Supreme Court of India
M/S Oudh Sugar Mills Ltd. vs Union Of India on 7 February, 2020Author: Mohan M. Shantanagoudar

Bench: Mohan M. Shantanagoudar, R. Subhash Reddy

C.A.No.3890 of 2010 etc.




M/s Oudh Sugar Mills Ltd. …Appellant


Union of India & Anr. …Respondents





1. These Civil Appeals are filed by the petitioner in

Writ Petition No.6732 of 1986 filed before the High

Court of Judicature at Allahabad, Lucknow Bench,

Lucknow, aggrieved by the judgment and order dated

18.07.2006 and further order dated 11.09.2007 passed in

Review Petition No.253 of 2006. By the aforesaid
Signature Not Verified

orders, the High Court has dismissed the Writ Petition
Digitally signed by
Date: 2020.02.07
14:33:33 IST

and Review Petition respectively filed by the appellant

C.A.No.3890 of 2010 etc.
2. The appellant is a public limited company namely

Oudh Sugar Mills Ltd., situated at Hargaon, District

Sitapur in the State of Uttar Pradesh. The appellant

company invoked the jurisdiction of the High Court

under Article 226 of the Constitution of India by

seeking the following reliefs:

“(i) Issue a writ, order or direction in the
nature of mandamus directing the opposite
parties to place the petitioners’ sugar
factory in East U.P. Zone for the purposes
of the Sugar (Price Determination for 1984-
85 production) Order, 1984 and Sugar (Price
Determination for 1985-86 Production) Order,

(ii) Issue a writ, order or direction in the
nature of mandamus directing the opposite
parties to permit the petitioner company to
realise the price of their levy sugar as
admissible to the sugar factories in the
East U.P. Zone under the Sugar (Price
Determination for 1984-85 Production) Order,
1984 and Sugar Price Determination for 1985-
86 Production) Order, 1985 and direct the
opposite parties to further continue to
place the petitioners sugar factory along
with the other sugar factories of district
Sitapur in the Uttar Pradesh east zone and
may further direct the opposite parties to
pay the petitioners the price of levy sugar
as per the price applicable for sugar
factories in the Uttar Pradesh east zone;

(iii) Declare Section 3(2)(f) and Section 3
(3c) of the Essential Commodities Act, 1955
as ultra vires of Article 14 and 19(1)(g) of
the Constitution of India;

(iv) Issue any other writ order or direction
as the nature of case may warrant;
C.A.No.3890 of 2010 etc.
(v) Issue an ad interim order in favor of
the petitioners;

(vi) Award the cost of the case to the

3. As the appellant did not press for relief on the

declaration sought on the validity of Section 3(2)(f)

and 3(3c) of the Essential Commodities Act, 1955, the

High Court did not go into the same as such.

4. For the crushing years 1984-85 and 1985-86 the

appellant sugar mill was placed in central zone for the

purpose of fixation of price for the levy sugar.

Mainly, it was the case of the appellant that the

geographical and climatic conditions of the sugar mills

in the District of Sitapur, stand on the same footing

as that of other similarly placed sugar factories

namely Seksaria Biswan Sugar Factory Ltd. Biswan,

District Sitapur and Kisan Sahkari Chini Mills Ltd.

Mahmoodabad (Awadh), District Sitapur. Inspite of the

same, these two factories were included in the eastern

zone, while the appellant factory was discriminated

against and kept in the central zone for the purpose of

fixation of levy sugar price for the crushing years

1984-85 and 1985-86.
C.A.No.3890 of 2010 etc.
5. Considering the submissions made on behalf of both

the sides and other material placed on record, the High

Court, by recording a finding that the said decision

was a policy decision which permitted the Central

Government to make a reasonable classification and in

absence of any case made out either of arbitrariness or

hostile discrimination, dismissed the writ petition

filed by the appellant.

6. We have heard Sri V. Shekhar, learned senior

counsel appearing on behalf for the appellant and Ms.

Binu Tamta, learned counsel appearing for the

respondents and have perused the impugned orders and

other material placed on record.

7. The price of levy sugar is fixed for a zone with

an intention to ensure to the manufacturers of the

sugar in the zone a reasonable return on their overall

production and investment, provided that the units are

running economically and efficiently. Sugar was a

controlled commodity during the relevant time, covered

by the provisions of the Essential Commodities Act,

1955. Certain quantity of sugar called levy sugar, was

to be supplied to the Government at a price fixed by

the Government and rest of the same was levy free

sugar, which could be sold in open market. The price
C.A.No.3890 of 2010 etc.
of levy sugar was fixed based on the Control Order

framed under the Essential Commodities Act. The price

of levy sugar was fixed by the Central Government,

having regard to various factors, including the basis

of basic–cost schedules drawn and recommended by the

expert body. As is evident from the stand of the

respondents it appears that the survey report of Bureau

of Industrial Cost & Prices (BICP) regarding the zonal

pattern was not found feasible by the Government of

India and the same was not implemented. The appellant

has claimed parity with sugar factories at Biswan and

Mahmoodabad, but such units were transferred to eastern

zone on merits adjudged by the State Government and

BICP and levy prices are fixed for zones and not for

each factory. Zones were also not as per the revenue

districts. Merely because there is difference in price

in central zone and eastern zone, the appellant cannot

claim, as a matter of right, its unit was to be placed

in eastern zone instead of central zone during the

relevant years. The impugned Orders questioned in the

writ petition were based on exhaustive study by

experts. The conclusions reached by the Central

Government in exercise of statutory power cannot be

said to be either discriminatory or unreasonable. So
C.A.No.3890 of 2010 etc.
far as sugar units at Biswan and Mahmoodabad are

concerned, they were transferred to eastern zone on the

basis of merits adjudged by the State. When the

revenue districts are not the limits for zonal

division, the appellant cannot claim parity with other

units only on the ground that all the units are

situated in Sitapur district. Even with regard to

appellant unit, after a lapse of time it was considered

feasible to place it in eastern zone and we are

informed that the same was placed in eastern zone. As

the appellant has failed to demonstrate any invidious

discrimination and statutory violation, merely on the

ground that other units in Sitapur district were

transferred to eastern zone and that the representation

of the appellant was not acceded to for the relevant

crushing years, is no ground for interference. We are

not persuaded to accept the plea that the appellant was

discriminated against by placing the appellant unit in

central zone and other units in Sitapur district in the

eastern zone of Uttar Pradesh. The action of the

Central Government in placing the factory of the

appellant at two different times in two different zones

also does not constitute any discrimination. The policy

decision was taken from time to time subject to
C.A.No.3890 of 2010 etc.
satisfaction of the Government by taking into account

expert reports. It is also the case of the respondents

that the factory at Mahmoodabad was established at a

very higher free sale sugar over the normal quota as

per incentive scheme of Government announced in

November, 1980. Several relevant factors were

considered by the State Government before announcing

policy and for fixation of zones, during the crushing

years of 1984-85 and 1985-86. For the above said

reasons, we do not find any illegality in the impugned

order dated 18.07.2006 dismissing the Writ Petition and

further order dated 11.09.2007 dismissing the Review

Petition No.253 of 2006, by the High Court. The High

Court has considered the material in detail and by

recording correct findings rejected the plea of the

appellant. In view of such findings recorded and other

reasons referred above, we do not find any merit in

these appeals so as to interfere with the same. These

appeals are, accordingly, dismissed with no order as to


8. Pursuant to interim orders passed by this Court,

50% of the amount demanded is deposited by the

appellant in the Registry and for the remaining 50%

bank guarantees are furnished. We allow the respondent-
C.A.No.3890 of 2010 etc.
Government for withdrawal of such amount covered by

deposit as well as bank guarantees and accrued interest




February 07,2020


Leave a Reply

Sign In


Reset Password

Please enter your username or email address, you will receive a link to create a new password via email.