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TMI Blog2015 (4) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... is a raw material used in the distilleries. The control, storage, gradation, regulation of supply and distribution of molasses in the State of UP is governed by the U.P. Sheera Niyantran 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to recover from the person to whom the molasses is transferred or sold or supplied an amount equivalent to the amount of such administrative 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing to sell and dispatch its molasses in open market due to arbitrary policy of maintaining the ratio of reserved and unreserved 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 13.8.1993, 22.10.1993 and 1.1.1994 by which the reservation of 30% was imposed in those years, as well as the ratio 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect on the chemical and down stream industries in U.P. As a result, the subsequent State notifications were 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asses by the distilleries causing situation of over-flow and difficulty in storage and consequent loss of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. 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 policy. The State Government has given relaxation to the sugar units including the petitioner's units which had applied for relaxation both in the ratio as well as the quantity covered by the ratio. 17.In paragraph-10 of the counter affidavit, it is stated that against the judgment of Lucknow Bench of this Court dated 17.3.2011 in Writ Petition No. 11959 (MB) of 2009 (M/s Triveni Engineering & Industries Ltd and another vs. State of UP and another), and other, connected writ petitions, the State has filed a Special Leave Petition. The petitioner has also filed a Contempt Application No. 2 of 2012 before the Lucknow Bench. M/s Dhampur Sugar Mills Ltd has also filed a Contempt Petition No. 3072 of 2011 in which orders were passed by the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 and the recommendation of the Committee constituted under Section 3 of the Act which includes the representatives of the U.P. Sugar Mills Association and U.P. Distilleries Association, apart from other stake holders. The reservation of the molasses is on historical basis taking into consideration the instant situation as well as future projections of the industry with relaxation to be provided in case of any difficulty faced by any sugar mill on case to case basis. In respect of the Molasses Policy for the year 2011-12, the State Government has taken into consideration the advice given by the Advisory Committee constituted under Section 3 of the Act. The petitioner has not challenged the recommendations made by the Advisory Committee and the policy made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 molasses, which is carried outside the premises of the Sugar factories, maybe for own distilleries located at distinct places. According to petitioners, the following amendments have been made in the principal Act, i.e. U.P. Sheera Niyantran Adhiniyam, 1964:- (i) A new clause (d) (i) "molasses for captive consumption" has been added in Section 2 of the U. P. Sheera Niyantran Adhiniyam, 1964. The impugned Act seeks to restrict the meaning of the expression "molasses for captive consumption" to mean and include only such transfer of molasses by an occupier of the sugar factory to a distillery or to industrial unit having the same ownership provided the distillery or industrial unit is situated within the same premises or where it is in such "contiguous vicinity" of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 allowed, there is no occasion for deposit of any administrative tax. However, it is provided that in case any of the petitioners had deposited the amount under the aforesaid head with the respondents, same shall be remitted to them forthwith. Accordingly, all the writ petitions are allowed and the aforesaid provisions are declared invalid. Consequently, any proceedings undertaken under the amended provisions by the authorities against the petitioners are declared illegal and are set-aside. [Dr. Satish Chandra, J.] [Rajiv Sharma, J.]" 24.We find that the observation made by the Division Bench in the judgment in M/s Triveni Engineering & Industries Ltd and another vs. State of UP & another (supra) relating to maintenance of ratio and reserving the percentage of molasses in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Kant that the observations quoted as above must be followed. He submits that these observations should not be treated as per-incuriam or sub-silentio, as the judgment in SIEL Ltd & others vs. Union of India and others (supra) was noticed by the Court and thus even if no relief was sought or finally given, the coordinate bench cannot ignore the law laid down by the bench of same Court. We do not agree. In Gangadhara Palo v. Revenue Divisional Officer and another (2011) 4 SCC 602 the Supreme Court held in paragraph-11 as follows:- "A precedent is a decision which lays down some principle of law. In our view, the observations made in para 4 of the aforesaid judgment, quoted above, that "if a review petition is filed after the dismissal of the special leave petition, it would be treated as an affront ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 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. 31.In the present case after the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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