Minimum-distance rule for sugar factories depends on an actually operational existing unit; equity may preserve an established factory.

Clause 6A of the Sugarcane Control Order, 1966 was described as a minimum-distance restriction for new sugar factories, but its operation depended on there being an existing sugar factory in statutory terms. The text states that a rival mill which had long ceased crushing operations, had been under liquidation, and was not operational when the appellant's project was processed could not be treated as an existing factory for that purpose. It also notes that equitable relief under Article 142 was used to preserve an established operational unit where closure would have served no useful public purpose, while adjusting cane allocation to protect competing interests.

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Issues: (i) Whether Clause 6A of the Sugarcane Control Order, 1966 could be applied to the appellant's project so as to treat the rival mill as an existing sugar factory within the meaning of the 2006 amendment; and (ii) whether, in the facts of the case, the appellant's factory should be permitted to continue its operations in exercise of equitable jurisdiction.

Issue (i): Whether Clause 6A of the Sugarcane Control Order, 1966 could be applied to the appellant's project so as to treat the rival mill as an existing sugar factory within the meaning of the 2006 amendment.

Analysis: Clause 6A introduced a minimum distance rule for new sugar factories, but its application depended on the presence of an "existing sugar factory" in operation or otherwise falling within the statutory definition. The record showed that the rival mill had been closed for years, had ceased crushing operations long before the appellant's IEM was acknowledged, and had even been placed under liquidation. The earlier processing of the appellant's project, the prior no-objection, the certificate of distance, and the absence of operational crushing activity demonstrated that the rival unit was not an existing factory for the purpose of the distance restriction. The minimum distance condition was therefore not attracted on the facts.

Conclusion: Clause 6A was not applicable to defeat the appellant's factory, and the rival mill could not be treated as an existing sugar factory for the purpose of the distance restriction.

Issue (ii): Whether, in the facts of the case, the appellant's factory should be permitted to continue its operations in exercise of equitable jurisdiction.

Analysis: The appellant had acted pursuant to permissions and clearances granted by the authorities, had taken substantial steps and incurred very large investments, had created employment, and had commenced production long before final adjudication. The Court balanced the statutory position against the practical and economic consequences of closure and found that no useful purpose would be served by shutting down an operational unit that served public interest and the sugarcane economy. The relief was therefore moulded to preserve continuity of the factory while protecting the competing allocation of cane area.

Conclusion: The appellant's factory was permitted to continue, with consequential adjustment of cane allocation in favour of the respondent concerned.

Final Conclusion: The challenge to the High Court's directions was allowed and the appellant's factory was allowed to remain operational, subject to re-allotment of the 14 villages to the respondent as directed.

Ratio Decidendi: A minimum-distance restriction for new sugar factories cannot be enforced where the allegedly competing unit was not an existing sugar factory in operation within the statutory sense, and equitable relief may be moulded under Article 142 to preserve an established industrial unit where closure would serve no public purpose.

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