By the Court.—We have heard Sri P.K. Bhalla, alongwith Sri Diptiman Singh, learned counsels for the petitioner and Sri Vishnu Pratap, learned Standing Counsel for the State.

2. The petitioner is a Company incorporated under the Companies Act, 1956 and has three sugar mills operating under the name and style of Mawana Sugar Works, Mawana in District Meerut, Nanglamal Sugar Complex, Nanglamal in District Meerut and Titawi Sugar Complex, Titawi in District Muzaffarnagar. The petitioner also has a distillery in Nanglamal Sugar Complex, Distillery Division Nanglamal, District Meerut which is engaged in the production of industrial alcohol. All the aforesaid three sugar mills of the petitioner are engaged in the business of manufacture of crystal sugar through vaccum pan process. Molasses is produced as a by product.

3. The storage, sale, supply and distribution of molasses is governed by the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 (hereinafter referred to as ‘the Act’). Section 8 of the Act empowers the authorities to issue necessary directions relating to sale and supply of molasses. In exercise of the said power, various orders have been issued from time to time with regard to reservation and distribution of molasses produced by the sugar factories to various distilleries producing country liquor. In this regard, the State Government issued a policy in the year 2007 by which 20% of the production of molasses was reserved for manufacturers of country made liquor. The said policy was challenged by a sugar factory, namely, Dhampur Sugar Mills Ltd. which matter went up to the Supreme Court. The Supreme Court decided the matter, which is in Dhampur Sugar Mills Ltd. v. State of U.P. and others, 2007(8) SCC 338.

4. The background leading to the said decision was that the company was producing molasses and that the entire production of molasses was required by the company itself for its captive consumption but the said company was required to reserve 20% of its production for supply to manufacturers of country liquor. The main challenge in the case of Dhampur Sugar Mills Ltd. was that though the Company was producing molasses, the entire production was required by the Company itself for its captive consumption which otherwise was also insufficient. The Company, in fact, had obtained permission from the Government for import of molasses from other States as also from other countries. It was contended that since the Company did not have balance or extra stock of molasses, the authorities could not compel the Company to supply molasses as directed in various Government Orders and instructions. It was contended that such action was improper, illegal, arbitrary and unreasonable, inconsistent with the provisions of the Act as also violative of Articles 14 and 19(1)(g) of the Constitution. On the other hand, the stand of the Government before the High Court was that in accordance with the provisions of the Act and the Uttar Pradesh Sheera Niiyantran Niyamavali, 1974, it was open to the authorities to direct the Company to supply 20% molasses for the purpose of manufacturing country liquor. As the said action was in consonance with law, the Company was bound to supply 20% molasses for the said purpose and the action could not be termed as illegal or unlawful. The Supreme Court, after considering the policy, interpreted Clause 3 of the said policy as under:

“24. On merits, the learned counsel for the appellant drew our attention to an order dated June 9, 2004 which was relied upon by the High Court for dismissing the writ petition. Clause (3) of the said order relates to supply of 20% molasses for manufacturing country liquor. The High Court in its order reproduced the said clause which is in Hindi and reads thus:

“PRATYEK CHINI MILL KE SHEERE KE AWASHESHA STAAK ME SE DESHI MADIRA KE LIYE 20 PRATISHAT SHEERE KA AARKSHAN EISI AA