2007 (4) TMI 736 - SC - Indian Laws

Summary

Issues Involved:
1. Interpretation of Press Note No.12 dated 31.8.1998 regarding de-licensing of the sugar industry.
2. Validity of Industrial Entrepreneur Memorandums (IEMs) filed by competing companies.
3. Application and retrospective effect of the Sugarcane (Control) (Amendment) Order, 2006.
4. Grant of milling permission to specific projects amidst pending litigations.

Detailed Analysis:

1. Interpretation of Press Note No.12 dated 31.8.1998:
The primary issue was the interpretation of Press Note No.12, which mandated a minimum distance of 15 KMs between an existing sugar mill and a new one to avoid unhealthy competition. The judgment clarified that the Press Note applied only to cases where a new mill was proposed within 15 KMs of an existing mill. It was held that in the absence of an existing mill, the Press Note had no application, thus dismissing the writ petition filed by Ojas and allowing the one filed by Oudh.

2. Validity of Industrial Entrepreneur Memorandums (IEMs):
The court examined the validity of IEMs filed by Ojas and Oudh. Ojas filed its IEM first and claimed to have taken effective steps towards setting up the mill. However, Oudh's subsequent IEM, filed within 7.2 KMs of Ojas's proposed site, led to a dispute. The court held that the first IEM holder taking effective steps within a reasonable time should be given priority, and subsequent IEMs within 15 KMs should be kept in abeyance. The High Court's decision to disapprove Oudh's IEM was set aside, reinforcing the need for effective steps by the first IEM holder.

3. Application and Retrospective Effect of the Sugarcane (Control) (Amendment) Order, 2006:
The judgment addressed whether the Sugarcane (Control) (Amendment) Order, 2006, which introduced Clauses 6A to 6E, applied retrospectively. The court held that the Order was retrospective, applying to all pending cases, including those where IEMs were in dispute. The Order clarified the effective steps required for implementing IEMs, such as land purchase, machinery orders, and financial arrangements. The court emphasized that the concept of "Distance" was crucial for economic reasons, ensuring adequate supply of sugarcane to mills.

4. Grant of Milling Permission to Specific Projects:
The court considered the application by Balrampur for milling permission for its Kumbhi project, which was complete and had substantial investment. Despite pending litigation, the court granted milling permission to the Kumbhi project to avoid prejudice to cane growers and shareholders, while the Guleria project would be governed by the principles laid down in the judgment. The court emphasized that the 2006 Order aimed to prioritize the first IEM holder taking effective steps, without banning new units.

Conclusion:
The Supreme Court upheld the retrospective application of the Sugarcane (Control) (Amendment) Order, 2006, and clarified that the first IEM holder taking effective steps would have priority over subsequent IEMs within 15 KMs. The court granted milling permission to Balrampur's Kumbhi project, ensuring the principles laid down would guide the resolution of other pending cases. All civil appeals, transfer petitions, and interlocutory applications were disposed of with no order as to costs.