Existing factory should be in ‘operation’ for application of Clause 6A of the Sugarcane Control Order, 2006

Supreme Court: The Bench comprising of A.K Sikri and Abhay Manohar Sapre, JJ., said that where economic interest competes with the rights of other persons, need is to strike a balance between the two competing interests and have a balanced approach. The Bench was hearing the dispute as existence of 2 sugarcane factories within the radius of 15 km, thereby, violating Clause 6A of the Sugarcane (Control) Amendment Order, 2006.

Appellant stated that at the time of setting up of factory he received all the required permissions and his IEM also stood acknowledged, respondent also granted the no objection certificate to the new setup of the factory, even the Survey of India and Director of Sugar stated that, no similar factory lies within its radius of 15 km. The Appellant argued that at the time of establishment of the factory no “existing” sugar factory was there as per the definition given in clause 6A stating that an existing sugar factory is a factory which is in “operation” and respondent’s factory was not carrying out its crushing operations for last five sugar seasons therefore was not an existing factory and large amount of sugarcane was wasted amounting to huge losses to sugarcane farmers and appellant further prayed that a huge amount of investment has already been made by him therefore this economic factor should also be considered.

Accepting the argument, the Court held that at the time of establishment of the sugar factory by the appellant, he had bona fide intention and followed the requirements under clause 6A of Sugarcane (Control) Amendment Order 2006, the Court said that the requirement of distance mentioned in the Amendment Order was inserted keeping in mind the benefit of the existing sugar factories. In a situation like this, when such a factory itself gave no objection certificate, thereby waived the requirement, the bona fides of the appellant cannot be doubted.

The Court also considered the economic factors such as the expenditure of approximately Rs.300 crores by the appellant in establishing the factory; loans raised to the tune of Rs. 237 crores; operational cost of Rs. 150 crores; generation of employment of 377 persons on regular basis and indirect employment of more than 7000 persons; and setting up of co-generation plant for production of electricity which is giving supply of 37 MW of electricity. The Court, hence, held that these factors, particularly, bank loans, employment, generation and production at the factory serve useful public purpose and such economic considerations cannot be overlooked, in the context where there is hardly any statutory violation. [Shivashakti Sugars Ltd. v Renuka Sugar Ltd., 2017 SCC OnLine SC 6024, decided on 9-5- 2017]

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