A.K. Sikri, J. - (1.) The Industries (Development and Regulation) Act, 1951 (for short, the 'Act') contains the provisions whereby certain industries mentioned in the First Schedule to the said Act are brought under the control of the Union Government. It mentions, vide Entry 25 of the First Schedule, "sugar industry" as well, to be 'scheduled industry'. The effect thereof is that by virtue of Sections 11 and 12 of the Act, compulsory licensing is required in respect of sugar industry. Sugar is also one of the essential commodities covered by Essential Commodities Act, 1955. In respect of such essential commodities, Union Government is empowered to fix the prices of the product and also to regulate the distribution and supply of such products. In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955, the Union Government promulgated the Sugarcane Control Order, 1966 which, inter alia, provided for the minimum price of sugarcane to be fixed, power to regulate the distribution and movement of sugarcane and power to issue licenses to cane crushers etc. Clause 11 provides that the Central Government may delegate to the State Government or any Officer of the State to perform any of the functions of the Central Government.
(2.) The Government of India, periodically issued guidelines, under the Act, in respect of the sugar industry through 'press notes'. These press notes, inter alia, provided that licenses for new sugar factories would be granted subject to a minimum distance requirement (which was varied from time to time). A Press Note no. 16 dated November 08, 1991 provided for a 25 km distance which could however be relaxed to 15 km in deserving cases where cane availability so justified. Clauses 2 and 3 are important as they provided that the basic criteria would be the availability of the cane and the potential for development of sugarcane. These clauses read as follows : Industrial Policy Highlights EXHIBIT NO. 12 PRESS NOTE NO. 16[1991 SERIES] GUIDELINES FOR LICENSING OF SUGAR FACTORIES A. A Government of India have reviewed the guidelines for licensing of new and expansion of existing sugar factories issued vide this Ministry's Press Note No. 4[1990 Series] dated 23.7.1990. In sup-Sersession of the aforesaid Press Note, Government have formulated the following revised guidelines: "1. New sugar factories will continue to be licensed for a minimum economic capacity of 2500 tones cane crush per day [TCD]. There will not be any maximum limit on such capacity. However, in area specified as industrially backward areas by the Government of India and certified by the Indian Council of Agricultural Research to be agro-climatically suited for development of sugarcane, licensing of new sugar factories in the co-operative and public sectors would be allowed for an initial capacity of 1750 TCD subject to the condition that the units would expand their capacity to 2500 TCD within a period of 5 years of going into production. 2. Licenses for new sugar factories will be issued subject to the condition that the distance between the proposed new sugar factory and an existing/already licensed sugar factory should be 25 kms. This distance criterion of 25 kms could, however be relaxed to 15 kms in special cases, where can availability so justifies. 3. The basic criterion for grant of licenses for new sugar units would be their viability, mainly from the point of view of cane availability and potential for development of sugarcane. 4. All new licenses will be issued with the stipulation that cane price will be payable on the basis of sucrose content of sugarcane. 5. Other things being equal, preference in licensing will be given to proposals from the co-operative sector and the public sector, in that order, as compared to the private sector. In case more than on application is received from any zone of operation, priority will be given to the application received earlier. 6. Priority will continue to be given to sugar factories with capacity less than 2500 TCD to expand to the aforesaid minimum economic capacity. 7. While granting licenses for new units and expansion projects, the additional capacity to be created up to the end of the English Plan, i.e., 1996-97, will be kept in view. 8. While granting licenses for new sugar factories, industrial licenses in respect of down-stream units for the use of molasses, i.e., industrial alcohol, etc. will be given readily. B. Applications for licenses will be initially screened by the Screening Committee of the Ministry of Food. While considering such applications, the comments of the State Government/Union Territory Administration concerned would also be obtained. The State Government/Union Territory Administration concerned would also be obtained. The State Government/Union Territory Administration would be required to furnish their comments within 3 months of the receipt of communication from the Ministry of Food. C. Applications for grant of industrial licenses for the establishment of new sugar factories as well as expansion of existing units should be submitted directly to the Secretariat for Industrial Approvals in the Department of Industrial Development in Form IL along with the prescribed fee of Rs. 2500/-. A copy of the application may also be sent to the Ministry of Food. D. The procedure and guidelines, as given above, are brought to be notice of the entrepreneurs for their information and guidance. ----------------------------------------------------------------------- No. 10[74]/91-LP New Delhi, the 8th November, 1991 Forwarded to Press Information Bureau for wide publicity to the contents of the above Press Note. SD/- [S.BHAVANI] DEPUTY SECRETARY TO THE GOVERNMENT OF INDIA PRINCIPAL INFORMATION OFFICER, PRESS INFORMATION BUREAU, SHASTRI BHAWAN, NEW DELHI-110 001." This Press Note was amended from time to time by Press Notes dated January 10, 1996, June 15, 1998 and August 31, 1998.
(3.) Press Note-12 dated August 31, 1998 is of some relevance in the present case. This was the result of liberalization policy of the Central Government. After embarking on liberalization and globalization, in order to ease the doing of business, the Government decided to relax the control over various types of industries. By the aforesaid Notification dated August 31, 1998, the Government exempted persons from taking licenses to set up a sugar factory. This was done in exercise of power contained under Section 29(b) of the Act subject to the condition that a minimum distance of 15 km would continue to be observed between an existing sugar mill and a new mill. Pertinently, insofar as Sugarcane Control Order, 1966 is concerned, there was no provision of minimum distance between the two sugar mills. For this reason, the aforesaid Press Notes were held to be administrative guidelines, not having statutory character by Allahabad High Court.;