M.Katju, Rakesh Tiwari - (1.) -The petitioner Nos. 1 to 3 are Associations of sugar factories in U. P., and petitioner Nos. 4 to 36 are companies having sugar factories in U. P. They have challenged clause 3A of the Sugarcane (Control) Order, 1966 fixing the maximum rebate for transportation cost from the purchase centers to the sugar factories.
(2.) HEARD Shri Sudhir Chandra, learned Senior Advoate and Shri Tarun Agarwal for petitioners, Sri B. N. Singh for the Central Government and Shri P.M. N. Singh and Sri Ganga Singh for respondent No. 2. Respondents may file counter-affidavit within three weeks. List thereafter. This writ petition illustrates what happens in a country when the authorities override basic economic principles for political or other extraneous considerations. It is a sad state of affairs that U. P., which is potentially one of the richest States in India, is economically stagnating, and in fact even going downhill because industries in the State are closing down due to wrong policies and short-sightedness of the people at the helm of affairs in the State. This petition relates to the sugar industry in U. P. regarding which a detailed news items in the Economic Times of 22.10.2002, appeared as follows : "The Sugar crisis that has gripped Maharashtra has now engulfed Uttar Pradesh, with mills fearing not only delayed crushing, but downright closure in the face of a huge glut in sugar stocks, abysmally low prices and disproportionately high cane prices for the fourth consecutive year. Sugar prices are expected to fall further after the festival season, once excess stocks are pushed into the market. 'By our rough estimates, if we close, our losses are around 6-7%, but if we operate despite the acutely adverse conditions, we are likely to incur losses totalling around 20-25%, thanks to the fact that politics rather than economics is allowed to run the industry," pointed out S. S. Majithia of Saraya Industries. Crushing is expected to be far lower than last season's quantity of 553 lakh tonnes. Last year, on a total production of 52.50 lakh tonnes in U. P., the loss is expected to be over Rs. 1,400 crores and millers point to excessive cane prices as the key culprit. As many as 18 factories have already been closed down in the State in the last three years and there have been no takers for 11 State run mills thus far. Eight more are on the anvil for closure now. Given the critical situation, sugar millers are now demanding that the Government should discard all plans of winding up the release mechanism, unless it also plans to do away with the support price for sugar."
(3.) WE are informed that 18 sugar mills in the State have already closed down and 11 are on the verge of closure. It is quite possible that other sugar industries may also follow suit if the present wrong policy is allowed to continue despite the fact that U. P. is one of the biggest sugarcane growing area in the country. As regard the present case, the controversy is regarding transport cost for transporting the sugarcane from the purchase centres to the sugar factories. In this connection, there is already a mandamus of this Court by a Division Bench of this Court in M/s. Shervani Syndicate Ltd. v. Union of India and others, on 10.7.1979 in Writ Petition No. 9383 of 1978 and other connected writ petitions in AIR 1979 All 394 (copy of which is Annexure-5 to the petition). In this judgment dated 10.7.1979, it was specifically observed that the cost of transportation charges has increased considerably during the last couple of years, and hence maintaining the rate of rebate at 32 paise per quintal appears to be arbitrary and unreasonable, and a direction was given to the Central Government to fix the rate of rebate allowable in case of sugarcane delivered at out-station purchasing centres at a rational and reasonable basis keeping in view the cost of transportation both in respect to sugarcane hauled by rail and road transport. The same view was reiterated in another Division Bench decision of this Court in a judgment, copy of which is Annexure-6 to the writ petition.;