Calcutta High Court (Appellete Side)
Wpa 4083 Of 1983 vs Union Of India & Ors on 16 June, 2025
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IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present: - Hon'ble Mr. Justice Subhendu Samanta.
IN THE MATTER OF
WPA 4083 of 1983
with
WPA 3510 of 1981
Vishnu Sugar Mills & Ors.
Vs.
Union of India & ors.
With
WPA 13574 of 1981
Vishnu Sugar Mills & Ors.
Vs.
State of West Bengal
With
WPA 4661of 1984
CAN 1 of 2017 ( Old No. CAN 3344 of 2017)
Vishnu Sugar Co. Ltd & Ors.
Vs.
Union of India & Ors
For the Petitioners : Mr. Mainak Bose, Adv.,
Mr. Sachin Shukla, Adv.,
Mr. Rishab Karnani, Adv.,
Mr. Vivek Jhunjhunwala Adv
For the
Union of India : Mr. D.N Ray, Adv.,
Mr. Rajesh Kumar Shah Adv
Reserved on : 24.03.2025
Judgment on : 16.06.2025
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Subhendu Samanta, J.
1. Petitioner No.1 is company engaged in the business of
manufacturing sugar. The petitioner No.1’s factory was set up on
1932-1933 and is registered under the provision of Industries
(Development and Regulation) Act, 1951. The petitioner No.2 is a
shareholder of petitioner No.1.
2. In 1961 the crushing capacity of the petitioner factory was
expanded from 800 ton to 1200 ton of sugarcane per day.
Licences were accordingly issued by the Ministry of Commerce
and Industry under Industrial Undertaking Rules, 1952.
3. In the year 1977 the petitioner applied before the
appropriate authority for further expansion of its licence capacity
was not consider and turn down.
4. Government of India, in exercise of its powers under Section
3(c) of the Essential Commodities Act, 1955 published Price
Determination Orders for each year. By the Price Determination
Order the Central Government fixed the price to be paid to the
sugar mills for levy sugar to be supplied by them. Separate price
were fixed for levy sugar to be supplied by the factories in
schedule V and schedule VI based on efficient and less efficient
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unit. The less efficient units are placed in schedule VI and
efficient units are placed in schedule V. Government of India
appointed a High Level Committee (HLC) on the sugar industry to
go into cost structure of the sugar industry. The said committee
submitted it reports in 1980 and it has been observed therein
that as far as unit capacity is concerned it is generally recognised
that units having capacity below 1250 tons cane crush per day
have much higher cost of production and therefore these have
been put it ones strata. The factories in this strata have a cost of
production i.e., Rs.26/- per quintal higher than others. On the
basis of the above, the said committee recommended that
differential of Rs.26/- per quintal as extra levy price be permitted
to the factories that are place in the stratum i.e., the factories
under less efficient unit are entertained to get the differential
amount of Rs.26/- per quintal.
5. It is the further case of the petitioner that though the
crashing capacity of the petitioner’s factory is 1200 tons per day
but in the Price Determination Orders the factory of the petitioner
was wrongfully and illegally placed in schedule V which is
schedule for efficient units.
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6. Representations were made by the petitioner to the
Government of India. The Government of India thoroughly
examined and scrutinized all the relevant factors and after being
fully satisfied that the placement of the petitioner’s factory in
schedule V of the Price Determination Order was incorrect and
erroneous and that the factory of the petitioner No.1 is a less
efficient unit. Thus on December 15, 1980 the Central
Government, the Government of India amended the said Price
Determination order and inter alia deleted the petitioner No.1
factory from schedule V and included the same in the schedule
VI being a less efficient unit.
7. After issuance of the said amendment order petitioner was
paid by the Government of India for supply for levy sugar at the
price payable to the factories in schedule VI.
8. On June 13, 1981 the Government of India issued a
purported order called sugar (Price Determination for 1980-81
Production) amendment order 1981 (Second Amendment Order)
by such amendment order (second) the factory of the petitioner
was again placed in schedule V and deleted from schedule VI.
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9. The Government of India has issued separate Price
Determination Orders for each year the petitioner has challenged
the said Price Determination Orders for each year by filing these
04 writ petitions.
The petitioner is aggrieved with those Price Determination
Orders on the grounds that though petitioners factory is come
under the zone of schedule VI factories (less efficient factories)
but they are placed in schedule V category of factories. Thus,
these writ petitioners are filed against each Price Determination
Orders.
Learned Counsel appearing on behalf of the petitioner
submits that the scope of challenging in the writ petitions is
confined to the price determination order and whether, as per the
policy of Government and the conditions made therein, the
petitioners plant false under efficient or less efficient unit. It is
further contention of the petitioner that two criteria had been laid
down by the high level committee and approved by the
Government while classifying a unit as an efficient unit/less
efficient unit. First condition relates to the age of the plant and
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the second criteria related to the licensed crushing capacity per
day of the factory.
The aforesaid issue becomes the subject matter of several
writ petitioners across the country. Learned Counsel for the
petitioner further argued that the division Bench of Delhi High
Court in the case of civil writ petition No. 181 of 1981 ( Godabari
Sugar Mill Limited Vs. Union of India and Anr.) decided on
May 28, 1981 has come to a specific decision that crushing
capacity per day is the license capacity in the capacity which a
plant is in a position to achieve regardless of whether a plant as
capacity to crush more or less, what is required to be considered
is the capacity which has been license and/or authorise by the
appropriate authority of the Government. He further argued that
the Division Bench has further pleased to hold that the criteria
has applied by the Union of India for placing the petitioners
factory in schedule V in place of schedule VI was not correct.
10. Learned Counsel for the petitioner further argued that this
court in a case of Rega Sugar Company Limited and Anr. Vs.
Union of India and Anr., decided on March 21, 2002 following
the principle laid down in Godabari Sugar Mills Ltd. (supra) was
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pleased to set aside the classification of the Unit concerned from
the schedule V and directed petitioner therein to be treated as in
schedule VI of the relevant Government Order.
11. He also argued that Hon’ble High Court at Delhi in batch of
writ petitions filed by the petitioner being Bishnu Sugar Mills
and Anr. Vs. Union of India and Anr. decided on February
26,2004 following the principle laid down in Godabari Sugar
Mills Ltd. (supra) was pleased to set aside the classification of
the unit concerned from schedule V, the same point was in issue
in this batch of writ petitions also.
12. Learned Counsel appearing on behalf of the Union of India
submits that Government of India appointed a high level
committee (HLC) on the sugar industry to go into cost structure
of a sugar industry. The said committee submitted its report in
1980 in the said report the committee observed that as far as the
unit capacity is concerned it is generally recognised that units
below 1250 tons cane crush per day have much higher costs of
production and therefore those have put in one strata. The
factory in this strata have a cost of production that is Rs 26 per
quintal higher than others. Part basis of above said committee
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recommended differential of per quintal as extra levy price be
permitted to the factories that are placed in this strata.
13. He further submits that on the basis of said
recommendation of HLC a criteria for eligibility for being granted
as extra levy price of Rs.26/- per quintal to weak factories was
drawn up by the Government of India. The sugar mills in
schedule V are entitled to this differential of Rs.26/- per quintal.
The criteria for putting sugar factory in schedule V and schedule
VI are as follows
Schedule V
List of vaccum pan sugar factories erected (either with new
or old machinery).
i. On or after the first day of October, 1955. Or
ii. Prior to the 1st day of October, 1955, and have a licensed
daily cane crushing capacity of
a. 1250 tonnes or more; or
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b. Less than 1250 tonnes, but have expanded the capacity up
to 1250 tonnes or more either under the liberalised licensing
policy or otherwise; or
c. Less than 1250 tonnes, but have crushed upto 1250
tonnes or more during each of the preceding five years.
Schedule VI
List of vaccum pan sugar factories erected prior to the 1st
day of the October 1955, and have a licensed daily cane
crushing capacity of
i. Less than 1250 tonnes or
ii. Less than 1250 tonnes and have also not expanded the
capacity to 1250 tonnes or more under the liberalised
licensing policy or, otherwise: or
Less than 1250 tonnes and have also not crushed 1250
tonnes or more during each of the preceding five years.
4. The Vishnu Sugar Mills Ltd. was examined with reference
to these criteria and the mill was rightly placed in Schedule
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V as it justified the following conditions laid down for
placement of the Sugar Factory in Schedule V:
i. Set up before 01.10.1955 and
ii. It has achieved a cane-crushing capacity which is not less
than 1250 Tonnes.
5. The supporting documents that prove that the Vishnu
Sugar Mills Ltd. was rightly placed in Schedule V are as
under:
i. As far back as on 13th April, 1973 the Vishnu Sugar Mills
Ltd., by its letter (Annexure-A) addressed to the then
Director, Sugar Technical, Directorate of Sugar and
Vanaspati, Department of Food, Jamnagar House, New Delhi,
informed that the writ petitioners had achieved 1500 tonnes
cane crushing capacity at their factory at Harkhua, and
intended to extend it further upto 1750 tonnes per day.
ii. Subsequently, in their letter dated the 21st October, 1974
(Annexure-B), addressed to Shri A.K.Bose, Deputy Director,
Sugar Technical, Dte. of Sugar & Vanaspati, Krishi Bhawan,
New Delhi the Vishnu Sugar Mills Ltd. furnished certain
11information and made a request for grant of permission to
extend the capacity of the factory further from 1500 tonnes
to 1750 tonnes per day.
14. Learned Counsel for the Union of India further submits
that petitioner, i.e. Bishnu Sugar Mills Ltd was examined with
reference to this criteria and it appears that the mills was rightly
placed in schedule V as it justified the following condition laid
down for placement for sugar factory in schedule V. It is further
contention for the Union of India that the petitioner was set up
before 01.10.1955 and it has achieved a cane crushing capacity
which is not less than 1250 tons as per day. It is the submission
of the Union of India that vide letter dated 13th April 1973 and
another letter dated 20st October 1974 Bishnu Sugar Mills
informed that they have achieved crushing capacity of 1500 tons
cane per day at their factory at Harkhuya and intended to extent
up to 1750 per day and they made request to the concerned
authority to extent the crushing capacity of the factory further
from 1550 tons to 1750 tons per day.
15. Learned Counsel for the Union of India submits that the
petitioner was rightful placed in schedule V category as they have
12the capacity to crush cane more than 1250 tons per day. He
further submits that the writ petitions are devoid of merit and
they are liable to be dismissed.
16. Having heard the Learned Counsel for the parties it appears
that the justification of placing the petitioners factory in schedule
V category of factories (efficient unit factories) is under challenge
before this court. It is admitted position of law that is different
High Courts including before the Supreme Courts same issues
were raised wherein the decision of Godabari Sugar mills and
Anr. Vs. Union of India and Ors. delivered on 03.10.2001
relying upon earlier judgment of Godabari Sugar mills and Anr.
Vs. Union of India and Ors. by the Hon’ble Division Bench of
Delhi High Court has been upheld. It has been decided by the
division bench that the criteria applied by the Union of India for
placing petitioners factory in schedule V in place of schedule VI
was not correct. The capacity for crushing sugarcane per day is
to be considered for a particular factory of its licensed capacity.
Moreover, if the respondents Union of India wanted to place the
petitioners factory in schedule V. They should give notice to the
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petitioner and also indicate the reason why the petitioner is being
placed in schedule V.
17. It further appears that the Union of India in their affidavit in
opposition has placed two representations of the petitioners
wherein they have prayed for expansion of their crushing
capacity from 1550 tons to 1750 tons per day. Both the
representations (as annexed with the affidavit in opposition of
Union of India) had not considered by Union of India and were
turned down; now to justify their act and action, Union of India
cannot place reliance upon them. Those representations, which
they actually, not considered at the relevant point of time. The
documents, i.e. representation dated April 13, 1973 and October
20, 1974, by the petitioners cannot be used by Union of India
while they themselves not considered them to be correct. Union
of India cannot use those representations for the purpose of
placing the petitioners factory in schedule V.
18. In my view the act and action of Union of India for placing
the petitioners factory in schedule V is erroneous. The law laid
down in the case of Godabari Mills Limited (supra) holds field;
thus the principle that crushing capacity of a factory should be
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considered as its licensed capacity is taken to be correct in its
specific perspective. Therefore following decisions of Godabari
Mills Ltd. (supra), the instant writ petitions are considered and
allowed.
19. The placement of petitioners in schedule V is turned down.
Relevant Price Determination Orders for respective years to that
effect, are hereby quashed.
20. Petitioners are entitled to the price of levy sugar supplied by
it after coming into force of the said Price Determination Order
for that particular period.
It is clarified that the placement of petitioner in schedule V
is appears to be illegal in terms of decision of Godabari Mills Ltd.
(supra).
21. In case of respondent/Union of India went to place the
petitioner in schedule V, they can do so, after giving notice to the
petitioner and after giving reasonable opportunity of hearing to
the petitioner to that effect.
22. Under the above observation writ petitions are disposed of.
Connected applications, if any, are disposed of.
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23. Parties to act upon the server copy and urgent certified copy
of the judgment be received from the concerned Dept. on usual
terms and conditions.
(Subhendu Samanta, J.)