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TMI Blog2018 (12) TMI 1773X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 performance chemicals etc. Its activity is based on use of Ethanol as raw material; not on petroleum based raw material. It claims that such use not only saves valuable foreign exchange, but also is extremely environment friendly. Ethanol is based on recovery from molasses (a dark, viscous liquid made from sugarcane. Its production is a labour-intensive process requiring several steps, including cutting the sugarcane plants, boiling, straining, skimming and re-boiling). The petitioner consumes about 2,40,000 kilo litres of ethanol annually; other major chemical plants, like it are ethanol based and produce articles. Put together, all these consume approximately 8,50,000 kilo litres annually. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 administered price. 5. The petitioners argued that on 29-1-2011, the Ministry of Chemicals and Fertilizers (Respondent No. 2) expressed its serious reservations regarding implementation of EBP on mandatory basis stating that the chemical industry has been suffering from a long time from shortage of ethanol. 6. The basic objective of Ethanol has not been achieved due to shortfall in supply by the ethanol suppliers. Further, there has been more outflow of foreign exchange due to import of ethanol by chemical industry or value-added chemicals which earlier were being produced from ethanol. The petitioners argue that the EBP programme has not only been unsuccessful, but has fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 identifying a remunerative use for a by-product of the industry. The Council stated that according to the present EBP was based upon the latter consideration. The Council then recommended that the end-use price paid for ethanol by the user should be market determined and not on the basis of helping out an individual set-up; the Council highlighted that this is so in the context of there being a reasonably well-established market for ethanol, both the spirits industry and alcohol based chemical industry. As a consequence, price for the EBP programme should be left to normal commercial process. 10. The petitioners urge that the Committee also noted that in view of the tremendous year-to-year variations as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted 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 queries made to Union Ministers in Parliament during the period 2014-18 to say that the EBP never reached its target of 5% blending (of ethanol with petroleum); rather it reached only 3.49% annually in 2015-16 and during the previous years was lower. The total ethanol procurement was also 65.4 crore litres - it did not go up as dramatically as envisioned; in 2010-11 it was 36 crore litres. It was submitted that on the other hand, the price fixation by the Central Government artificially drove up prices of a commodity which could well be procured at a cheaper rate by domestic industry, which due to the constraint of higher prices, was forced to import the product, to the national detriment. 14.&em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst 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, 2013, dismissed the appeal. Later the petitioner also preferred a Civil Appeal No. 810 of 2014 before the Supreme Court of India, which is sub judice. 18. It is submitted that the Central Government introduced the EBP keeping in mind the beneficial effects it will have on the agricultural sector as well as on the environment. It is further submitted that before the Union Government's decision to implement the EBP consultations were held with the stakeholders and only upon careful consideration of the benefits of the said programme, and the logistical and financial advantages it entailed for a country like India, did the Central Government eventually take an informed decision of mandating EBP. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 challenge. No private right will prevail over a change in policy, structured and mandated in public interest. A change in policy occasioned by application of some principles of public interest cannot be challenged on the ground that it affects private rights of private individuals. 23. It was contended by the respondent that in economic matters especially, the Government enjoys wide latitude of discretion. In such matters, geographical classification which is based on sound rationale and proper reasons is not per se violative of Article 14. In support of this, the respondents relied on Parisons Agrotech (P) Ltd. v. Union of India - (2015) 9 SCC 657 = 2015 (323) E.L.T. 3 (S.C.); Anant Prasad Lakshm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 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. Later, the Central Government issued the National Policy on Bio-fuels. The relevant extract of the said policy, dealing with Bio-fuels, reads as follows : "5.6 Ethanol is mainly being produced in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et 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 already enjoys concessional excise duty of 16% and biodiesel is exempted from excise duty. No other Central taxes and duties are proposed to be levied on bio-diesel and bio-ethanol. Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 Rs. 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 Rs. 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 that this committee may be by Dr. Saumitra Chaudhury, Member Planning Commission. The su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 the commodity exchanges for both spot and future deliveries. Suitable initiatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Government to permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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. In our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 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 stands dismissed. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 believed by citiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 drive up pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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