[Para 69]
important points
If the conditions are fulfilled, the authorities could not reject the application for licence.
Reservation of area of a sugar factory is not of permanent nature.
Decisions are to be taken in accordance with policies in force at then relevant time.
Scope of judicial interference in Policy matters and question of mala fide discussed.

Headnote:(a)Essential Commodities Act, 1955 – Section 2(b) – Sugarcane included within the definition of ‘essential commodity’ ‘food-crops’ and hence cultivation and sale of sugarcane could be regulated by law.(Para 10)
       (1956) 1 SCR 393 : AIR 1956 SC 676; (1970) 1 SCR 673 : AIR 1970 SC 267 – Relied upon.
       (b)The Industries (Development and Regulation) Act, 1951 – Section 2 – The First Schedule, inter alia, included ‘sugar’ industry as one of the controlled industries.(Para 11)
       (c)Sugarcane (Control) Order, 1966 – Clauses 2, 3, 6 and 7 – An application for the grant of licence by the licensing authority cannot be rejected except where (i) such application has not been made in the prescribed form, or (ii) is incomplete, or (iii) is not accompanied with the payment of requisite fee, or (iv) the licensing authority is of the opinion that it is necessary or expedient so to do in the public interest – The Licensing Authority is also enjoined to take into consideration the directions of the State Government issued from time to time – If the conditions are fulfilled, the authorities could not reject the application for licence.(Paras 13, 14 and 26)
       (d)U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 – Sections 11, 12 and 15 – Provisions of sections 11, 12 and 15 have the combined effect that at the time of declaration of reserved area and assigned area under Section 15, the estimate published under section 12 shall be the basis for consideration by the Sugarcane Commissioner for the purpose of quantifying the requirement of sugarcane for every factory.(Para 20)
       (e)U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 – Section 12 –Reserved area of a sugar factory is not of permanent nature and no sugar factory can claim that the area reserved for a particular year would remain with it for all the time – The Sugarcane Commissioner can change the area even during the same crushing season.(Para 21)
       (f)Sugarcane (Control) Order, 1966 – Clause 7 – Earlier an application made by respondent No.4 came to be rejected as per policy in force at that time – It does not mean that even if the policy changes, that order cannot be modified – Since the policy was thereafter changed, grant of licence in favour of respondent No.4 could not be objected by the appellant, particularly in view of additional conditions imposed by the authorities.(Paras 23 and 24)
       (g)Sugarcane (Control) Order, 1966 – Clause 7 – One of the considerations which must be kept in mind by the Authorities while exercising powers under various provisions of law would be as to whether exercise of such power would also protect interest of sugarcane growers – Here that is precisely done by the respondent-authorities and there is no infirmity therein.(Para 29)
       (h)Sugarcane (Control) Order, 1966 – Clause 7 – Office Order, dated November 15, 2003 – Para 1(a) – Government exercising power of relaxation u/s Cl. (a) ony after satisfying that the new unit will not affect adequate supply of sugarcane to appellant – Moreover a specific condition that the new licensee would not purchase bonded cane of appellant – With all these safeguards, there is no illegality in the order.(Para 32)
       (i)Sugarcane (Control) Order, 1966 – Clause 7 – No specific reserved area earmarked for any sugar factory given to respondent no. 4 – Moreover, in view of additional condition No. 3 imposed on respondent No. 4, the appellant is not adversely affected.(Para 34)
       (j)Sugarcane (Control) Order, 1966 – Clause 7 – Office Order, dated November 15, 2003 – Statutory finality is attached to the order passed by the State Government – The Authorities below considered the facts and circumstances and granted licence to respondent No.4 and High Court correctly did not think it proper to interfere with such order.(Para 36)
       (k)Sugarcane (Control) Order, 1966 – Clause 7 – Permission for use of sugarcane for rab/ khandsari – Contention that sugarcane in the reserved areas should not be permitted for use other than sugar is not tenable – Of course, Government ought to take into consideration interest of sugarcane growers also – Sugarcane Commissioner having done precisely that when he observed that the sugarcane growers had one more option available for realizing proper return and protecting the interest of the appellant as well, there is no infirmity – No interference required with High Court order.(Paras 39 and 44)
       (1987) 4 SCC 604 – Distinguished.
       (l)Gur (Regulation of Use) Order, 1968 – Application submitted by respondent No. 4 was limited to manufacture of rab and no other use was indicated at all – As per law it is permissible to use gur inter alia for the use in chemical industry or for any other industrial use – Therefore, if there was violation of provision of law relating to use of rab for a purpose other than permitted by law, the remedy was not to challenge licence but to question the use of rab – An appropriate direction in such an eventuality can always be issued by the Authority.(Paras 45 and 46)
       (m)Judicial Review – Policy matters – Although executive discretion is not absolute, unqualified, unfettered or uncanalised and judiciary has control over all executive actions; public authorities must have liberty and freedom in framing policies.(Para 48)
       57 L Ed 730; (1972) 2 SCC 788 : AIR 1973 SC 106; (1971) 2 SCC 410 : AIR 1973 SC 588; (1981) 4 SCC 675 : AIR 1981 SC 2138 : (1982) 1 SCR 947; (1984) 3 SCC 465; (1986) 4 SCC 566 : AIR 1987 SC 25 : JT 1986 SC 701; (1990) 3 SCC 223 : AIR 1990 SC 1277 : JT 1990 (1) SC 462; (2001) 3 SCC 635 : AIR 2001 SC 1447 : JT 2001 (4) SC 31; (2002) 2 SCC 333 : AIR 2002 SC 350 : JT 2001 (10) SC 466; 1980 Supp SCC 559 : AIR 1981 SC 1545; (1991) 1 SCC 505 : AIR 1991 SC 363 : JT 1990 (4) SC 741; AIR 1952 Bom 468 – Relied upon.
       (n)Judicial Review – Mala fide exercise of power – Every action of a public authority must be based on utmost good faith, genuine satisfaction and ought to be supported by reason and rationale – It is, therefore, not only the power but the duty of the Court to ensure that all authorities exercise their powers properly, lawfully and in good faith.(Para 67)
       1904 AC 515: 20 TLR 370.
       (o)Judicial Review – Mala fide – Allegations of mala fide being serious in nature essentially raise a question of fact – It is, therefore, necessary for the person making such allegations to supply full particulars in the petition – In absence thereof, the court would not make ‘fishing’ or roving inquiry. (Para 69)
       (1974) 4 SCC 4 : (1974) 2 SCR 348; (1976) 1 SCC 800 : AIR 1977 SC 448; (2005) 7 SCC 764 – Relied upon.
       Facts of the case:
       The appellant is a Company registered under the Companies Act, 1956. It owns a sugar factory at Kashipur in the State of Uttranchal. It was set up in the year 1936. The Company is engaged in the manufacture, sale and supply of sugar. It is the case of the appellant that M/s Indian Glycols Limited (‘IGL’ for short) submitted an application in the year 2003 for grant of licence for Power Driven Crusher for the manufacture of rab from sugarcane. The application was, however, rejected by the Sugarcane Commissioner. According to the appellant, the Sugarcane Commissioner took the said decision as per the Licencing Policy of the Government whereunder a new licence to Khandsari Unit could not be granted in the reserved area of the existing sugar mills. Since the application of IGL was in the reserved area of the appellant, it could not be granted. According to the appellant, however, the State Government vide its order dated November 15, 2003, modified its earlier sugar policy and the Government was empowered to relax the limitation laid down in para (ka) of the Government Order in certain cases. Immediately after the amendment in the policy, IGL submitted fresh application on November 18, 2003 for grant of licence for rab manufacturing unit. IGL intended to manufacture rab from sugarcane juice. The said application was allowed by the Licencing Authority, i.e. Sugarcane Commissioner by an order dated February 17, 2004. According to the appellant, the proposed site of the new unit of respondent No. 4-IGL fell in the reserved area of sugar mill of the appellant. No such licence, therefore, could have been granted to IGL. The Sugarcane Commissioner as well as the State Government observed that the new unit would not adversely affect adequate and sufficient supplies of sugarcane to the sugar mills in the reserved area and hence, limitation in para (ka) could be relaxed. According to the appellant, the factual position was totally ignored by respondent Nos. 1 to 3 and the action was illegal, unlawful, arbitrary and mala fide since the respondents wanted to oblige IGL at the cost of interest of the appellant.
       The High Court dismissed the petition.
       Findings of the Court:
       License has been granted to respondent no. 4 in accordance with policy in force at the relevant time and keeping the interest of sugarcane growers as also that of the appellant. Hence there is no illegality or infirmity in the Government order or judgment of the High Court.
       No case of mala fide on the art of the authorities made out.
       Result : Appeal dismissed.

judgment

C.K. THAKKER, J. —

1.Leave granted.

2.The present appeal is filed by the appellant-original petitioner against the judgment and final order dated December 23, 2005 passed by the High Court of Uttranchal at Nainital in Writ Petition No. 564 of 2004 (M/B) by which the Division Bench of the High Court dismissed the petition filed by the writ-petitioner.

3.The appellant-writ-petitioner filed a petition in the High Court of Uttranchal at Nainital by invoking Article 226 of the Constitution against the respondents for an appropriate writ, direction or order quashing and setting aside relaxation in Clause (ka) of Notification dated November 15, 2003 issued by the Cane Development & Sugar Industries Development, Government of Uttranchal, also quashing an order issuing licence for Power Crusher dated February 17, 2004 issued in favour of respondent No. 4; as also quashing an order dated January 22, 2004 issued by Secretary (Ganna Cheeni), Government of Uttranchal. A Writ of Mandamus was also sought by the appellant directing respondent Nos. 1 to 3 to estimate the requirement of sugarcane of the appellant on the basis of 6250 Tonnes Crushing Capacity (TCC). A further prayer was made to quash and set aside the order dated September 25, 2004 passed by the Government of Uttranchal dismissing the appeal filed by the appellant herein.

FACTUAL MATRIX

4.To appreciate the controversy raised in the present appeal, few relevant facts may be noted. The appellant is a Company registered under the Companies Act, 1956. It owns a sugar factory at Kashipur in the State of Uttranchal. It was set up in the year 1936. The Company is engaged in the manufacture, sale and supply of sugar. It is the case of the appellant that M/s Indian Glycols Limited (IGL for short) submitted an application in the year 2003 for grant of licence for Power Driven Crusher for the manufacture of rab from sugarcane. The application was, however, rejected by the Sugarcane Commissioner. According to the appellant, the Sugarcane Commissioner took the said decision as per the Licencing Policy of the Government whereunder a new licence to Khandsari Unit could not be granted in the reserved area of the existing sugar mills. Since the application of IGL was in the reserved area of the appellant, it could not be granted. According to the appellant, however, the State Government vide its order dated November 15, 2003, modified its earlier sugar policy and the Government was empowered to relax the limitation laid down in para (ka) of the Government Order in certain cases. Immediately after the amendment in the policy, IGL submitted fresh application on November 18, 2003 for grant of licence for rab manufacturing unit. IGL intended to manufacture rab from sugarcane juice. The said application was allowed by the Licencing Authority, i.e. Sugarcane Commissioner by an order dated February 17, 2004. According to the appellant, the proposed site of the new unit of respondent No. 4-IGL fell in the reserved area of sugar mill of the appellant. No such licence, therefore, could have been granted to IGL. The Sugarcane Commissioner as well as the State Government observed that the new unit would not adversely affect adequate and sufficient supplies of sugarcane to the sugar mills in the reserved area and hence, limitation in para (ka) could be relaxed. According to the appellant, the factual position was totally ignored by respondent Nos. 1 to 3 and the action was illegal, unlawful, arbitrary and mala fide since the respondents wanted to oblige IGL at the cost of interest of the appellant.

DECISION OF HIGH COURT

5.The High Court dismissed the petition inter alia holding that all the contentions raised by the appellant were ill-founded. According to the Court, sugarcane produced in the reserved area was available to the sugar factory. It was also observed by the Court that as per the bonding policy, adequate supply was ensured so far as the appellant factory was concerned and hence, it had no occasi

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2007 Supreme(SC) 1227

Cases Referred (17)