TMI Blog2015 (4) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... through its association in the deliberations of the Advisory Committee of which the unanimous resolution and recommendations were accepted by the State Government to reserve 22% of the Molasses, are estopped from challenging the reservation and the consequential maintenance of the ratio of the stocks of the reserved and unreserved molasses. Maintenance of stocks of the reserved and unreserved molasses in clause-3 of the Molasses Control Order dated 20.12.2011 is in consonance with the reservation of 22% of molasses and is provided to carry out the objects of reservation to provide for sufficient and safe quantities for manufacture of country liquor in distilleries and at the same time reserving the revenue for the State. The maintenance of ratio throughout the year with the condition to review the percentage of reservation as well as the power to relax the reservation, which has in fact has been exercised in the case of the petitioner and other sugar mills by order dated 21.6.2012, which also refers to many such orders of the relaxation in the same year, makes the exercise of power, reasonable and non-arbitrary. After the order of relaxation, the petitioner has not establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Adhiniyam, 1964 (in short, the Act). The constitutional validity of the Act was upheld by Supreme Court in SIEL Ltd others vs. Union of India and others (1998) 7 SCC 26. 3.By this writ petition the petitioner has prayed for following reliefs:- 1. issue a writ, order or direction in the nature of mandamus declaring the Molasses Policy 2011-12 as null and void to the extent it reserves a percentage of molasses as reserved or levy molasses. 1.a. Issue a writ, order or direction in the nature of mandamus restraining the respondent nos. 2 and its officers/agencies from reserving any quantity/ratio/percentage of molasses as levy or reserved molasses. 2.Issue a writ, order or direction in the nature of mandamus restraining the respondent no. 2 and its officers/agencies from creating any hindrance in the sale and dispatch of molasses, as unreserved molasses, by the petitioner. 3.Any other writ, order or direction, which this Hon'ble Court may deem fit and proper in the circumstances of the case. 4.Award cost of petition to the petitioner. 4.We have heard Shri Ravi Kant, Senior Advocate assisted by Shri Tarun Agrawal for the petitioner. Shri S.P. Kesarwani, Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges, in addition to the price of molasses. 6.It is submitted by Shri Ravi Kant that the petitioner is under no obligation to reserve any quantity of molasses as levy molasses, as this Court has in M/s Triveni Engineering Industries Ltd and another vs. State of UP another, Writ Petition No. 11959 (MB) of 2009 and other connected writ petitions decided on 17.3.2011 declared the reservation of molasses for country made liquor as illegal. However, for free sale of molasses in the open market, the petitioner has to depend on the permission of the Excise Authorities for lifting of molasses for transportation. Despite repeated representations the respondents have not granted permission to sell molasses in the open market. He has relied upon the representations dated 5.5.2012 and 9.5.2012 by which the petitioner requested the Excise Commissioner-Cum-Molasses Controller, Government of UP to direct the concerned officers for releasing the overshoot quantity of 1, 86, 542 quintals of molasses in the three sugar units of the petitioner. The petitioner had also requested for transportation of the balance unreserved quantity of molasses at Dwarikesh Nagar (58,861 quintals), Dwarikesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved molasses, has blocked the capital on account of which the petitioner is not able to meet the targets of making payments to the cane growers fixed by the Supreme Court. 9.Shri Ravi Kant submits that Clause (1) of the impugned Molasses Allotment Policy of the State Government dated 20.12.2011 provides for reservation of 22% of the total quantity of molasses for the distilleries manufacturing country made liquor. Those sugar mills, that use molasses in their captive distilleries, have been exempted from such reservation to the extent the molasses is captive consumed. Clause (3) of the policy provides for maintenance of the constant ratio of 1:3.5 between reserved and unreserved molasses. It is submitted that on account of the requirement to maintain a constant ratio of reserved and unreserved molasses in the sugar mill, the petitioner is unable to sell even unreserved molasses in the open market, which leads to accumulation of molasses in the storage tanks, thereby augmenting the possibility of leakage, overflow and auto-combustion. It is submitted that despite the policy itself provides that in the event of any exigency, a decision would be taken by the respondent no.2 to per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reserved and unreserved quantities of molasses in the Molasses Policy for the year 1993-94. The Supreme Court held that the reservation of 30% of the molasses and the control on its price, is a reasonable economic measure. The State Government should have more latitude in formulating economic policy as well as appropriate legislation in comparison to legislation relating to fundamental rights. While upholding the policy and declaring it to be non-arbitrary and non-violative of Article 19 (1) (g) of Constitution of India the Supreme Court held as follows:- 26. It was also contended that the three notifications of 13.8.1993, 22.10.1993 and 1.1.1994 are unreasonable or they do not constitute a reasonable restriction on the right to carry on any occupation, trade or business under Article 19(1)(g). It is contended that there is also a violation of Article 301 of the Constitution. The State Government has submitted that the provisions of the U.P. Sheera Niyantaran Adhiniyam, 1964 and the State notifications have to be viewed in the context of development of sugar, alcohol and chemical industries in the State of U.P. If looked at in a historical perspective, there has been contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued in October, 1993 and January, 1994 reducing substantially the percentage of molasses which were made free of control and increasing the percentage of controlled molasses. Simultaneously, the price of controlled molasses was also enhanced by the State Government. The State has followed a fair economic policy. In fixing from time to time, the percentage of free and controlled molasses and the prices for controlled molasses, the overall market position had also been borne in mind and the extent of availability, and the price of imported petro feed stock and chemical products had also to be borne in mind. In other words, the State has submitted that price fixation of molasses and the percentage of free and controlled molasses is essentially a matter of economic policy and the same should not be the subject matter of challenge under Article 19(1)(g) of the Constitution when the policy is fair and has been in force for a long time. This submission has much force. This Court has held that in examining the reasonableness of an economic measure, the State should have more latitude in formulating economic policy as well as appropriate legislation in comparison to legislating relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... molasses, the Molasses Controller will consider the relaxation in respect of each sugar mill on the merits of the fact situation. 14.It is submitted by the State respondents that based on the recommendation/resolution of the Molasses Advisory Committee, a proposal was prepared by the Controller of Molasses, U.P. Allahabad and was submitted to the State Government on 15.11.2011 in terms of the U.P. Molasses Advisory Committee Rules, 1965 on which the State Government framed the Molasses Policy for the year 2011-12. The petitioner as a member of the U.P. Sugar Mill Association was represented in the Committee and is thus estopped from raising any grievance with regard to the percentage of reservation and maintenance of ratio of reserved and unreserved quintals of molasses. Further the petitioner had applied for relaxation in terms of Para-5 of the Controller of Molasses dated 20.12.2011 praying for permission to sell certain quintals of unreserved molasses as against reserved of 1:3.5 fixed in the Molasses Policy. The application of petitioner and other sugar mill was considered by the State Government and that by the order dated 21.6.2012 a relaxation was granted for a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing country liquor. Non-supply of molasses to country liquor distilleries adversely affects production of standard and safe quality of country liquor for consumption to meet the requirement of consuming classes. The de-control of molasses will facilitate sale of illicit country liquor causing serious threat to the life and health of consuming class and also loss to the State exchequer. The total excise revenue involved in country liquor for the financial year 2012-13 is about ₹ 4575 crores. Under the policy no restriction has been placed on the sale of reserved molasses. The petitioner is free to sell reserved quantity of molasses to any country liquor manufacturing distillery on such price and terms as may be agreed between them. 16.In paragraph-8 of the counter affidavit it is stated that Dwarikesh Nagar sugar unit of the petitioner has its own captive distillery. The petitioner has transferred the molasses from its Bundki sugar mill to its captive distillery. The Afzalgarh sugar mill is located at about 50 Kms and Faridpur sugar mill at about 250 Kms away from Bundki sugar unit. The petitioner has not suffered any hardship or any loss on account of the reservation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that the petitioner is not interested in selling the reserved quantity of molasses and is waiting for the best available price, and is complaining in the Court of maintenance of ratio. The Controller of Molasses has issued instructions from time to time to be followed by the sugar mills on 27.1.1989, 28.4.2006 and 20.4.2012, to avoid auto-combustion. If these directions are followed, there would be no threat of auto-combustion in the sugar mills. 19.In SIEL Ltd others vs. Union of India and others (supra) the Supreme Court upheld the validity of U.P. Sheera Niyantran Adhiniyam, 1964, and also considered the challenge to the notifications dated 13.8.1993, 22.10.1993 and 1.1.1994 by which different percentages of upgraded molasses were reserved for distilleries and industries based on molasses and alcohol in the State of UP. The reserved quantity under the said orders was required to be sold at prices fixed by the State under the notification under sub-section (2) of Section 10 at the relevant time when the prices of reserved molasses were also controlled. The prices have since been decontrolled. The reservation, however, continues but subject to a wide based consultation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93-94 under Sections 7 and 8 of the Act were upheld by the Supreme Court in SIEL Ltd others vs. Union of India and others (supra) and were held to be non-discriminatory and non-violative of Article 19 (1) (g) of the Constitution of India. 22.In M/s Triveni Engineering Industries Ltd and another vs. State of UP another (supra) decided by Lucknow Bench of this Court on 17.3.2011, which is under challenge in Supreme Court, the petitioners did not question or challenge the provisions of Section 8 (1) and 8 (2) of the Act, or the Molasses Policy of the State Government for the year 2011-12. The challenge in the writ petitions in the opening paragraphs of the judgment is quoted as follows:- In all the afore-captioned writ petitions, the petitioners have questioned the validity of Clause 2(d-1), 8(4) and 8(5) of the U.P. Sheera Niyantran Adhiniyam [hereinafter referred to as the 'impugned Act' for the sake of brevity] as amended by the U.P. Act No. 10 of 2009, therefore, all the writ petitions have been clubbed together and are being disposed of by this common judgment. By these petitions, the petitioners have assailed the levy of Administrative Charges on the molas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be levied only in the circumstances where there is a sale or supply by the sugar factory to some other legal entity by transfer of title for valuable consideration as enshrined in the Constitution of India. 23.The Lucknow Bench after considering the submissions granted reliefs in the concluding part of the judgment as follows:- In view of the above, we are of the considered opinion that the provisions of Section 2(d-1), Section 8(4) and 8(5) of the U.P.Sheera Niyantran Adhiniyam amended by U. P. Act No. 10 of 2009, reproduced hereinabove, suffer from callous exercise of power and it can safely be concluded that the State has over-stepped its limit of power. Before concluding, we would like to point out that this Court while admitting the writ petition No. 4343 (MB) of 2009 along with other connected matters, passed an ad interim order dated 22.5.2009 providing therein that the petitioners' sugar mills shall maintain an account of molasses transferred to their own distillery and in case their petitions fail, they will deposit the amount within 30 days alongwith interest. As the amending provisions have been held to be invalid and the writ petitions are being allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. (3) Maintaining high stock of molasses, at time results in overflow of molasses during the season, which causes pollution problem. (4)The storage of molasses beyond January, 2010 in the sugar units of the petitioner company will result in closure of the sugar mills as a result of non-lifting or dispatch of the produced molasses. In our opinion, thirty percent reservation has been made in clear violation of the statutory provision enshrined in Section 7-A and Section 8 of the Adhiniyam of 1964 and Niyamavali framed thereunder, which does not empower the State government to reserve a certain percentage of molasses in favour of the distilleries for the manufacture of country liquor. Section 7-A and Section 8 of Adhiniyam of 1964 envisages the making of individual orders by the Respondent No.2 upon receipt of application form a distillery requiring molasses. Therefore, the order impugned in the writ petitions is wholly arbitrary and violative of the rights of the petitioners guaranteed under Article 14 and 19 (1) (g) of the Constitution of India and ultra vires the provisions of the Adhiniyam and Rules made thereunder. 26.We do not agree with the arguments of Shri Ravi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved and unreserved quantities of molasses. The parties never joined issues on these points. The judgment does not show that there is any challenge to the ratio nor there was any facts pleaded and discussed in the judgment. The judgment in SIEL Ltd ors vs. Union of India (supra) was also cited on an entirely different issue. The stray observations of the Division Bench regarding the ratio of the reserved and unreserved stocks of molasses to be maintained by the sugar mills, are without any reference or context and have to be treated as obiter dicta which is not binding on us while deciding the matter, which has been directly raised, and argued in this writ petition. 29.On the aforesaid discussions we are of the opinion that the petitioner as a member of the U.P. Sugar Mill Association, having participated through its association in the deliberations of the Advisory Committee of which the unanimous resolution and recommendations were accepted by the State Government to reserve 22% of the Molasses, are estopped from challenging the reservation and the consequential maintenance of the ratio of the stocks of the reserved and unreserved molasses. 30.We also find that the mainte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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