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2018 (12) TMI 1773

..... ved due to shortfall in supply by the ethanol suppliers - HELD THAT:- It is apparent from inception, the EBP factored in purchase of ethanol by OMCs, which are public sector units, at prices to be decided by the Central Government. This was part of its overall strategy of not only ensuring cleaner fuel, and lowering emission, but increasing eventually bio fuel component to 10%. The material on record shows that from an initial low of about 1.75% in 2009, the EBP achieved upto 3.5% of bio-fuel element in the petroleum sold. The various cabinet notes and decisions also indicate that a key component in EBP and its envisioned success was on the basis of sustained supply of ethanol at prices determined by the Central Government. This, it was felt, would act as incentive to those supply ethanol, for the EBP. The February 2010 minutes suggests that the Saumitra Chowdhury Committee was set up at the behest of the Central Government. The petitioner’s challenge to the EBP is two-fold : a constitutional challenge on the basis that the policy is an unsustainable restriction, as it is not founded even on a statute; and two that its continued existence is arbitrary, since it has the effect .....

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..... ita Sharma and M.L. Lahoty, Advocates, for the Respondent. ORDER The petitioner is engaged in the business of manufacturing and marketing of Ethanol based Chemicals and is dependent upon the supply of Ethanol. Ethanol is a value added product derived from molasses - a sugar industry product. In 2003, the Central Government mandated use of 5% Ethanol in petrol through its Ethanol Blended Petrol (hereafter referred as EBP ) Programme. By these proceedings, the petitioner challenges the EBP programme as discriminatory since it has an adverse and deleterious impact on the price of ethanol which is vital to its final product, as a raw material; the petitioner says that the scheme, inasmuch as it prescribes mandatory purchase price for monopoly State owned petroleum and petroleum product companies, is arbitrary. 2. The petitioner has set up a green plant in the State of Uttarakhand and manufactures a range of chemicals including Mono ethylene Glycol, Diethylene Glycol, Tri ethylene glycol, Fatty Acid Ethoxylates, Fatty Amine Ethoxylates, Alkyl Phenol Ethoxylates, Castor/Natural Oil Ethoxylates, Ethoxylated and Propylated co-polymers, brake fluids, anti-freeze coolants and performanc .....

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..... ice of ethanol for EBP has resulted into increase in ethanol price for chemical industries as well, making them unviable. In this connection, the petitioners cite the report submitted by Dr. Saumitra Chaudhuri (Member - Planning Commission), prepared at the instance of the Central Government, categorically stated that Government fixed price of ethanol will have powerful effect on the prices for other industrial users and therefore, ethanol should be traded in the commodity exchange for both spot and future deliveries to bring transparency in the industry. Further, the National Policy of Bio-fuels (December, 2009) stated that the EBP shall not create supply constraint of ethanol for other industrial use. It is submitted that a similar position was again reiterated by Dr. C. Rangarajan (Chairman, Economic Advisory Council to the PM) in a report that was submitted to the PMO in October, 2012, which stated that all user industries i.e. chemical, alcohol and petroleum should compete for procurement of ethanol. The Senior Counsel submitted that the National Policy on Bio-fuels, the Dr. Saumitra Chaudhuri Report and the Dr. C. Rangarajan report were completely ignored by CCEA while fixing .....

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..... for varied purposes, or in the chemical sector, because the artificially created high prices result in increase of input cost and inflate prices. It is submitted that such pricing policy has also affected legitimate users of Ethanol, like chemical industries, (who use 35% to 40% of the Ethanol produced) being second only to the potable alcohol sector, which uses about 60% of the total Ethanol produced. The chemical industry is seriously prejudiced as it is deprived of the critical resource and is thus suffering tremendously on that account. This results in increased imports of ethanol by the chemical sector, and consequent depletion of valuable foreign exchange. 9. The petitioners rely upon the note and opinion of the Economic Advisory Council, which considered the draft interim report of the Saumitra Chaudhary Committee. It stated that the Council s report of 10th March, 2011, commented that potentially EBP could be based either on a combination of the need to reduce consumption of fossil fuels and the motivation for this could be concern for the foreign exchange and import bills as also the environment and the need for improving the economics of the sugar industry by identif .....

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..... king on pricing, the sugar mill owners and ethanol producers issued a threat in the form of a circular to its members on 23rd of November, 2011 to close down mills for a day to mark the protest. The petitioner states that despite the recommendations of the Sumitra Chowdhary Committee as well as the EAC to the Prime Minister s office, nothing concrete was done to look into the interests of the chemical industries. Therefore, second respondent once again by letter of 29th December, 2011 disagreed with the Chowdhary Committee recommendations. 12. It is argued that despite a recommendation by the C. Rangarajan Committee report of October, 2012 that special pricing of the products should not be resorted to by the Central Government, and that rather the chemical, fertilizer and other segments of industry which wish to procure molasses should do so on the basis of a competitive market, the UOI went ahead, and issued a directive on 22-11-2012 with reference to price fixation, for procurement by the PSU oil companies. It is also stated that this was followed up by a Press release dated 7th December, 2012, by the Central Government. 13. Learned Counsel relied on various replies to .....

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..... ion and not saved by Article 19(6) of the Constitution of India; it is also arbitrary. Learned Senior Counsel cited Union of India v. Naveen Jindal - AIR 2004 SC 1559; Bijoe Emmanuel v. State of Kerala - 1986 (3) SCC 315 and State of M.P. v. Thakur Bharat Singh, AIR 1967 SC 1170. 16. It is submitted by the respondents that the claim to prohibit the Central Ministry of Petroleum and Natural Gas (hereinafter referred to as the MoP&NG ) from implementing the directive of CCEA dated 10-12-2014 on uniform price for procurement of ethanol. Counsel for the Union highlighted that the petitioners and others had approached the Competition Commission of India (hereafter referred as CCI ) complaining against the price fixation orders. 17. The Commission was of the opinion that there existed no prima facie case of violation of any of the provisions of either Section 3 or Section 4 of the Competition Act and accordingly closed the matter. Aggrieved by the aforesaid Order of CCI, the petitioner filed an Appeal No. 119 of 2012 (India Glycols Limited v. Indian Sugar Mills Association & Ors.) before the Competitive Appellate Tribunal. That Tribunal, in its order dated 9th December, .....

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..... s in pursuance of similar (if not identical) remedies. 21. It is urged that the executive power of the Union, under Article 73 is co-extensive with Parliament s legislative power; and under Article 298 of the Constitution it can enter into trade or contracts, etc. The CCEA is equivalent to the Cabinet, as has been held by various verdicts of the Supreme Court, and is constituted as it is physically and practically not possible for the Union Cabinet to examine all matters of importance. It is urged that the right to formulate a policy is an exercise of Legitimate Constitutional Executive Power and the Central Government is competent for good reasons to modify or change its policy. 22. Learned Counsel emphasized that it is a settled law that policy decisions of the Government are not to be reviewed by the Courts and that the Courts are to refrain from intervening or venturing into the executive domain of policymaking. Counsel also argued that change in policy based on an established foundation of public interest and in the absence of any allegation that the policy is structured to suit one particular private party or harm a particular private party is impregnable to a chall .....

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..... rol, as per Bureau of Indian Standards specifications, shall be sold in the following States and Union Territories if the price of sourcing indigenous ethanol for supply of ethanol-blended petrol is comparable to the price of indigenous ethanol for alternative uses, and the delivery price of ethanol at the location is comparable to the import parity price of petrol at that location and the indigenous ethanol industry is able to maintain the availability of ethanol for ethanol-blended petrol programme at such prices :- States 1. Andhra Pradesh (except Chittor and Nellore districts) 2. Goa 3. Gujarat 4. Haryana 5. Karnataka 6. Maharashtra 7. Punjab 8. Tamil Nadu (only in districts Coimbatore, Dindigul, Erode, Kanay- kumari, Nilgiri, Ramanathpuram, Tirunelveli, Tuticorin and Virudhunagar) 9. Uttar Pradesh 10. Uttaranchal. Union Territories 1. Daman and Diu 2. Dadra and Nagar Haveli 3. Chandigarh. 2. The Central Government may, suo motu, or on a reference made to it, after due consideration of facts, by an order, modify the areas, and the percentage of ethanol in the ethanol blended petrol that may be supplied, and specify the period for the same. [F.NO. P-45018/28/2000-CC] 26.&em .....

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..... 0 The blending would have to follow a protocol and certification process, and conform to BIS specification and standards, for which the processing industry and OMCs would need to jointly set up an appropriate mechanism and the required facilities. Section 52 of the Motor Vehicles Act already allows conversion of an existing engine of a vehicle to use biofuels. Engine manufacturers would need to suitably modify the engines to ensure compatibility with biofuels, wherever necessary. * * * * * * * * * *    * * * * * * * * * * Financial and Fiscal Incentives. 5.16 Financial incentives, including subsidies and grants, may be considered upon merit for new and second generation feedstocks; advanced technologies and conversion processes; and, production units based on new and second generation feedstocks. If it becomes necessary, a National Biofuel Fund could be considered for providing such financial incentives. 5.17 As biofuels are derived from renewable biomass resources they will be eligible for various fiscal incentives and concessions available to the New and Renewable Energy Sector from the Central and State Governments. 5.18 Bio-ethanol alread .....

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..... ns for supply by the sugar industry as well as reallocations in case of default by some party. The Working Group will also ascertain the possibility of implementation of the programme in States facing problems of availability and other procedural issues, and in case it is not possible to implement the programme then it will recommend accordingly and this will be informed to the CCEA. * * * * * * * * * *    * * * * * * * * * * 3.5 In the meeting held on 1-12-2009, the informal Group of Ministers decided that a price of ₹ 27/litre ex-factory for ethanol may be fixed for a period of three years. This price can thereafter be reviewed by a Committee of Experts to be appointed for this purpose which will review the above price after a period of three years. The Committee should determine the formula/principle which will determine the price for three year period. However, Department of Expenditure, Ministry of Finance is of the view that the price of ₹ 27/1 litre may apply for a period of six months and the Committee of experts should be set up immediately to finalize its recommendations within a period of six months. Planning Commission has suggested .....

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..... ategy of not only ensuring cleaner fuel, and lowering emission, but increasing eventually bio fuel component to 10%. The material on record shows that from an initial low of about 1.75% in 2009, the EBP achieved upto 3.5% of bio-fuel element in the petroleum sold. The various cabinet notes and decisions also indicate that a key component in EBP and its envisioned success was on the basis of sustained supply of ethanol at prices determined by the Central Government. This, it was felt, would act as incentive to those supply ethanol, for the EBP. The February 2010 minutes suggests that the Saumitra Chowdhury Committee was set up at the behest of the Central Government. 29. The petitioner has placed considerable reliance on the Saumitra Chaudhary report. The relevant extract of that report is as follows : The Draft Report of the Expert Committee chaired by Dr. Saumitra Chaudhuri concludes ...Finally, over a period of time, in order to stabilize the ethanol blending programme, it is necessary to encourage a broad-based system of price discovery so that the administered mechanism may be phased out. Both industrial/potable grade ethanol (95%) and anhydrous ethanol should be traded in .....

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..... ith it. During the course of these consultations and policy reviews, the Soumitra Chowdhary Committee, the C. Rangarajan Committee and the Economic Advisory Council recommendations were made; they were considered by the Union. 33. The petitioner s challenge to the EBP is two-fold : a constitutional challenge on the basis that the policy is an unsustainable restriction, as it is not founded even on a statute; and two that its continued existence is arbitrary, since it has the effect of driving up the price of ethanol, which has applications other than for biofuel purposes, especially in the chemical industry. 34. So far as the first ground of challenge (i.e. that the policy is not premised on enacted law), the petitioner relies primarily on Bijoe Emmanuel, Naveen Jindal and Thakur Bharat Singh (supra). In this context, it would be also useful to consider decisions of the Court where Government policies, not based on legislation, but framed in exercise of the State s executive power, were considered. For instance, in State of Orissa and Anr. v. Radheysham Meher & Ors., 1995 (1) SCC 652, the Supreme Court had to deal with an issue concerning executive power of the State .....

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..... find it convenient or safe to go out of the campus to purchase the medicines in the night hours. In these facts and circumstances, the paramount consideration should be the convenience of the patients and protection of their interest and not the hardship that may be caused to the medical store keepers who may be having their shops outside the hospital campus. Thus the intention of the appellants to open a medical store within the hospital campus is to salvage the difficulties of the patients admitted in the hospital and this object of the appellants has direct nexus with the Public Interest particularly that of the patients and, therefore, the High Court should not have interfered with the decision of the State Government to settle the holding of a medical store in the Hospital premises. However, if the respondents so choose, they may keep their medical stores also open day and night. Consequently, the impugned order could not be sustained. 35. In another decision, Dalmia Cement (Bharat) Ltd. v. Union of India, 1996 (10) SCC 104, the Supreme Court has observed that above economic justice means abolition of such economic conditions which remove inequality between man and man. I .....

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..... 19(6) of the Constitution. In view of the above, we are of the opinion that these appeals should fail and the same are dismissed accordingly. No costs. CA Nos. 3723 and 3744 of 1988 : 20. These appeals are preferred against the judgment and order of the High Court of Punjab and Haryana dated 3-6-1988 made in Civil W.P. No. 6144 of 1987 wherein the High Court was pleased to allow the writ petition filed by the respondents in these civil appeals, quashing the policy decision of the State of Punjab whereby the State had directed its authorities concerned to purchase certain medicines from the public sector undertakings only. We have today in CA Nos. 4550-51 of 1989 held that a similar policy decision issued by the State of Rajasthan does not amount to creation of monopoly nor is there any violation of Article 14 or 19(1)(g) of the Constitution. The facts giving rise to the writ petitions before the Punjab and Haryana High Court from which the above civil appeals have arisen being the same, we allow these civil appeals and set aside the judgment and order of the Punjab and Haryana High Court dated 3-6-1988 made in Civil W.P. No. 6144 of 1987. Consequently, the said writ petition s .....

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..... e authorities as the case may be. The court is called upon to consider the validity of a public policy only when a challenge is made that such policy decision infringes fundamental rights guaranteed by the Constitution of India or any other statutory right... 39. Similarly, in Delhi Science Forum & Ors. v. Union of India & Anr. - (1996) 2 SCC 405, the Court, while rejecting a claim against the opening up of the telecom sector held that Courts are not the forum for debate and discourse over the merits and demerits of a policy; it was also stated that no direction can be given by the Courts, unless the implementation of executive policies, results in infringement of any of the constitutional or statutory provisions. It held that : 7. What has been said in respect of legislations is applicable even in respect of policies which have been adopted by Parliament. They cannot be tested in Court of Law. The courts cannot express their opinion as to whether at a particular juncture or under a particular situation prevailing in the country any such national policy should have been adopted or not. There may be views and views, opinions and opinions which may be shared and bel .....

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..... gal efficacy of a policy and ensuring that it does not violate any statutory canon or is not the outcome of an irregular or unfair procedure; nor tainted by mala fides. In the facts of the present case, what the petitioner frontally challenges is not just the legality of the EBP but its efficacy as well, contending that it has not yielded the benefits envisioned on the one hand, and on the other, is wreaking havoc on its business. The relative unwisdom - as is urged by the petitioner in its complaint about the policy, is clearly beyond the ken of this Court, which does not simply possess the tools, wherewithal or jurisdiction to examine. The EBP was perceived of as a measure for the larger public good; its implementation is to ensure cleaner, greener fuel, as a measure to protect the environment and also to promote production of ethanol. The Central Government s dictat to its OMCs (Oil manufacturing Companies) is a conscious policy choice made after considering the relevant macroeconomic considerations. Given the bounds of judicial review, it is unfeasible for this Court to venture into the area of a merits review of that policy, purely because the procurement price fixed, tends to .....

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