissioner.
- 130 -
NC: 2023:KHC-K:8950-DB
Insofar as the present proceedings, the State
Government, on 25.02.1987, has notified the
Karnataka Sugarcane [Regulation of Distribution]
[Aland] Order, 1986 [Aland Order] allocating 369
villages in different talukas, including the villages in
the talukas of Kalaburagi and Afzalpur.
27.2 The provisions of Clause-6 of the
Sugarcane Control Order 1966 and the separate
orders under this Clause continue to regulate the
distribution and movement of sugarcane in the State
of Karnataka, and this Court must refer to the brief
interlude when the State Legislature enacted the
Karnataka Sugarcane [Regulation of Purchase and
Supply] Act, 2013 providing for purchase of
sugarcane in the reserved area. This Act, in Section 7
thereof, stipulated that a sugarcane grower in a
reserved area may sell sugarcane to the factory to
which the area is so reserved and that the concerned
- 131 -
NC: 2023:KHC-K:8950-DB
factory shall enter into an agreement with the
sugarcane growers in such form and on such terms
and conditions as are contained in Clause-6 of the
Sugarcane Control Order 1966 with the stipulation
that no other person shall enter into an agreement to
purchase sugarcane grown by the grower as
aforesaid.
of 2014, which is brought into force to amend the
aforesaid Act of 2013, the provisions of Section 726
are substituted to read that the purchase of
Purchase of sugarcane in reserved area.-
(1) A sugarcane-grower in reserved area may sell
sugarcane grown to the occupier of the factory to which
the area is so reserved.
(2) The factory shall enter into an agreement with a cane-
grower in such form, by such date on such terms and
conditions as specified in Clause 6 of the Sugarcane
(Control) Order, 1966 for the purpose of purchasing the
sugarcane offered in accordance with sub-section(1).
(3) No person other than the factory aforementioned shall
purchase or enter into an agreement to purchase
sugarcane grown by the sugarcane grower except in
accordance with agreement under sub-section (2).
- 132 -
NC: 2023:KHC-K:8950-DB
sugarcane by the sugar factories from the reserve
area shall be regulated as per the Sugarcane Control
Order 1966 as amended from time to time. As such,
status quo ante is restored, and the distribution and
movement of sugarcane must essentially be regulated
under the Sugarcane Control Order 1966 and the
respective Orders issued by the State Government for
each factory.
27.4 This Court must also record that the
question of reserving cane area has received the
attention of Central Government in the previous
decade. The Economic Advisory Council to the Prime
Minister headed by Dr. C Rangarajan has submitted
a report 'On The Regulation Of Sugar Sector In India:
The Way Forward' in the month of October 2012, and
insofar as the Cane Reservation/ Bonding, as per the
PRS Legislative Research Report Summary, the
Council has opined that over a period of time the
- 133 -
NC: 2023:KHC-K:8950-DB
States could encourage development of a market-
based long term contract and phase out reserving
Cane Area and bonding. It is reported that after this
report, the States have been requested to consider
the recommendations for implementation, and except
the State of Maharashtra, none of the States have
made any changes in the prevailing arrangement.
27.5 Therefore, the question whether
there is a vested right in M/S NSL to procure
sugarcane from the Subject Cane Area must be
examined in the light of the provisions of the
Sugarcane Control Order 1966 and the Aland Order.
The provisions of the Sugarcane Control Order 1966
are as follows:
"6. Power to regulate distribution and
movement of sugarcane. -
[1] The Central Government may, by order
notified in the official Gazette -
- 134 -
NC: 2023:KHC-K:8950-DB
a) reserve any area where
sugarcane is grown [hereinafter
in this Clause referred to as
"reserved area"] for a factory
having regard to the crushing
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.
b) determine the quantity of
sugarcane a factory will require
for crushing during any year.
c) fix, with respect to any specified
sugarcane grower or sugarcane
growers generally in a reserved
area, the quantity or percentage
of sugarcane grown by such
grower, or growers, as the case
may be, which each such grower
by himself, or if he is a member of
a co-operative society of
sugarcane growers operating in
the reserved area, through such
society, shall supply to the factory
concerned.
d) direct a sugarcane grower or a
sugarcane grower's co-operative
society, supplying sugarcane to a
factory, and the factory concerned
to enter into an agreement to
supply or purchase, as the case
may be, the quantity of sugarcane
fixed under paragraph.
- 135 -
NC: 2023:KHC-K:8950-DB
e) direct that no gur [jaggery] or
khandsari sugar or sugar shall be
manufactured from sugarcane
except under and in accordance
with the conditions specified in
the licence issued in this behalf.
f) prohibit or restrict or otherwise
regulate the export of sugarcane
from any area [including a
reserved area] except under and
in accordance with a permit
issued in this behalf.
[2] Every sugarcane grower, sugarcane
growers' co-operative society and
factory, to whom or to which an order
made under paragraph [c] of sub-
Clause [1] applies, shall be bound to
supply or purchase, as the case may
be, that quantity of sugarcane
covered by the agreement entered
into under the paragraph and any
willful failure on the part of the
sugarcane growers' cooperative
society or the factory to do so, shall
constitute a breach of the provision of
the Order:
Provided that where the default
committed by any Sugarcane
Growers' Cooperative Society is due
to any failure on the part of any
sugarcane grower, being a member of
such society, such society, shall not
be bound to make supplies of
sugarcane to the factory to the extent
of such default.:"
- 136 -
NC: 2023:KHC-K:8950-DB
27.6 The provisions of the Aland Order read as
under:
" Determination of the quantity of
sugarcane required by the factory and
preservation of the area for supply of
sugarcane -
[1] The crushing capacity of the factory
being one thousand two hundred and fifty
tonnes per day, the quantity of sugarcane
required by the factory during a year is
about two and half lakh metric tonnes.
[2] The factory shall secure the sugarcane
determined under sub-Clause (1) from the
area specified in the Schedule I to this
Order which shall be the reserved area for
supplying of sugarcane to the factory.
[3] The factory shall also secure the
sugarcane from the area specified in
Schedule I except during the period when
the concerned Khandasari units in these
areas were allowed to operate by the
Government.
4. Fixation of quantity of sugarcane to
be supplied by the growers-
[1] Every grower of sugarcane in the
reserved area specified in Schedule I shall
supply to the factory ninety-five per cent of
the sugarcane grown by each such grower
by himself or if he is a member of a
Sugarcane Growers Co-operative Society
operating in the reserved area through such
Society.
- 137 -
NC: 2023:KHC-K:8950-DB
[2] Every grower of sugarcane in the
reserved area specified in Schedule I shall
supply ninety-five per cent of the sugarcane
grown by each such grower, which he has
not contracted or has not actually supplied
to the Khandasari units.
5. Agreement to supply or purchase the
determined quantity of sugarcane.
Every grower of sugarcane, or Co-operative
Society, supplying sugarcane to the factory,
and the factory Sugarcane Growers shall
enter into agreement to supply or purchase,
as the case may be, the quantity of
sugarcane determined under Clause 4."
27.7 The Central Government, and because of
the delegation, the State Government, may by order
notified in the official Gazette reserve any area where
sugarcane is grown for a factory having regard to [a]
the factory's crushing capacity, [b] availability of
sugarcane in reserved area and [c] the need for
production of sugar. This is the first stage, and this
Court must observe that with the issuance of the
Aland Order insofar as M/S SSKN's factory at
Bhusnoor [M/s NSL is granted leasehold rights for
- 138 -
NC: 2023:KHC-K:8950-DB
thirty years and this lease subsists] this stage is
accomplished as 369 villages in different talukas,
including the villages in the talukas of Kalaburagi
and Afzalpur, are reserved.
27.8 The provisions of Clause 6[1][b] of the
Sugarcane Control Order 1966 further stipulate that
the Central Government [the State Government] may
determine the quantity of sugarcane a factory
requires for crushing "during any year" and the
provisions of Clause 6[1][c] stipulate that there must
be fixation of the quantity [or the percentage] of the
sugarcane grown by the sugarcane grower in such
Area. This Court must observe that the aforesaid two
requirements are also achieved by the issuance of
Aland Order for M/s SSKN inasmuch as the
assessment of the crushing capacity of the factory at
Bhusnoor is assessed at 1250 TCD and the quantity
of sugarcane required during a year is assessed at
- 139 -
NC: 2023:KHC-K:8950-DB
1.5 lakh metric tones and every grower within the
area reserved is directed to supply 95% of the
sugarcane grown [by himself or as a member of the
sugarcane growers cooperative Society operating in
the reserve] to this factory.
27.9 However, the question would be whether
this decision to reserve these villages as contained in
the Aland Order must prevail forever, and the
contentions on behalf of M/s KPR in this regard are
that this decision cannot be forever cast in iron and
that the State Government must every year
undertake the necessary exercise for determining the
quantity of sugarcane required by a factory and fix
the quantity [or the percentage] of sugarcane grown
with resultant direction to both the sugarcane grower
and the factory to enter into an agreement for supply
and purchase of the quantity of sugarcane fixed.
This canvass, which is to meet the argument of the
- 140 -
NC: 2023:KHC-K:8950-DB
'vested right' in M/s NSL to procure sugarcane from
the 369 Villages [the reserved Area, including the
Subject Cane Area] is stoutly refuted on behalf of M/s
NSL.
27.10 It cannot be gainsaid that over a period of
time circumstances are bound to change either
substantially or otherwise. If the attendant
circumstances of a factory and its reserved area
remain without substantial changes, the question to
be asked is should the exercise to reserve the cane
area to determine the quantity of sugarcane required
by a factory and the fixation of the quantity to be
supplied be undertaken each year. If all the
attendant circumstances significantly remain the
same with some changes, and if the exercise as
aforesaid is to be undertaken, this Court must opine,
the same will be onerous and not conducive for good
administration practices.
- 141 -
NC: 2023:KHC-K:8950-DB
27.11 On the other hand, over a period of
time the attendant circumstances may change
significantly, and the circumstances may change in
myriad ways inasmuch as it could be because of
uncertain weather conditions, change in the crop
pattern resulting in increase or reduction of the area
under sugarcane cultivation, the possible increase in
the number of factories in a region and a factory's
inability to crush the available sugarcane and
discharge its liabilities. In these circumstances, the
decision taken [a] to reserve the cane area, [b]
determine the quantity of sugarcane required by a
factory for crushing in a given year [c] fix the quantity
of percentage of sugarcane to be supplied by the
sugarcane grown to the factory will have to be re-
examined with the resultant change in the direction
to the concerned factory and the sugarcane grower to
enter into agreement which will bring about all the
consequential rigour.
- 142 -
NC: 2023:KHC-K:8950-DB
27.12 This Court must also observe that in
devising the provisions of Clause 6 of the Sugarcane
Control Order 1966 the inevitability for re-
determination of the reservation of cane area and
determination of the crushing capacity of a factory
and fixation of the quantity because of the changing
circumstances must have received due consideration.
As such, the provisions of Clause-6 of this Order
employ the expression 'may' as against the
expression 'shall', and thus the State Government is
given the discretion to act according to the changing
circumstances in reserving a particular area or in
determining the quantity of sugarcane required by
the factory and the quantity or the percentage of
sugarcane to be bound to a factory, or in fixing the
quantity or percentage of sugarcane that is to be
supplied.
- 143 -
NC: 2023:KHC-K:8950-DB
27.13 Therefore, this Court is of the considered
view that if it is not reasonable to opine that the
decision under Clause-6 of the Sugarcane Control
Order 1966 would be immutable, it would also not be
reasonable to construe the provisions of Clause-6 of
the Sugarcane Control Order 1966 as requiring the
concerned government to take decision on the
aforesaid aspects every year. This Court having thus
opined, must also observe that the State Government
must act timely inasmuch as both the sugarcane
growers and the concerned factory are uniquely
placed. If there is any delay to act, notwithstanding
the circumstances staring, the balance of interests
between them will be affected leading to protracted
and multiple proceedings as in this case.
27.14 This Court, in this regard must make a
useful reference to the exposition in paragraph 19 of
the decision of the Hon'ble Supreme Court in U P Co-
- 144 -
NC: 2023:KHC-K:8950-DB
operative Cane Unions Federation Vs. West UP
Sugar Mills Association and Others supra, and it
read as hereunder.
"The provisions referred to above have been
made for the benefit of the sugar factory so that
it is assured of and gets a continuous supply of
freshly harvested sugarcane in quantity
according to its crushing capacity and for the
whole duration of the crushing season. No
doubt the cane grower also gets some
advantage in the sense that purchase of his
yield is assured but at the same time many
limitations and restrictions are imposed upon
him. In view of the aforesaid statutory
provisions, the position of a cane grower
becomes entirely different from that of a farmer
producing any other kind of agricultural crop
where there are absolutely no restrictions upon
him. He is at absolute liberty to harvest his
crop at his convenience without being dictated
by a third party, to sell it to anyone
whomsoever he likes and whenever he wants.
It is in this scenario, which is not the creation of
the cane grower but of the statutory provisions
operating in the field, that we have to examine
- 145 -
NC: 2023:KHC-K:8950-DB
the question whether the State has any
authority or power to fix the price of the
sugarcane supplied to a producer of sugar
(sugar factory)."
27.15 The obligation to enter into contract as
envisaged in Clause 6[1][d] of the Sugarcane Control
Order 1966 and the terms of the Sugarcane
Regulation of Distribution [Hospet] Order 197427 [the
Hospet Order] qua a sugar factory and the sugarcane
growers within the area reserved for this factory has
come up for consideration before a Division Bench of
this Court in Tungabhadra Sugarcane and
Banana Growers Association Vs. Government of
Karnataka28 when there was a dispute between a
factory and the concerned sugarcane growers about
the payment to be made by the factory to the
growers. This question was listed before the Division
The essential terms of this Hospet and Aland Orders for the
present purposes are materially the same.
2011 SCC Online Kar 187.
- 146 -
NC: 2023:KHC-K:8950-DB
Bench for consideration in view of the reference by a
writ Court.
27.16 The Division Bench has examined the
corresponding rights and obligations in the backdrop
of the Scheme under Clause-6 of Sugarcane Control
Order 1966/ the Hospet Order 1974 and the decision
of the Hon'ble Supreme Court in UP Co-operative
Cane Unions Federation Vs. West UP Sugar Mills
Association and Ors. supra. The Division Bench,
upon compliance with the different requirements as
contemplated under Clause-6 of the Sugarcane
Control Order 1966, has ultimately opined that an
obligation is cast upon the concerned factory and the
sugarcane growers to enter into an agreement
stipulating the quantity of sugarcane sold or
purchased, and there is no discretion for the parties
in this regard with the further observation that if
either want the benefit of the Sugarcane Control Order
- 147 -
NC: 2023:KHC-K:8950-DB
1966, they must necessarily enter into an agreement
as contemplated under Clause 6[1][e] of the
Sugarcane Control Order 1966. The relevant
paragraphs in this judgment read as under:
"21. ............... However, the most important
Clause is, Clause 6. The Central
Government by a notification in the
Official Gazette can reserve any area
where sugarcane is grown for a
factory having regard to the crushing
capacity of the factory based on the
availability of sugarcane in the
reserved area and the need for
production of sugar with a view to
enable the factory to purchase the
quantity of sugarcane required by it.
By a notification the said power is
delegated by the Central Government
to the respective State Governments.
Accordingly, the Central
Government/State Government would
determine the quantity of sugarcane
which a factory will require for
crushing during the year and fix the
quantity or percentage of sugarcane
- 148 -
NC: 2023:KHC-K:8950-DB
grown by such grower or growers in
the reserve area which would be
supplied to the factory concerned. It
also has the power to direct the
sugarcane grower or a sugarcane
growers co-operative society to supply
sugarcane to a factory and the factory
concerned has to enter into an
agreement to supply or purchase as
the case may be, the quantity of
sugarcane fixed by the Government. It
also has been vested with the power
to prohibit or restrict or otherwise
regulate the export of sugarcane from
the area including the reserved area
except under and in accordance with
the permit issued in this behalf. Sub-
Clause [2] of Clause 6 makes it very
clear that if the aforesaid provisions
are contravened, by any of the parties,
it shall constitute a breach of the
provisions of the order."
27.17 This Court must reiterate the exposition
and observe that when an area is reserved as
contemplated under Clause 6[1[[a] of the Sugarcane
- 149 -
NC: 2023:KHC-K:8950-DB
Control Order 1966, and every time the decision to
reserve an area is revisited, there must be
determination, or re-determination, of the quantity of
sugarcane required by a factory for crushing and
fixing of the quantity [or percentage] of sugarcane
grown to be supplied to the concerned factory as
contemplated under Clause 6[1][b] and [c] of this
Order. Crucially, simultaneously with the
determination [or re-determination] there must be a
direction to the concerned factory and the sugarcane
growers [the concerned Co-operative Society] to enter
into an agreement for binding the sugarcane grown
as contemplated under Clause 6[1][d] of the
Sugarcane Control Order 1966, apart from direction
under Clauses 6[1][e] and [f], and the factory and the
growers [the Co-operative Society] consequent to such
directions must enter into an agreement resulting in
vested rights paving way for prohibition under Clause
6[2] of the Sugarcane Control Order 1966.
- 150 -
NC: 2023:KHC-K:8950-DB
27.18 This Court, while reiterating the
exposition on the significance of the mentioned
exercise resulting in direction to enter into an
agreement and the consequential obligatory
agreement, must also declare that the concerned
Government, when circumstances have changed,
must not only revisit the decision to reserve an area
and/or re-determine the quantity of sugarcane
reserved by a factory for crushing and fix the quantity
[or percentage] of sugarcane to be supplied but must
also direct a fresh agreement in the light of revisited/
re-determined times. The concerned Government,
depending on the circumstances, must undertake all,
or any, of the aforesaid exercise resulting in
consequential direction to enter into an obligatory
agreement. The State Government cannot be ad hoc
in considering the changing circumstances.
- 151 -
NC: 2023:KHC-K:8950-DB
27.19 In the present case, with the issuance of
the Aland Order not only the area for M/s SSKN is
reserved [paragraph 3 read with Schedule-I of the
Order] but also the quantity of sugarcane to be
supplied by the concerned sugarcane
grower/Cooperative Society is fixed [paragraph 4 of
the Order] with direction to enter into agreement with
the sugarcane growers [paragraph 5 of the Order]. It
is contended that the agreement as contemplated
under Clause 6[1][d] of the Sugarcane Control Order
1996 and the paragraph-5 of the Aland Order is
brought about between M/s SSKN and the sugarcane
growers in the reserve area [369 villages, including the
Subject Cane Area] with the sugarcane growers in
these villages enrolling as members of M/s SSKN [a
Co-operative Society] with Byelaws enjoining them to
subscribe to the arrangement for supply of 95% of
the sugarcane grown to M/s SSKN's Factory at
Bhusnoor.
- 152 -
NC: 2023:KHC-K:8950-DB
27.20 M/s NSL, to assert a vested right to
procure sugarcane exclusively from the Subject Cane
Area, relies upon these circumstances and the fact
that it has entered into the lease deed dated
06.03.2010 after certain negotiations and that there
are certain assurances to restore the villages allotted
to M/s Renuka Sugars29. The learned Senior
Counsels for both M/s NSL and M/s KPR have
elaborated on the afore to contend why this Court
must opine that M/s NSL can and cannot assert a
vested right to procure sugarcane exclusively from
the 369 villages, and the corresponding submissions
are on whether M/s NSL can rely upon the byelaws of
M/s SSKN when the details on the measures taken
by its Board [as required under the Byelaws] to
29 The term in the Lease Deed in this regard read that the
"State Government shall issue a separate notification
restoring 38 villages which are temporarily allocated to
M/S Renuka Sugars Ltd., in favour of lessee soon after
signing of this lease deed".
- 153 -
NC: 2023:KHC-K:8950-DB
promote the cultivation of sugarcane and the interest
of the growers in these villages are not on record.
27.21 The learned Senior Counsel for M/s
NSL places greater reliance on the pre-bid discussion
on restoring the reservation of the 369 villages in
favour of M/s NSL with certain terms in that regard
being incorporated in the lease deed dated
06.03.2010 and the undisputed fact that M/s SSKN
and M/s NSL have filed objections when there was a
proposal to reserve the Subject Cane Area [44 villages
of the 369 villages] in favour of M/s KPR. However,
the proposal to reserve these villages has remained
inchoate with no decision taken. This Court, in the
backdrop of this Court's opinion on the need for re-
determination of factors under Clause 6 of the
Sugarcane Control Order 1966 when circumstances
so command, must consider whether M/s NSL can
assert a 'vested right ' to receive sugarcane from the
- 154 -
NC: 2023:KHC-K:8950-DB
growers from the Subject Cane Area in the light of the
Scheme under the Sugarcane Control Order 1966
and the Aland Order notwithstanding the
circumstances over the last three decades rather
than dilating on these aspects.
27.22 The State Government [as the
concerned Government] in issuing the Aland Order in
the year 1986 has reserved 369 villages in the
different Talukas of the Kalaburagi District for M/s
SSKN and considered that the crushing capacity of
M/s SSKN's factory is at 1250 TCD and the
requirement would be 1.5 lakh Metric Tonnes a year.
The Aland Order is issued subject to the condition
that its terms shall be subject to amendment
inasmuch as this Order [in paragraph 2] stipulates
that it shall continue to be in force till repealed subject
to such amendments as may be made to it from time to
time. Over the period of the last three decades, there
- 155 -
NC: 2023:KHC-K:8950-DB
have been substantial changes in the circumstances,
and these changes in the circumstances are seen
from the following.
• M/s NSL, which has acquired rights from M/s
SSKN, has increased this crushing capacity,
and it is stated that M/s NSL, as of today, has
the capacity of 10,000 TCD. If M/s NSL was
crushing about 7.33 LMT during the year 2013-
2014, it has crushed 8.95 LMT during the year
2021-2022. M/s NSL proposes to increase its
crushing capacity to 12,000 TCD, and it is
asserted that it requires 20-24 LMT of sugarcane
a year for crushing.
• Apart from M/s NSL and M/s KPR there are a
few other factories in the region and the
combined capacity of these factories is 27,500
TCD.
• Due to the implementation of irrigation projects
over the decades in the region, the sugarcane
growing area has increased and 56,333 hectares
are brought under sugarcane cultivation as of
the year 2012-22. Even if the yield of sugarcane
- 156 -
NC: 2023:KHC-K:8950-DB
is 80 - 100 metric tonnes an acre, 45-56 LMT
Sugarcane would be available in the district and
about 42 LMT would suffice to meet the
requirements of all the factories in the region.
• M/s NSL, because of circumstances which may
not be very germane for the present purposes,
has defaulted in paying the price for the
purchase of sugarcane in some of the years
leading to protests by sugarcane growers in the
region.
• M/s KPR has a crushing capacity of 10,000 TCD,
and it has obtained, during the years 2020 -
2021 and 2021 - 2022 different permissions and
approvals for establishing its unit, and it has
also commenced crushing. M/s KPR has been
reserved some villages, and there is no dispute
over this allotment.
• A proposal is mooted to allocate the villages
comprised in the Subject Came Area, but as
aforesaid, it has remained inchoate without any
conclusion. Several writ petitions have been
filed for directions to the authorities to consider
- 157 -
NC: 2023:KHC-K:8950-DB
the application/representations as regards the
reservation of cane area, and though these
petitions are disposed, no decision is taken.
27.23 The State Government, because of the
exigencies brought by the aforesaid circumstances,
should have revisited the reservation of the cane area
for M/s SSKN [now represented by M/s NSL] and re-
determined the quantity of sugarcane required by
M/s NSL for crushing and fixed the quantity of the
sugarcane grown by the farmers in the region [or the
percentage of Sugarcane grown] that will have to be
supplied to M/s NSL. If necessary exercises were
undertaken, a contingent right would have inured to
M/s NSL, and if there were directions for conclusion
of the agreement resulting in an agreement, M/s NSL
could have asserted a vested right. Conversely, if
notwithstanding the circumstances, the necessary
exercises are not undertaken, M/s NSL cannot assert
- 158 -
NC: 2023:KHC-K:8950-DB
a vested right leading to contemplated consequences
if there is breach.
27.24 If the Scheme under Clause-6 of the
Sugarcane Control Order 1966 does not envisage a
right to a factory notwithstanding the circumstances;
and if the State Government, which should have
considered the changed circumstances and decided
on re-examining and re-assessing the reservation of
the cane area based on the varying crushing capacity
and the availability of sugarcane has not, this Court
is of the considered view that M/s NSL cannot assert
a vested right to procure sugarcane from the Subject
Cane Area. It is settled that a right is vested when an
immediate right or a present right for future
enjoyment is conferred without any dependence on
some event which may or may not happen or ought to
be performed. Therefore, the reliance upon the
decision of the Hon'ble Supreme Court in MGB
- 159 -
NC: 2023:KHC-K:8950-DB
Gramin Bank v. Chakrawarti Singh30 is justified
wherein, it is held that a vested right is a right
independent of any contingency. M/s NSL also
cannot seek invocation of the equitable principle of
promissory estoppel or assert legitimate expectation.
The rival A. On the merits of the
submissions Government of Karnataka
on Question granting crushing licence
No. V dated 19.10.2022 in
favour of M/s KPR for the
year 2021-2022, and
B. On the Deputy
Commissioner holding that
M/s KPR has not violated
the provisions of the EC Act
and that it has not crushed
sugarcane illegally in the
months between January -
May 2022
(2014) 13 SCC 583
- 160 -
NC: 2023:KHC-K:8950-DB
28. The Deputy Commissioner has examined
the merits of the crushing license dated 19.10.2022
in the light of the different approvals and permissions
obtained by M/s KPR after filing its Industrial
Entrepreneur Memorandum, [IEM,] and the decisions
of the Hon'ble Supreme Court in Dhampur Sugar
Limited and Samarth Sugars and Afro Ltd. supra.
The Deputy Commissioner has concluded that in
view of the provisions of the Sugarcane Control Order
1966 and the decision in Dhampur Sugar Limited,
that no sugar factory can assert that the reservation
of area is forever, and because there is no shortage of
sugarcane, M/s NSL can have a grievance.
Significantly, the Deputy Commissioner has opined
that in view of the decision in Samarth Sugars and
Agro Industries Ltd, supra the ownership of
sugarcane is not affected by the terms of the Order
issued under the provisions of the EC Act.
- 161 -
NC: 2023:KHC-K:8950-DB
29. Sri Basava Prabhu Patil submits that the
State Government could not have granted crushing
licence dated 19.10.2022 retrospectively for the
period between 01.07.2021 and 30.06.2022, but
such licence is issued only to cover up the deliberate
act of permitting M/s KPR to commence crushing
without allocation of cane area and to create
circumstances to absolve them of the consequences
that would ensue because of the pending contempt
proceedings. Sri Basava Prabhu Patil emphasizes
that the State Government's policy is to grant
crushing licence simultaneously with the allocation of
the cane area and on the condition that the
entrepreneur to whom such allocation is made must
undertake promotion and development of cane
cultivation in the allotted area, but M/s KPR is
allotted certain cane area only in the month of June
2022, and it has commenced crushing in the month
of January 2022.
- 162 -
NC: 2023:KHC-K:8950-DB
29.1 Sri Basava Prabhu Patil canvasses that
the Deputy Commissioner has upheld the challenge
to the grant of crushing licence overlooking the afore
and placing reliance upon the decision in
Maharashtra Rajya Sahakari Sakkar Karkhana
Sangh Limited and Others vs. State of
Maharashtra and Others31 without considering the
crucial fact that the Maharashtra Sugar Zoning Order
does not have provision similar to Aland Order and
that in terms of the Aland Order, every sugarcane
grower within the reserved area is bound to supply
95% of the sugarcane grown to M/s NSL and there is
complete prohibition insofar as this 95%.
29.2 Sri Basava Prabhu Patil also canvasses
that the Deputy Commissioner could not have
premised his order on the ground that the farmers
have a right to choose the buyer and the reliance on
1995 Sppl.3 SCC 475
- 163 -
NC: 2023:KHC-K:8950-DB
the decision of the Hon'ble Supreme Court in Swami
Samarth Sugars and Agro Industries Limited vs.
Loknete Marutrao Ghule Patil Dnyaneshwar
Sahakari Sakhar Karkhana Limited and others32
and the decision of the Division Bench of this Court
in Indian Sugar and Refineries Ltd vs. State of
Mysore33 is mischievous, and as such, there is
primacy to the farmers' right to ensure that they can
enjoy the fruits of their labour in a healthy manner.
30. Sri S. S. Naganand, the learned Senior
Counsel for M/s KPR, submits that after submitting
an application for crushing licence, the general
practice is to commence crushing in anticipation of
the licence being granted because it is generally
granted and refusal is an exception. This could be
seen in the undeniable fact that in the case of M/s
Sangamnath Sugars Limited, the crushing licence is
32 [2022] 14 SCC 1
ILR 1959 Mys.688
- 164 -
NC: 2023:KHC-K:8950-DB
granted on 30.04.2022 for the period between
01.07.2021 and 30.06.2022. Even if the crushing
licence is refused when there is breach of a relevant
condition, it is granted immediately when the breach
is rectified.
30.1 Sri S. S. Naganand submits that the
crushing licence dated 19.10.2022 is issued under
the Karnataka Sugar (Regulation of Production)
Order, 1975 [for short, the 'Regulation of Sugar
Production Order 1975'] on conditions mentioned
therein. When an application is filed for grant of, or
renewal of, crushing licence as contemplated under
Paragraph 4 [1] and [2] of the Regulation of Sugar
Production Order 1975, the licence is granted after
holding an enquiry as found fit by the State
Government in the circumstances of a case.
However, when an application for grant or renewal is
proposed to be rejected, given the provisions of
- 165 -
NC: 2023:KHC-K:8950-DB
Paragraph 4[3] of this Order, the State Government
must assign reasons and extend an opportunity of
hearing.
30.2 Sri S. S. Naganand canvasses that the
provisions of the Regulation of Sugar Production
Order, 1975 do not contemplate 'prior' or 'previous'
approval, and it has been held by the Hon'ble
Supreme Court in Life Insurance Corporation of
India vs. Escorts Limited and Others34 that the
expression 'prior' or 'previous' may be implied but
such implication must be contextual and in very
compelling circumstances. He argues that this
Court, because the terms of Paragraph-4 of the
Regulation of Sugar Production Order 1975
contemplate recording of reasons and extending of
opportunity when the proposal is to reject the
application, must not find fault with the practice of
34 [1986] 1 SCC 264
- 166 -
NC: 2023:KHC-K:8950-DB
granting crushing licence after the commencement of
crushing or the crushing in anticipation of grant of
licence or with the crushing licence dated
19.10.2022.
30.3 Sri S. S. Naganand submits that this
Court, if notwithstanding the aforesaid
circumstances, considers concluding against the
issuance of crushing licence dated 19.10.2022 or the
manner in which the crushing licence is issued, this
Court must consider the settled proposition that the
Courts must take a balanced approach while
interpreting the statutory provisions in matters
relating to industrial practices which have serious
economic implications. In this regard Sri S.S.
Naganand relies upon the decision of the Hon'ble
Supreme Court in Shivashakthi Sugars Limited
vs. Shree Renuka Sugar Limited and Other35.
35 [2017] 7 SCC 729.
- 167 -
NC: 2023:KHC-K:8950-DB
This Court's conclusion on Question No. V.
31. The State Government in exercise of the
jurisdiction conferred vide Clause-3 of the Sugarcane
Control Order 1966 and the notification dated
24.08.1967 issued by the Government of India, has
notified the Karnataka Sugar [Regulation of
Production] Order 1975 [the Regulation of Sugar
Production Order 1975]. The crushing licences were
being issued under this Order for manufacture of
sugarcane on an application filed in the prescribed
form. This Order of 1975 is repealed with the
notification of the Karnataka Sugar [Regulation of
Production] Order, 2022 [the Regulation of Sugar
Production Order 2022]36.
31.1 Under the Regulation of Sugar Production
Order 2022 [as in the earlier Regulation of Sugar
36 This Order is notified by the Notification dated 24th of
February 2023.
- 168 -
NC: 2023:KHC-K:8950-DB
Production Order 1975], the requisite application for
crushing licence will have to be filed in the prescribed
Form furnishing, amongst others, the details of the
factory site, the quantity of sugarcane crushed during
the three previous crushing seasons and the number
of days that the factory has crushed sugarcane
during the three previous crushing seasons. The
crushing licence is granted, in the discretion of the
State Government, for a term of one, or three or five
years. If the licence is so granted [or renewed] it shall
be valid up to the 30th June of the year following the
year of issuance. If the State Government proposes
to reject the application, it must assign reasons after
extending an opportunity. These are the common
features between these Orders.
31.2 However, there is short but significant
change in the manner in which the crushing licence
- 169 -
NC: 2023:KHC-K:8950-DB
is granted, and this can be seen when the erstwhile
and the recent provisions are read in conjunction.
The relevant of the The relevant of the
Regulation of Sugar Regulation of Sugar
Production Order 1975 Production Order 2022
[3] On receipt of an [3] On receipt of an
application under sub application, the State
Clause (1), the State Government may,
Government may, after such inquiry, as
after such enquiry, as it thinks necessary, if
it thinks necessary, if satisfied that the
satisfied that the license may be
license may be granted or renewed,
granted or renewed as the case may be,
as the case may be grant or renew the
grant or renew a license in Form - II,
licence in Form II. before the start of
crushing season, and
it shall be valid up to
[4] The State Government 30th June of the year,
may, for reasons to following the date of
be recorded in issue and shall be
writing, refuse to subject to such
grant or renew conditions as may be
license after giving imposed by the
the applicant an government from time
opportunity of being to time.
heard.
- 170 -
NC: 2023:KHC-K:8950-DB
[4] The State Government
may, for reasons to
be recorded in
writing, refuse to
grant or renew the
license after giving
the applicant an
opportunity of being
heard.
The underlining is by
this Court
The change under the Regulation of Sugar Production
Order 2022 is that there is an express stipulation
that if the State Government is satisfied that a license
must be issued, such licence must be granted before
the commencement of the crushing season. This is a
deliberate shift from what should have been the
practice viz., the grant of post facto licence and
commencement of crushing of sugarcane in
anticipation of the licence being so granted.
- 171 -
NC: 2023:KHC-K:8950-DB
31.3 M/s KPR has submitted its application for
allocation of Cane Area in the month of March 2021
and it has submitted its application for grant of
crushing license in the month of November 2021, and
the State Government has allotted a certain cane
area [excluding the Subject Cane Area] on 13.06.2022
and the crushing license on 19.10.2022. In view of
the earlier accepted practice in the absence of
express stipulation that crushing licence must be
issued before the commencement of the crushing
season, and the later change in the policy with the
express stipulation that the crushing licence must be
issued before commencement of the crushing season,
this Court is of the considered view that no exception
can be taken with the crushing licence being granted
on 19.10.2022 after the commencement of crushing
solely on this ground, but the next ground of
challenge that the crushing licence is issued without
the allocation of the cane area must be considered.
- 172 -
NC: 2023:KHC-K:8950-DB
31.4 It is undisputed that the Commissioner
for Cane Development has sent a proposal for
allocation 78 villages to M/s SDMSL [now
represented by M/s KPR], including the 44 villages
within the 369 villages [the Subject Cane Area]
originally allotted to M/s SSKN by Aland Order. M/S
NSL and M/s SSKN have filed their objections in the
year 2016 to the allotment of the Subject Cane Area
to M/s KPR, and the Commissioner for Cane
Development has responded to the Government's
queries in this regard on 07.04.2017. There is no
information on the status of this proposal.
31.5 In continuation of the examination of this
proposal, the Government of Karnataka, which has
on 06.02.2021 granted in-principle approval under
the provisions of the Karnataka Industries
[Facilitation] Act, 2002 to M/s KPR to set up its unit
at Chinmigera in the proximity of an existing factory
- 173 -
NC: 2023:KHC-K:8950-DB
at Bhusnoor [now managed by M/s NSL] though
outside the permitted 15 kms radius, should have
determined the quantity of sugarcane required by
M/s KPR in the immediate years and fixed the
quantity of the sugarcane grown by the farmers in
the region [or the percentage of the sugarcane grown]
to be supplied to the factory followed by directions for
agreement between M/s KPR and the growers.
31.6 This is inevitable in the light of the
provisions of the Sugarcane Control Order 1966. M/s
KPR has also filed its application for allocation of the
cane area in the month of June 2021, and
considering this application M/s KPR is allotted
certain cane area [17 villages excluding the Subject
Cane Area] temporarily in the month of June 2022,
and it is obviously during the pendency of the
proceedings before the writ Court. However,
essentially M/s KPR has commenced its activities
- 174 -
NC: 2023:KHC-K:8950-DB
with Cane Area allocation, and Deputy Commissioner
in the impugned order dated 12.01.2023 has ignored
all these facets in opining that M/s KPR has not
crushed sugarcane illegally. The Deputy
Commissioner's opinion that the sugarcane growers
do not lose ownership of the produce is extraneous to
the present context. M/s NSL's grievance against the
impugned order 12.01.2023 could be addressed, in
the circumstances discussed, without disturbing this
order but observing that the Deputy Commissioner
should have been more circumspect in opining that
M/s KPR has not crushed sugarcane illegally.
31.7 This Court is also of the considered
opinion that there is a definite failure in the State
Government not issuing necessary Orders under the
Sugarcane Control Order 1966 for regulation and
distribution of Sugarcane to M/s KPR, but this
failure must necessarily be considered in the light of
- 175 -
NC: 2023:KHC-K:8950-DB
the peculiar circumstances of the case and the surfeit
of proceedings before this Court. The State
Government, with the march in time and the
resultant changes in the circumstances such as
implementation of irrigation project resulting in
larger tract of lands being brought under sugarcane
cultivation and increased yield and new factories
being established in the region, inevitably must also
consider the dispute between M/s NSL and M/s KPR
about the allocation/ reservation of the villages in the
Subject Cane Area to ascertain whether the Aland
Order requires to be amended. Though Sri. Dama
Seshadri Naidu, the learned Senior Counsel for M/s
SSKN, has clarified that M/s NSL has paid all dues to
M/S SSKN, this Court must record that there are
allegations of M/s NSL dithering on its payment to
the sugarcane growers during some of the previous
crushing seasons with the Civil Administration
- 176 -
NC: 2023:KHC-K:8950-DB
having to handle law and order situation. This
circumstance must also be considered.
31.8 This consideration of whether the
Subject Cane Area will have to be allotted to M/s KPR
or continued with M/s NSL will be in accordance with
the Aland Order because in paragraph-2, it is
stipulated that the terms shall continue to be in force
till repealed subject to such amendments as may be
made to it from time to time. This Court must also
consider that there will be a need to manage the rival
claims between M/s NSL and M/s KPR until the
decisions as aforesaid are taken, and the decisions in
this regard may also not be immediate. With both
M/s NSL and M/s KPR, having invested substantial
amounts exposing themselves to financial
implications, cannot be expected to keep their
respective factories idle or under utilize their
respective capacities, and that would also not be
- 177 -
NC: 2023:KHC-K:8950-DB
conducive to the interest of the sugarcane growers,
who, it is said, have chosen to deliver sugarcane at
the factories' gates to secure their interest.
Therefore, the Government of Karnataka must be
called upon to take certain interim measures that
would mitigate the reasons for litigation especially
with the commencement of the crushing season.
On the writ appeal in WA No. 200021/2023 and
Deposits
32. The writ appeal in WA
No.200021/2023 is filed calling in question the writ
Court's direction to the Commissioner for Cane
Development to file a report under the EC Act on
seizure of sugar, molasses and ethanol at M/s KPR's
factory at Chinmigera and the direction to the Deputy
Commissioner to pass orders in respect of the said
seized products. This Court on 13.06.2023 has
disposed of an application [IA No. 2/2022 in W.A.
- 178 -
NC: 2023:KHC-K:8950-DB
No.200021/2023 and IA No.1/2023 in W.A.
No.200169/2022] filed by M/s KPR, as requested by
the learned Senior Counsels for M/s NSL and M/s
KPR with interim directions for sale of the seized
products and for disbursement of 60% of the
proceeds to M/s KPR subject to further orders and
for deposit of the remaining 40% of the proceeds with
this Court, and again, subject to further orders. M/s
NSL has filed petitions before the Hon'ble Supreme
Court in SLP Nos. 14359-14360/2023. The Hon'ble
Supreme Court has not interdicted the sale of the
seized products but has directed M/s KPR to
maintain the amount received in its account without
utilising the same.
32.1 In compliance with this Court's interim
order dated 13.06.2023, the office has informed that
a total sum of Rs.103,06,20,487/- has been
deposited with this Court. The details of the deposits
- 179 -
NC: 2023:KHC-K:8950-DB
which are received in writ appeal in WA
No.200021/2023 are as follows:
Sl. R.O. No/Date FDR No./Date Amount
No.
1. 409/14.07.2023 42155344170/08.08.2023 Rs. 14,31,26,256/-
2. 410/14.07.2023 42180017797/16.08.2023 Rs. 34,79,52,951/-
3. 411/14.07.2023 42155185196/08.08.2023 Rs. 18,10,836/-
4. 412/14.07.2023 42155181077/08.08.2023 Rs. 85,29,712/-
5. 418/19.07.2023 42264395165/14.09.2023 Rs. 25,87,776/-
6. 419/19.07.2023 42264585076/14.09.2023 Rs. 1,05,42,728/-
7. 420/19.07.2023 42264586386/14.09.2023 Rs. 1,27,29,008/-
8. 451/01.08.2023 42155340482/08.08.2023 Rs. 16,10,26,000/-
Through k-II online
payment
9. 461/03.08.2023 42263679578/14.09.2023 Rs. 19,43,360/-
10. 462/03.08.2023 42263679216/14.09.2023 Rs. 58,40,488/-
11. 463/03.08.2023 42267446845/14.09.2023 Rs. 7,53,25,740/-
12. 473/11.08.2023 42263680006/14.09.2023 Rs. 35,15,832/-
13. 474/11.08.2023 42264579345/14.09.2023 Rs. 2,04,36,716/-
14. 485/24.08.2023 42264487568/14.09.2023 Rs. 2,38,93,980/-
15. 494/24.08.2023 42263814702/14.09.2023 Rs. 71,35,988/-
16. 576/27.10.2023 Rs. 12,70,23,090/-
17. 577/27.10.2023 Rs. 7,72,00,026/-
TOTAL Rs.1,03,06,20,487/-
This Court is also informed that the aforesaid amount
has been deposited in Short Term Deposits with a
Nationalised Bank subject to further orders of this
Court. However, the deposit will have to be subject to
the orders of the Hon'ble Supreme Court in SLP
Nos.14359-14360/2023 as this Court's order dated
13.06.2023 is called in question in such proceedings.
- 180 -
NC: 2023:KHC-K:8950-DB
Therefore, there must be suitable directions in this
regard, and with the turn of events, the appeal in WA
No. 200021/2023 will not survive.
In the light of the afore, the following
ORDER
[A] The writ Appeals in W.A. Nos.200168/2022 and
200169/2022 are dismissed and the writ appeal
in W.A. No.200021/2023 is disposed of
confirming the common Order dated
28.09.2022 in W.P. Nos.200210/2022 and
201052/2022 affirming the writ Court's
direction in Paragraphs - 36 and 37 to the State
Government to consider the pending proposal
as regards the allocation of the subject 44
villages in Afzalpur and Kalaburagi Talukas [the
Subject Cane Area] at the earliest in the light of
this Court's observations.
- 181 -
NC: 2023:KHC-K:8950-DB
[B] The Contempt proceedings in CCC
Nos.200037/2022 and 200014/2023 are
dropped.
[C] The writ petition in W.P.No.200423/2023 is
dismissed.
[D] The Commissioner for Cane Development is
directed to call for a joint meeting of the
representatives of M/s NSL and M/s KPR,
within one[1] week from the date of receipt of a
certified copy of the operative portion of this
order, to ascertain whether these companies,
without prejudice to their respective defences,
could agree on a conciliatory interim
arrangement for the coming crushing season
insofar as the Subject Cane Area, and if for any
reason the conciliation for an interim
arrangement remains elusive at the end of
fifteen [15] days from the date of the first
- 182 -
NC: 2023:KHC-K:8950-DB
conciliatory meeting, the Commissioner for
Cane Development shall file a report with the
State Government, within the next one[1] week,
on who can procure sugarcane from the Subject
Cane Area for the coming crushing season
considering the following:
• the crushing capacity of M/s NSL and M/s
KPR and the availability of sugarcane for the
crushing from the region, and in the Subject
Cane Area;
• the financial ability to pay the sugarcane
growers within the Subject Cane Area based
on the records to demonstrate such ability;
and
• the other circumstances that would be just
and necessary.
- 183 -
NC: 2023:KHC-K:8950-DB
The State Government shall consider the report
filed by the Commissioner for Cane Development
and decide expeditiously.
[E] The amount of Rs.103,06,20,487/- deposited
with this Court shall continue to be in Short-
term Deposits with appropriate instructions for
timely renewal subject to the orders of the
Hon'ble Supreme Court in the pending petitions
in SLP Nos.14359-14360/2023.
All the pending applications stand disposed of in
the light of this Order.
Sd/-
JUDGE
Sd/-
JUDGE
nv*
