High Court of Punjab and HaryanaCWP/3098/2020allowed

Sukhjeet Singh v. Nakodar Co-Operative Sugar Mills Ltd And Others

2022-11-14Mr. Justice Vinod S. Bhardwaj29 pages

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As the factual aspects are not in dispute, hence the legal submissions advanced by the counsel for the respective parties are dealt with. The first question that arises for consideration before this Court is as to whether the petitioners are entitled to claim interest in terms of Clause 3(3-A) of the Sugarcane Control Order, 1966 or not. A specific stand has been adopted by the respondents that Sugarcane Control Order, 1966 has been promulgated under the Essential Commodities Act, 1955. It has also been maintained by the respondents that the purchase of sugarcane in the State of Punjab is governed as per the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 and the Rules of 1958.

A State Advisory Price (SAP) which is higher than the Fair and Remunerative Price (FRP) notified by the Government of India, is paid to the cane growers of the State of Punjab. While the Sugarcane Control Order, 1966 provides for interest at the rate of 15% per annum on the delayed payments after a period of 15 days, similar Clause is not provided for in the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 or the Rules of 1958. No rejoinder to the same has been filed by the petitioners. Even the Union of India has maintained the aforesaid stand.

contemplated in Clause 3 (3-A) of the Sugarcane Control Order, 1966. Once the procurement has not been effected under the said Order of 1966, the terms of payment of the Control Order of 1966 cannot be attracted to the Act of 1953- under which purchase has been effected. The second question which arises for consideration is as to whether the dispute involved in the present petition is amenable to the writ jurisdiction of this Court or not.

Reliance has been placed by the respondents on the judgment of Hon'ble Supreme Court in the matter of S.S. Rana Vs. Registrar Cooperative Societies and another reported as (2006) 11 SC 634. To appreciate the said argument, the scope of Writ Jurisdiction under Article 226/227 of the Constitution of India needs to be examined. The Hon'ble Supreme Court of India had laid down six tests for holding as to whether an entity would be 'State' within the within the meaning of Article 12 of the Constitution or not in the matter of Ajay Hasia Vs. Khalid Mujib Sehravardi reported as (1981) 1 SCC 722. The said tests are extracted as under:

"(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.

(2) Where the financial assistance of the State is so much as to meet almost the entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.

(3) It may also be a relevant factor whether the corporation enjoys monopoly status which is State-conferred or Stateprotected.

(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality.

(5) If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.

(6) 'Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government."

Further in the matter of Pardeep Kumar Biswas Vs. Indian Institute of Chemical Biology, reported as (2002) 5 SCC 111, the Hon'ble Supreme Court has held as under:

40.

The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex-hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory, whether under statute or otherwise, it would not serve to make the body a State"

It was thus held that where an entity/Body is financially, functionally and administratively dominated by or under the control of Government, such control being pervasive, it falls within the meaning of a 'State' under Article 12 of the Constitution of India.

It is also not claimed by the respondent No.1 - Nakodar Cooperative Sugar Mill that it is a private Society and not a Cooperative Sugar Mill established by the Government. Further, as per written statement filed on behalf of the respondent-Sugar Mill, it is evident that the said Sugar Mill has been receiving substantial financial support from the Government as well. The said aspect is clearly illustrated in their own written statement and the tabulation given by the Cane Commissioner in his response. As per the said response, the Sugar Mill had arranged for the payment to the tune of Rs.2631.90 lacs while Rs.2293.26 lacs were given by the Government. It is also set out in the table that by the financial year 2019-20, the respondentSugar Mill had again received financial assistance to the tune of Rs.22.93 crores. It is thus apparent that substantial financial assistance is also being extended by the State Government out of public funds towards the payment of the sugarcane price.

Another aspect which needs to be kept in mind is that even though the respondents have raised an objection that it is a society, however, the requisite details with regard to its Constitution as well as the administrative and supervisory control have not been set out in the response. There is thus no supporting material other than a bald pleading, to establish that the society does not fall under the administrative and supervisory control of the Government. No valid explanation has been put forth for withholding such crucial and relevant information. Such failure on the part of the respondents leaves no option with this Court but to infer that the respondent No.1-Sugar Mill is actually established and controlled by the State Government of Punjab and would be amenable to writ jurisdiction being a State under Article 12 of the Constitution of India.

The instant issue is also examined from an alternative perspective as well. It has been held by the Hon'ble Supreme Court in the matter of "Common Cause, A Regd. Society Vs. Union of India" reported as (1999) 6 SCC 667 that where an element of public law entailing public duty is involved, even a Society would be amenable to the writ jurisdiction of High Court under Articles 226/227 of the Constitution of India. Modern times recognize two separate fields of law: Private law and public law. While Private law regulates the affairs of subjects between themselves, public law deals with affairs between subject and Public Authorities. The prerogative writs are set to motion against action/inaction of the Public Authorities. The factor which is thus determining is the formal source of power.

If power is derived wholly or substantially from the contract as opposed to statute, it is not public law- whereas, whenever a body exercises powers which are partially regulated by Statute, the matter would depend on statutory interpretation. The "power test" is concerned only with the "source of the particular power" and not with the status of the body exercising said power. Hence, in an absence of statutory Power and Regulation, a Contract executed even by a statutory authority for public purpose is apparently a private law matter. The public law system enforces the proper performance of duties owed to the public by the Public Authorities. The general Public as a whole is beneficiary of what is protected or projected by public law while individuals/bodies are entitled to the benefits of protection of Private Law.

Not all decisions of such public authorities may fall under judicial review. Where some other breach of law more appropriate governs the disputes, that branch of law should normally be applied and where there is an agreement, such express or implied terms of the agreement would normally govern the matter.

Public duty cannot be equated to an obligation to any person or identified group but to public in general. Hence, the broad requirements for judicial review would be "Public Law"; "Public Authority"; and "Public Duty".

With the expanding horizon of Article 14 of the Constitution of India the arbitrary, unreasonable, illegal or discriminatory acts have fallen under the power of judicial review.

The sale and purchase of sugarcane in the State of Punjab is claimed to be governed under the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 and the Rules of 1958. The said Act was published in the Gazette after receiving assent from the Governor of Punjab on 30.10.1953 with an object to provide for rational distribution of the sugarcane to the factories, for its development on organized and scientific lines and making adequate funds available and also to protect the interest of cane growers and all the industries. As per the statutory scheme, an area is assigned to the respective sugar mills and the cane growers of the assigned area are required to sell their produce only to the respective Sugar Mill.

Each factory is required to submit the estimate of quantity of the sugarcane required by the Factory to the Cane Commissioner, who shall then submit the said requirement to the Sugarcane Control Board and take a decision to assign the area from which the sugarcane may be purchased by the said Factory. The Sugarcane Control Board, also declares the varieties of the sugarcane to be sown and also the varieties that are unsuitable for use in the Factories. The seed of the sugarcane is then required to be distributed by the Factory or its agent as per the varieties so approved.

his area has been assigned and that no other person can purchase the sugarcane grown in the assigned area except with the permission of the Government. Hence, even though the Act seemingly grants a liberty to a cane grower to enter into an agreement with a particular Factory within whose assigned area his land falls, however, at the same time it imposes a prohibition for any other person to purchase sugarcane from outside his assigned area except with the permission of the Government. Resultantly, the entire sale of sugarcane to any person is regulated by the Government itself. Relevant provision of the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 is extracted hereinafter below:

"2.

Definition . - In this Act unless the context otherwise requires.

(1) "assigned area" means an area assigned to a factory under this Act;

(2) XXX XXX XXX (3) "cane" means sugarcane intended for reuse in a factory; (4) "Cane Commissioner" means the officer appointed by the Government to perform the functions of Cane Commissioner;

(5) "Cane Grower" means a person including a tenant who cultivates cane either himself or through members of his family or through hired labour and who is not a member of a Cane-growers' Co-operative Society.

(6) XXX XXX XXX (7) XXX XXX XXX (8) XXX XXX XXX (9) "factory" means a sugar factory wherein 20 or more workers are working, or were working, on any day of the preceding twelve months and in any part of which any manufacturing process connected with the production of sugar is being carried on or is ordinarily carried on with the aid of power;

(10) "Governemnt" means the Government of the State of Punjab;

(11) XXX XXX XXX

(12) XXX XXX XXX

(13) "State" means the State of Punjab.

Appointment of Cane Commissioner. - The Government may appoint any officer to be the Cane Commissioner and may also appoint such other staff, body or committee as may be necessary for the performance of any duty or function, under this Act.

XXX XXX XXX XXX 10.

Estimate of quantity of cane required by factory.- (1) The Cane Commissioner may order the occupier of any factory to submit to him on or before any specified date, an estimate of the quantity of cane intended to be purchased for his factory during any particular crushing seasons. (2) On receipt of an estimate, the Cane Commissioner shall cause the same to the submitted to the Sugarcane Control Board for their approval. The Sugarcane Control Board shall be competent to confirm, modify or reject the estimate, and in case of its not being rejected, to assign the area from which the cane may be purchased, on such terms and conditions as it may deem fit. (3) If the Sugarcane Control Board is of the opinion that a survey of any area is necessary for the purpose of assigning it to a factory, the Cane Commissioner shall cause such survey to be made and report the result to the Sugarcane Control Board. The cost of such survey shall be payable by the occupier of such factory.

XXX XXX XXX XXX 14.

Purchase of cane in assigned area.- (1) XXX XXX XXX XXX (2) XXX XXX XXX XXX (3) Except with the permission of the Government, cane grown in an assigned area shall not be purchased by any person

other than the agent of the factory for which such areas has been assigned."

Further the Punjab Sugarcane (Regulation of Purchase and Supply) Rules, 1958 were published in the Gazette on 02.08.1958, which governs the sale and purchase of the sugarcane and also the declaration of the assigned area The entire process of purchase of sugarcane grown in an assigned area is provided for under Rule 11 of the said Rules, while the minimum price payable is prescribed under Rule 12 of the said Rules. General provisions regarding purchase of sugarcane are incorporated under Rule 14. Payments are governed by Rule 18 of the said Rules. The relevant provisions of the Rules are reproduced hereinafter below: "11. Purchase of cane grown in assigned areas. - (1) The occupier or agent of a factory or society shall estimate or

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* & &*; A reading of the aforesaid statutory provisions clearly shows that the entire process from the cultivation of the sugarcane till its sale and also the pricing and payment mechanism is governed by the State and the statutory regulations.

Even though the Act stipulates an option to the cane grower to sell his produce to any other person, however, even such other person must have approval from the Government before purchasing such sugarcane The payment period as per Rule 18 is prescribed to be one week and it also contemplates that the occupier and/or agent shall be responsible for making all payment. The Cane Commissioner is required to forward to the Collector a certificate under his signature specifying the amount of arrears of account of price of sugarcane plus the interest, if any, due from the occupier and/or agent of the Factory in the event of delay and the Collector, on receipt of such certificate, shall proceed to recover from such occupier and/or agent the amount specified therein as if it were arrears of land revenue.

Hence, the payment of price of sugarcane and/or the interest on delayed payment thereof is not simplicitor a private dispute for refund of some money by an individual, rather, it is part of a public law enforcement entailing a further duty not only on the occupier and/or agent of the Factory but also on the agencies and instrumentalities of the State including the Cane Commissioner as well as the Collector. In the matter of Godavari Sugar Mills Limited Vs.

Hon'ble Supreme Court was with regard to the payment of interest on delayed payment of compensation, the Hon'ble Supreme Court held that where a lis has a public law character, the relief under Articles 226 of the Constitution cannot be denied. The same cannot be treated as akin to a private relief for seeking refund of money where the appropriate remedy would be to approach the Civil Court. The breach in the instant case is not on account of a mere breach of contract or a tort to pay an amount of money due to the claimant, it is rather a case of enforcement of public law under the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 and the Rules framed thereunder. The High Court had held that the remedy of writ would not be available for seeking interest on delayed payment, with such judgment was reversed by the Hon'ble Supreme Court. The relevant extract of the said judgment is reproduced hereinafter below:

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*; It must be kept in mind that legal right of an individual may be founded upon a Contract, Statute or an Instrument having the force of law, however, for a public law remedy enforceable under Article 226 of the Constitution, the actions of the Authority need to fall in the realm of public law. It cannot be possible to generalize the nature of action that would come either under public law remedy or private law field as it is neither desirable nor

possible to give an exhaustive list of such actions. The same has to be determined by a Constitutional Court on a case-to-case basis. The judgment of S.S. Rana (supra), however, is not applicable to the facts of the present case, which are rather more similar to the issue involved in the matter of Gadavari Sugar Mill's case (supra). In the case of S.S. Rana (supra) relied upon by the respondent, the dispute rather related to the termination of service of the appellant therein and was a contract of service. Besides, the entire management structure and functional details have been duly noticed on the basis of documents placed on record before the Hon'ble Supreme Court concluded that the respondent therein would not fall within the aegis of an authority amenable to writ jurisdiction under Article 12 of Constitution.

It was specifically noticed that there was nothing on record to infer that the State exercised any functional and financial control over the affairs of the society the respondent society did not fulfill any of the concerned tests. No such evidence has been adduced by the respondent in the present case. Besides, the dispute in question is not limited to the private lis between the employer and employee and is, rather, relatable to payment of dues as regulated by the Statute. Besides, the cane grower is also obligated as per the Statute to sell his produce to the persons authorised by the Government. However, the nature of dispute involved in the present case cannot be treated at par with an individual private dispute.

Considering the facts of present case on both the above aspects, I am of the view that the present dispute is amenable to the writ jurisdiction of this Court as it involves a public law element and imposes a public duty on the respondent sugar mills as well as the officials nominated by the State Government to ensure enforcement of the public law. The relief claimed for is

in furtherance to the public law and not based on any private contractual breach or a tortuous claim for alleged infringement of a civil right. The next question which thus arises for consideration is as to whether the writ petition should be dismissed since an alternative efficacious remedy under Rule 18 is available to the cane growers and they can approach the Cane Commissioner, who is empowered to carry out the assessment and issue a certificate under his signature to the Collector so that the price as well as the interest, if any, due to the cane grower cane be recovered and disbursed. It is not an absolute law that the existence of an alternative remedy is a bar to the exercise of writ jurisdiction under Article 226 of the Constitution of India.

The Hon'ble Supreme Court has held in the matter of Harbans Lal Sahnia and another Vs. Indian Oil Corporation Ltd. and others reported as (2003) 2 SCC 107 that in an appropriate case, the High Court may exercise its writ jurisdiction despite availability of alternative remedy.

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*; The said position in law is also not controverted by the respondents. It is significant herein that despite the aforesaid provisions contemplated in the rules, this Court is also persuaded to not relegate the petitioners to the Cane grower since the response of the Cane Commissioner has already been filed. Even though the Cane Commissioner, who is the prescribed Authority under the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 and the Rules framed thereunder, was fully conscious of the issue involved, however, he has yet chosen to not make any commitment for examining the issue in hand has also not furnished any specific stand as to whether the petitioners herein would be entitled to receive any interest or not. Apart from being non-committal, he has rather been defending the Sugar Mills about the strenuous efforts made by them to clear the arrears. The appellate Authority having already opined, it would not serve any purpose to relegate the petitioners to the same Authority.

Reliance is also placed on memo dated 19.05.2020 (Annexure R1) where the Cane Commissioner had directed interest to be paid at the rate of 15% per annum against the respondent-Sugar Mills itself for its failure to pay the amount within 14 days as per Clause 3(3-A) of the Sugarcane Control Order, 1966. Similar orders have also been passed under Annexure R-2 dated 27.04.2020. Thus, although the Cane Commissioner was conscious of the dispute and had been directing payment of compensation by the concerned sugar mills at par with the owners and/or agents under Section 3 (3-A)

Sugarcane Control Order, 1966, yet, for no explicable reason, response filed herein has been largely evasive.

Apparently, even though the respondent-Authorities contend that the provisions of Clause 3(3-A) Sugarcane Control Order, 1966 may not be applicable, however, the Cane Commissioner has been following the said principle while issuing certificates under Rule 18(6) of the Punjab Sugarcane (Regulation of Purchase and Supply) Rules, 1958. There is thus inherent contradiction in the actions of the respondent - Cane Commissioner vis-à-vis the submissions/objections raised in their written statement. Relegating the petitioners to approach the Cane Commissioner so that the procedural requirements may be satisfied would only amount to further delay in redressal of the grievance of the farmers-petitioners and to add to their agony. Once the factual aspect as well as the entitlement of the petitioners-farmers to the interest is not disputed, it would not be appropriate at this juncture to not redress their grievance.

It has also remained uncontroverted that a Division Bench of this court has earlier passed an order directing the respondents to make payment of interest in terms of the Clause 3(3-A) Sugarcane Control Order, 1966 vide CWP No.17915 of 2004 against the respondent No.1- Nakodar Cooperative Sugar Mills itself. Thus, considering it from any of the said perspective, writ jurisdiction has been invoked against the respondent-Sugar Mill on an earlier occasions also and they have been directed to pay interest as per the Clause 3(3-A) Sugarcane Control Order, 1966. Such aspect, thus, need not be reexamined again. The last question which now arises for determination is as to what rate of interest ought to be extended to the petitioners since the Punjab

Sugarcane (Regulation of Purchase and Supply) Rules, 1958 did not stipulate any specific rate of interest, which such interest is otherwise prescribed under Sugarcane Control Order, 1966. The submissions of the respondents had been that the Clause 3(3-A) Sugarcane Control Order, 1966 being not applicable, the interest at such rate thus cannot be held to be statutorily applicable. However, it is not in dispute that Rule 18(6) contemplates interest, if any, that is due and as such it empowers the Cane Commissioner to award interest on delayed payment. Even though time period of 7 days for payment of money has been contemplated in Rule 18, a period of 14 days is contemplated under Sugarcane Control Order, 1966.

The Cane Commissioner, in his order, which has been appended alongwith the response, has been directing disbursement of interest in terms of Clause 3(3-A) Sugarcane Control Order, 1966 and the Division Bench had issued a direction to the respondent-Sugar Mill to pay interest in terms of Clause 3(3-A) Sugarcane Control Order, 1966 vide its order dated 27.07.2005 (Annexure P-4) passed in CWP No.17915 of 2004. The orders passed by the Authorities as well as the precedents judgment of the Division Bench of this Court have thus maintained parity by drawing strength from the Sugarcane Control Order, 1966 and have awarded interest at the rate of 15% per annum for the delayed period of the payment after an expiry of 14 days instead of 07 days as contemplated under the Punjab Sugarcane (Regulation of Purchase and Supply) Rules, 1958.

A mere reason of financial hardship cited by the respondent cannot be the basis to dilute the statutory mandate or to provide an escape to respondents to not adhere to the statutory provisions.

benefits that may have been availed by the respondents on account of the wrongful retention of the money with itself. It cannot be permitted to derive a wrongful gain and retain the benefits to itself at the cost of farmers. Hence, keeping all the aforesaid circumstances into consideration as well as the orders that are being passed by the Cane Commissioner in exercise of the powers conferred under Rule 18(6) of the Punjab Sugarcane (Regulation of Purchase and Supply) Rules, 1958 as well as the precedent judgments of this Court, I am of the view that interest in terms of Clause 3(3A) Sugarcane Control Order, 1966 shall be admissible to the petitioners after expiry of 14 days from the date of sale of their produce. The requisite payment be calculated and released by the respondent-Sugar Mill within a period of three months from the date of receipt of certified copy of this order. >, +

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