Disposed

M/S. Belgaum Sugars Private Limited v. the Chief Director (Sugar)

Karnataka HC10 Jun 2019WP/109285/2019

Case brief

AI extract

What is this about?

This Court, in a writ petition under Articles 226 and 227 of the Constitution, directed the relevant Government authorities to pass appropriate orders on a show cause notice issued to the petitioner for alleged non-implementation of its Industrial Entrepreneur Memorandum. The direction was issued by taking into consideration the amendments brought to the Sugarcane Control Order.

What did the court decide?

Respondents directed to pass appropriate orders on show cause notice within six weeks considering amended Sugarcane Control Order.

M/S. Belgaum Sugars Private Limited Vs the Chief… — Company and Corporate | Karnataka HC (2019)

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 10^TH DAY OF JUNE 2019

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BEFORE

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THE HON’BLE MR.JUSTICE S.G. PANDIT

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W.P. NO. 109285/2019 (GM-RES)

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BETWEEN:

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M/S BELGAUM SUGARS PRIVATE LIMITED, A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT “HILL GARDEN”, ANNA ROAD, GOKAK, DIST: BELAGAVI, KARNATAKA – 591 307, REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE, MR. MARUTHI S/O SOMAPPA RAOJI.

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PETITIONER

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(BY SRI. PRASHANT F. GOUDAR, ADVOCATE)

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AND:

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THE CHIEF DIRECTOR (SUGAR), DIRECTORATE OF SUGAR, DEPARTMENT OF FOOD AND PUBLIC DISTRICUTION, MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION, GOVERNMENT OF INDIA, KRISHI BHAVAN, NEW DELHI- 110 001.

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MR. NARENDRA SINGH, TECHNICAL OFFICER (ST) AND DIRECTORATE OF SUGAR, MINISTRY OF CONSUMER AFFAIRS,

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FOOD AND PUBLIC DISTRIBUTION, GOVERNMENT OF INDIA, KRISHI BHAVAN, NEW DELHI- 110 001.

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THE COMMISSIONER FOR CANE DEVELOPMENT AND DIRECTOR OF SUGAR, KARNATAKA HOUSING BOARD BUILDING, CBAB COMPLEX, F BLOCK, 5^TH FLOOR, CAUVERY BHAVAN, K.G. ROAD, BANGALORE – 560 009.

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THE BRANCH MANAGER, INDIAN OVERSEAS BANK, MUDHOL BRANCH, BAGALKOT DISTRICT, KARNATAKA-597 313.

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RESPONDENTS

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(BY SRI. M.B. KANAVI, CENTRAL GOVERNMENT STANDING COUNSEL FOR RESPONDENT NOS. 1 AND 2, SRI RAVI V. HOSAMANI, AGA FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED SHOW CAUSE NOTICE VIDE ANNEXURE-K & ETC.

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THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner-company registered under the Companies Act is before this Court before this Court under Article 226 of the Constitution of India praying for the following reliefs.

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i. Issue a Writ in the nature of Certiorari quashing the impugned show cause notice bearing File No. 25 (2189)/2012-ST/1007 dated 06.12.2018 produced vide Annexure-K passed by the Respondent No.2.

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ii. Issue a Writ in the nature of Mandamus directing the Respondent No.1 to consider and pass appropriate orders on the representations dated:-05.08.2014 (produced vide Annexure-G) and 07.04.2016 (produced vide Annexure-H) given by the petitioner requesting the Respondent No.1 to refund the Performance Bank Guarantee of the Petitioner.

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The petitioner intended to set up a sugar cane factory at Honawada village, Bijapur Taluk and District. After complying with the requirement of Sugarcane (Control) (Amendment) Order, 2006, the petitioner had obtained IEM (Industrial Entrepreneur Memorandum) on 28.12.2011. As required, the petitioner submitted Performance Guarantee to the respondent No.1. It is submitted by the learned counsel for the petitioner that due to various reasons and unavoidable circumstances the petitioner could not set up the sugar factory at the site indicated and sought permission to shift the proposed project. By that time, as the IEM granted to the petitioner had expired, the petitioner by a representation dated 05.08.2014 requested the respondents to return the Performance Guarantee deposited by way of Bank Guarantee. When the representation was

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pending, the Sugarcane (Control) Order, 1966 came to be amended by substituting 6(c) and proviso to Clause 6(d) was inserted, which reads as under:

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6C. Time limit to implement Industrial Entrepreneur Memorandum.-

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The stipulated time for taking effective steps shall be three years and commercial production shall commence within five years with effect from the date of filing the Industrial Entrepreneur Memorandum with the Central Government, failing which the Industrial Entrepreneur Memorandum shall stand derecognized as far as provisions of this Order are concerned and the performance guarantee shall be forfeited;

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Provided that the Chief Director (Sugar), Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution may, after the expiry of the aforesaid period, give extension of maximum two years, not exceeding more than a year at a time, in cases involving delay due to any unforeseen circumstances beyond control, such as, natural calamities, drought or non-

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availability of sugarcane (raw material) during off season in a year wherein the extended validity period terminates, non-financing of sugar sectors, stay on permission for land use by the courts due to environmental or other reason. In all such cases extension shall be granted in consultation with respective State Governments, if necessary, either for taking effective steps or for commencement of sugar production.

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6D. Consequences of non-implementation of the provisions laid down in Clauses 6D and 6C. If an Industrial Entrepreneur Memorandum remains unimplemented within the time specified in clause 6C, the performance guarantee furnished for its implementation shall be forfeited after giving the concerned person a reasonable opportunity of being heard. After clause 6D, the following proviso shall be inserted, namely:-

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(i) the commercial production is commenced within the stipulated period of seven years including two years of extension; (ii) the commercial production is not commenced even after seven years for reasons not attributable to the project proponement and

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the same is fully established on merit and be recorded in writing;

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(iii) the project proponent, suomotu, opts to forego its Industrial Entrepreneur Memorandum within two years from the date of its filing and requests for return of performance guarantee with due justification.”

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From the reading of the above amendment it is clear that time for implementation of IEM could be extended upto the period as stated in the amended clause. Further, the inserted proviso to clause-D would provide for return of bank guarantee under three circumstances stated therein.

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In the meanwhile, a show cause notice dated 06.12.2018 was issued to the petitioner to show cause within 15 days from the date of issuance of show cause notice, as to why action should not be initiated for violation of the Sugarcane (Control) Order, 1966. It is alleged in

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the notice that the petitioner has neither taken effective steps nor commenced commercial production as per the provisions of Sugarcane (Control) Order, 1966 read with the amendments.

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The petitioner has submitted his reply to the show cause notice on 08.03.2019 and thereafter he has approached this Court challenging the show cause notice vide Annexure-K.

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The learned Central Government Standing Counsel for respondent Nos.1 and 2 submits that no order has been passed as on today in pursuance to show cause notice dated 06.12.2018 (Annexure-K). In view of the said submission I am of the view that if a direction is issued to pass appropriate order in pursuance to the show cause notice and reply submitted by

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the petitioner taking into consideration the Sugarcane (Control) Amendment Order, published on 24.08.2016, ends of justice would be met. Hence, the following order is passed.

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ORDER

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Respondents are directed to pass

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appropriate orders in pursuance to show cause notice dated 06.12.2018 vide Annexure-K by considering the reply dated 18.03.2019 submitted by the petitioner keeping in mind the amendment brought to the Sugarcane Control Order on 24.08.2016.

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The subsequent representation submitted by the petitioner also may be taken note of while disposing of the show cause notice. The order as stated above shall be passed within a period of six weeks.

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Sri M.B. Kanavi, learned Central

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Government Standing Counsel for respondent

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Nos.1 and 2 and Sri Ravi Hosamani, learned A.G.A. for respondent No.3 are permitted to file memo of appearance on behalf of the respective respondents.

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Sd/JUDGE

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bvv

M/S. Belgaum Sugars Private Limited v. the Chief Director (Sugar)

Case brief

What is this about?

What did the court decide?

M/S. Belgaum Sugars Private Limited v. the Chief Director (Sugar)

Case brief

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What did the court decide?

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