In a liberalised economy, industrial growth is both an engine of progress and a flashpoint for disputes. While industries generate employment, infrastructure, and revenue, they also raise issues of legality, compliance, and fairness in competition. Courts, particularly under Article 226 of the Constitution of India, are often called upon to examine whether challenges to industrial activities are bona fide or motivated. The central issue is whether challenges of this nature can truly be regarded as Public Interest Litigation.
The judgment of the Bombay High Court in Sahyadri Sahakari Sakhar Karkhana Ltd. v. Union of India & Ors. (2025) provides a significant lens to examine this tension. The case revolved around a cooperative sugar factory contesting the validity of an Industrial Entrepreneur Memorandum (IEM) granted to a rival factory, raising issues of locus standi, statutory interpretation, and the limits of writ jurisdiction.
Legal Background: Sugarcane Control and Industrial Licensing
Industrial Entrepreneur Memorandum (IEM)
An IEM is a formal intimation filed with the Central Government for establishing certain categories of industries following de-licensing under the Industries (Development and Regulation) Act, 1951. Though industries like sugar were de-licensed in 1998, safeguards were retained to prevent unhealthy competition. A minimum distance of 15 km (later 25 km for Maharashtra) was mandated between sugar mills to secure viability and protect sugarcane farmers
The Sugarcane (Control) Order, 1966
Issued under the Essential Commodities Act, 1955, this order regulates the distribution and movement of sugarcane. Through amendments, Clauses 6A and 6C were inserted in 2006:
Clause 6A: Defined “effective steps” towards commencement of production (land purchase, machinery procurement, financial arrangements).
Clause 6C: Required commercial production to commence within four years (later five years), failing which the IEM would stand de-recognised automatically
.These provisions were meant to balance industrial ambition with farmers’ interests, ensuring only genuine entrepreneurs sustained sugar units.
The Dispute: Sahyadri v. Shivneri Sugars
The Petitioner’s Case
Sahyadri Sahakari Sakhar Karkhana Ltd., a cooperative sugar factory established in 1974 and operating across five talukas of Satara and Sangli, challenged the IEM held by Shivneri Sugars Ltd. (Respondent No.10). Their principal arguments were:
- Violation of Distance Norm: Shivneri’s factory was within 23 km of Sahyadri’s unit, contravening the 25 km rule under Maharashtra’s 2011 notification.
- Automatic De-recognition: Since the original holder, M/s Jijamata Sugar & Power Industries Ltd., failed to commence production within four years of its 2003 IEM, Clause 6C triggered automatic lapse.
- Paper Compliance: Sahyadri alleged that claims of production in 2011–12 (187 quintals) were fictitious—no crushing licence, excise duty payment, or operational machinery existed.
- Public Interest Impact: The petitioner argued that permitting Shivneri’s activity jeopardized cane growers, disrupted cooperative zones, and created unhealthy competition
The Respondents’ Case
- Government of India: Maintained that Jijamata had taken “effective steps” under Clause 6A before the cutoff and was recognized as an “existing sugar mill” in 2008. Later transfers of ownership to Shivneri were legally valid. It denied any lapse of the IEM
- State of Maharashtra: Contended that it lacked authority to de-recognize IEMs. It also noted contradictions in records but stressed that Shivneri had since obtained a separate IEM in 2021 for expansion
- Shivneri Sugars: Argued that Sahyadri’s petition was malicious and politically motivated, engineered by rival cooperative interests. It highlighted that a previous writ petition by Sahyadri on similar grounds had been withdrawn. Shivneri emphasized its lawful acquisition of Jijamata’s assets and compliance with regulatory directions
Core Legal Questions Before the Court
- Does Clause 6C operate retrospectively to nullify IEMs issued prior to the 2006 amendment?
- Was there factual evidence of commercial production or effective steps by Jijamata/Shivneri?
- Does Sahyadri, as a rival industry, possess locus standi to challenge another unit’s IEM?
- Can such disputes be treated as PILs in the absence of demonstrable infringement of public rights?
Judicial Analysis
On Retrospective Operation of Clause 6C
The Court relied on earlier Supreme Court rulings (Balrampur Chini Mills v. Ojas Industries, 2006; Ojas Industries v. Oudh Sugar Mills, 2007), holding that the 2006 Amendment had a retrospective effect. However, the Government’s recognition of Jijamata as an “existing sugar mill” in 2008 was considered binding, as effective steps had been taken within the statutory window.
On Evidence of Production
While Sahyadri cast doubts on the claim of 187 quintals produced in 2011–12, official records from the Commissioner of Sugar and the Government of India had accepted it. The Court noted contradictions but refrained from substituting its view for administrative findings. The dispute was thus not one of blatant illegality but contested factual inferences.
On Locus Standi
Perhaps the most significant finding was on standing. The Court held that Sahyadri’s grievances stemmed primarily from competitive rivalry rather than infringement of a legal right. As a cooperative sugar factory, it did not have a justiciable claim to block another industry merely on commercial grounds. Unless petitioner’s legal rights or fundamental rights were violated, the writ was unsustainable.
On Nature of Petition: PIL or Private Interest?
The Court clarified that while the petitioner framed its case as statutory enforcement, it was not a genuine PIL. Public interest was incidental, not central. A PIL must demonstrate concern for the rights of marginalised communities or larger constitutional values. Here, the dominant motive was industrial rivalry, disqualifying it from PIL status.
Key Highlights of the Decision:
The Bombay High Court summed up the issue in unequivocal terms:
“As a writ court we cannot be oblivious to the benefit such legitimate industrial activity is benefitting the different stake holders like farmers, labourers, transporters and several other allied industries and the generation of the revenues for the State Government from such activities. As discussed hereinabove, the relief that the IEM dated 18 September 2003 stood de-recognized by operation of law, is thus patently misconceived. In the facts of the case, it would be a travesty of justice, if the pleas as urged by the petitioner are accepted. We have also observed that the petitioner lacks locus standi in the absence of any legal right of the petitioner being infringed by permitting the operations at Shivneri under IEM is concerned. This is certainly not a Public Interest Litigation.”
(Per G.S. Kulkarni & Advait M. Sethna, JJ.)
Broader Implications
1. Distinction Between Private and Public Interest
The judgment reiterates that every challenge to industrial activity cannot be clothed as a PIL. Courts must guard against abuse of writ jurisdiction for private competitive battles. Unless there is a clear infringement of environmental norms, labour rights, or public health, such petitions are more appropriately addressed in civil or commercial forums.
2. Judicial Deference to Administrative Findings
Industrial regulation involves technical and administrative evaluation—capacity expansion, effective steps, and licensing compliance. Courts, while exercising judicial review, do not function as appellate authorities on such factual controversies. The Bombay High Court respected this boundary.
3. Protection of Industrial Stability
By dismissing the writ, the Court reinforced the principle that industrial stability and investor confidence require certainty. Endless challenges by rivals could paralyse projects, deter investment, and harm stakeholders, including farmers and workers.
4. Clarification on Locus Standi
The decision underscores that locus standi in industrial matters is limited. A rival industry cannot challenge governmental approvals unless it demonstrates direct infringement of a legal or fundamental right. This prevents misuse of PIL jurisprudence as a “competitive litigation tool.”
Comparative Perspectives
PIL in Environmental and Industrial Contexts
Indian courts have historically expanded PIL jurisdiction in cases affecting the environment, labour exploitation, and displacement (e.g., MC Mehta v. Union of India). However, where the dispute is essentially commercial, courts have drawn lines.
In Jasbhai Motibhai Desai v. Roshan Kumar (1976), the Supreme Court held that a rival cinema owner could not challenge a competitor’s licence. Similarly, in Balco Employees Union v. Union of India (2002), the Court refused to entertain a PIL against disinvestment decisions.
The present case aligns with this tradition—differentiating genuine public interest from disguised private interest.
Conclusion
The Bombay High Court’s ruling in Sahyadri Sahakari Sakhar Karkhana Ltd. v. Union of India & Ors. highlights a vital principle: not every challenge to industrial activity is a Public Interest Litigation. Where disputes are rooted in commercial rivalry and absence of infringement of legal rights, writ jurisdiction under Article 226 cannot be invoked.
The Court reaffirmed that while industries must comply with statutory obligations, their operations also benefit a wide range of stakeholders—farmers, labourers, transporters, allied businesses, and the State’s exchequer. Blocking such activity on tenuous grounds, without demonstrable violation of rights, would amount to misuse of PIL jurisprudence.
In the broader framework of Indian administrative law, this case underscores judicial restraint, deference to regulatory expertise, and the need to preserve PIL as a tool for social justice, not business competition.
Important Link
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