2007 (9) TMI 608 - SC - Indian Laws

Supreme Court Upholds Decision on Licensing Policy & Petition Dismissal

M/s Dhampur Sugar (Kashipur) Ltd Versus State Of Uttranchal

The Supreme Court upheld the decisions of the High Court and the State Authorities, finding no illegality in the dismissal of the writ petition, the ... Whether or not the sugar factory of the appellant has been adversely affected is essentially a question of fact and cannot be decided in proceedings under Article 226 or Article 136 of the Constitution? Whether the impugned action of granting licence to respondent No. 4 by respondent Nos. 1 to 3 is mala fide? Issues Involved1. Legality of the High Court's dismissal of the writ petition.2. Validity of the change in licensing policy by the State Government.3. Impact of the new unit on the appellant's sugar mill.4. Consideration of public interest and statutory provisions in granting the license.5. Allegations of mala fide exercise of power by the State Authorities.Detailed Analysis1. Legality of the High Court's Dismissal of the Writ PetitionThe High Court dismissed the writ petition filed by the appellant, holding that the contentions raised were ill-founded. It observed that the sugarcane produced in the reserved area was available to the sugar factory, and adequate supply was ensured as per the bonding policy. The Court found no arbitrariness, unreasonableness, or violation of statutory provisions in the State Government's change of policy. The High Court also noted that under the U.P. Sugarcane (Purchase Tax) Act, 1961, grant of license was the rule and rejection an exception. The Supreme Court upheld this view, stating that the High Court was right in considering the facts and circumstances in their entirety and in holding that the action of the respondent authorities could not be said to be illegal or otherwise objectionable.2. Validity of the Change in Licensing Policy by the State GovernmentThe appellant contended that the change in licensing policy was arbitrary, unreasonable, and contrary to law. However, the Court noted that the State Government had the power to frame and reframe policies. The policy was changed to allow the granting of licenses within the reserved area of existing sugar mills, provided certain conditions were met. The Court observed that the policy change was not limited to the case of respondent No. 4 but was uniformly applied to all. The Supreme Court held that public authorities must have liberty and freedom in framing policies, and courts should not interfere unless the policy is shown to be arbitrary, capricious, or mala fide.3. Impact of the New Unit on the Appellant's Sugar MillThe appellant argued that the establishment of the new unit by respondent No. 4 would adversely affect its sugar mill by reducing the supply of sugarcane. The High Court and the Supreme Court noted that the authorities had imposed conditions to protect the interests of the appellant, such as prohibiting the purchase of bonded cane by respondent No. 4 and ensuring that the new unit would not adversely affect the supply of sugarcane to the appellant's factory. The Supreme Court found that the authorities had adequately protected the interests of all parties and that the appellant had not been adversely affected by the grant of the license.4. Consideration of Public Interest and Statutory Provisions in Granting the LicenseThe Court examined the statutory scheme governing sugar and sugarcane, including the Essential Commodities Act, 1955, the Industries (Development and Regulation) Act, 1951, and the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953. It noted that the authorities had adhered to the statutory provisions and policy guidelines while granting the license to respondent No. 4. The Court also observed that the authorities had considered the interest of sugarcane growers by providing them with one more option to sell their crops at an appropriate price. The Supreme Court held that the action of the respondent authorities was in consonance with law and that public interest had been adequately considered.5. Allegations of Mala Fide Exercise of Power by the State AuthoritiesThe appellant alleged that the policy was changed to extend an undeserving benefit to respondent No. 4 and that the action was mala fide. The Supreme Court noted that allegations of mala fide are serious and require full particulars and supporting materials. The Court found that the appellant had not provided sufficient evidence to prove mala fide exercise of power. The Court held that the change of policy was not limited to the case of respondent No. 4 but was uniformly applied, and there was no material to support the allegation of mala fide.ConclusionThe Supreme Court upheld the decisions taken by the respondent authorities and confirmed by the High Court, finding no illegality or infirmity. The appeal was dismissed without any order as to costs.