Khandsari licensing in reserved cane areas upheld where policy change was uniform, reasoned, and unsupported mala fides failed.

Licensing and reservation of cane areas under the Essential Commodities Act framework were treated as measures regulated in public interest, and the licensing authority could refuse a khandsari licence only on the limited grounds in the governing orders. The relaxed policy was later applied with recorded satisfaction that the proposed unit would not adversely affect cane availability to the existing sugar mill, and protective conditions were imposed on bonded cane purchases, statutory minimum price, and crushing capacity. The challenge based on mala fides failed for lack of material particulars, and a mere policy change did not invalidate the decision when uniformly applied and supported by relevant considerations.

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Issues: Whether the grant of licence to a khandsari unit in the reserved area of an existing sugar mill under the relaxed policy was illegal, arbitrary or mala fide and liable to be quashed.

Analysis: The statutory scheme under the Essential Commodities Act, the Sugarcane (Control) Order, the U.P. Khandsari Sugar Manufacturers Licensing Order, 1967, the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, and the U.P. Sugarcane (Purchase Tax) Act, 1961 shows that licensing and reservation of cane areas are matters regulated in public interest, with the licensing authority empowered to refuse a licence only on the limited grounds stated in the governing provisions. The policy was later modified, and the authorities recorded satisfaction that the proposed unit would not adversely affect cane availability to the existing sugar mill. Additional conditions were imposed to protect the mill and cane growers, including prohibition on purchase of bonded cane, payment of statutory minimum price, and restriction of crushing capacity. The challenge based on mala fides failed for want of material particulars, and a mere change of policy could not by itself invalidate the decision when the change was uniformly applied and supported by relevant considerations. The Court also held that questions about actual adverse impact on the mill were essentially factual and not fit for interference in writ or appellate jurisdiction absent illegality, arbitrariness, or perversity.

Conclusion: The grant of licence was not shown to be illegal, arbitrary or mala fide, and the challenge to the licence failed.

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