2015 (4) TMI 611 - HC - Indian Laws

Validity of Molasses Policy 2011-12 - Maintenance of ratio of the stocks of reserved and unreserved quantities of molasses - Held that - observation made by the Division Bench in the judgment in M/s Triveni Engineering & Industries Ltd and another vs. State of UP & another (2011 (3) TMI 1526 - ALLAHABAD HIGH COURT) relating to maintenance of ratio and reserving the percentage of molasses in favour of distilleries and for maintenance of the ratio, were out of context and were totally out of place, inasmuch as the petitioners had neither prayed, nor argued on the validity of Section 8 (1) and (2) as well as Molasses Policy in which such reservations and ratio have been prescribed. There was no prayer in the writ petition nor there is any discussion on the question of percentage of reservation and the ratio. The Court did not give any relief with regard to Section 8 (1) and (2) of the Act and Rules providing for reservation and maintenance of ratio of the reserved and unreserved stocks of molasses. - petitioner as a member of the U.P. Sugar Mill Association, having participated through its association in the deliberations of the Advisory Committee of which the unanimous resolution and recommendations were accepted by the State Government to reserve 22% of the Molasses, are estopped from challenging the reservation and the consequential maintenance of the ratio of the stocks of the reserved and unreserved molasses. Maintenance of stocks of the reserved and unreserved molasses in clause-3 of the Molasses Control Order dated 20.12.2011 is in consonance with the reservation of 22% of molasses and is provided to carry out the objects of reservation to provide for sufficient and safe quantities for manufacture of country liquor in distilleries and at the same time reserving the revenue for the State. The maintenance of ratio throughout the year with the condition to review the percentage of reservation as well as the power to relax the reservation, which has in fact has been exercised in the case of the petitioner and other sugar mills by order dated 21.6.2012, which also refers to many such orders of the relaxation in the same year, makes the exercise of power, reasonable and non-arbitrary. After the order of relaxation, the petitioner has not established any hardships to challenge the policy as arbitrary and unreasonable. Clause-5 of the policy clearly refers to an extraordinary condition created in the year 2009-10, in which on account of over-shooting the storage capacities, a situation of over-flow and auto-combustion was created and in order to avoid the recurrence of any such condition, the State Government reserved the powers for relaxations, which have been exercised in the current year from time to time. No such extraordinary condition has been pleaded or established by the petitioners. - State Government has been issuing allotments to the distilleries regularly for release, sale and transportation of the reserved quantities of molasses. One such order dated 15.6.2012 has been placed before us along with request of the distilleries for further allotments and for transportation of the reserved quantities of molasses. These allotments demonstrate that the State Government is regularly monitoring the stock position of molasses and is issuing orders of sale of the reserved quantities of molasses to avoid the accumulation and over-shooting of the stocks. - Decided against the petitioner.

Summary

Issues Involved:
1. Constitutional validity of the U.P. Sheera Niyantran Adhiniyam, 1964.
2. Legality of the Molasses Policy 2011-12.
3. Requirement to reserve a percentage of molasses as levy molasses.
4. Maintenance of a ratio between reserved and unreserved molasses.
5. Financial hardships due to the policy.
6. State Government's power to relax the policy.

Detailed Analysis:

1. Constitutional Validity of the U.P. Sheera Niyantran Adhiniyam, 1964:
The U.P. Sheera Niyantran Adhiniyam, 1964, governs the control, storage, gradation, regulation of supply, and distribution of molasses in Uttar Pradesh. The Supreme Court upheld the constitutional validity of the Act in SIEL Ltd & others vs. Union of India and others (1998) 7 SCC 26, affirming the legislative competence of the State Government to enact the Act.

2. Legality of the Molasses Policy 2011-12:
The petitioner challenged the Molasses Policy 2011-12, particularly the reservation of 22% of molasses for distilleries manufacturing country-made liquor and the maintenance of a ratio of 1:3.5 between reserved and unreserved molasses. The policy was framed based on the recommendations of the Advisory Committee constituted under Section 3 of the Act, which includes representatives from various stakeholders, including the U.P. Sugar Mills Association and U.P. Distilleries Association.

3. Requirement to Reserve a Percentage of Molasses as Levy Molasses:
The petitioner argued that the reservation of molasses for country-made liquor was illegal, citing a previous judgment in M/s Triveni Engineering & Industries Ltd and another vs. State of UP & another, where the court declared such reservation illegal. However, the court noted that the Supreme Court in SIEL Ltd upheld the reservation of molasses as a reasonable economic measure, and the petitioner, as a member of the U.P. Sugar Mill Association, participated in the Advisory Committee's deliberations and is thus estopped from challenging the reservation.

4. Maintenance of a Ratio Between Reserved and Unreserved Molasses:
The petitioner contended that maintaining a ratio of 1:3.5 between reserved and unreserved molasses caused financial hardships and operational difficulties. The court found that the policy of maintaining the ratio was in consonance with the reservation of 22% of molasses and was necessary to ensure sufficient and safe quantities for the manufacture of country liquor while reserving revenue for the State. The policy also provided for relaxation in case of any difficulty, which had been exercised in the petitioner's case.

5. Financial Hardships Due to the Policy:
The petitioner claimed financial hardships due to the policy, including blocked capital and delayed payments to cane growers. The court noted that the petitioner had already sold more than 90% of the unreserved quantity of molasses and had not established any extraordinary conditions to challenge the policy as arbitrary and unreasonable. The State Government had been issuing allotments for the sale and transportation of reserved quantities of molasses to avoid accumulation and overflow.

6. State Government's Power to Relax the Policy:
The court observed that the State Government had the power to relax the policy in case of any difficulty, as provided in the Molasses Policy. The petitioner had applied for and received relaxation for a period of one month, allowing the sale of certain quantities of molasses. The court found that the policy was reasonable and flexible, with provisions for relaxation to avoid any hardships.

Conclusion:
The court dismissed the writ petition, upholding the Molasses Policy 2011-12 and the reservation of 22% of molasses for distilleries manufacturing country-made liquor. The court found that the policy was in accordance with the U.P. Sheera Niyantran Adhiniyam, 1964, and was necessary to ensure sufficient quantities for the manufacture of country liquor while reserving revenue for the State. The policy also provided for relaxation in case of any difficulty, which had been exercised in the petitioner's case. The petitioner, as a member of the U.P. Sugar Mill Association, was estopped from challenging the reservation and the maintenance of the ratio of reserved and unreserved molasses.