SAHARANPUR CO OPERATIVE CANE DEVELOPMENT UNION LIMITED COLLECTOR SAHARANPUR Vs. LORD KRISHNA SUGAR MILLS LIMITED :LORD KRISHNA SUGAR MILLS LIMITED

JUDGEMENT

(1.) These two appeals on special leave are directed against an order dated 11 May 1972 of the Division Bench of the Allahabad High Court confirming an earlier interim order passed ex parte on 31 March 1972. The interim order challenged by the appellants was passed under the following circurnstances.

(2.) The Lord Krishna Sugar Mills Ltd., the respondent No. 1 in both these appeals, is a company owning and operating a sugar factory in the District of Saharanpur in Uttar Pradesh. For the sake of convenience we shall hereafter refer to the Lord Krishna Sugar Mills Ltd. briefly as the petitioner. Between November, 1971 and March, 1972 the petitioner received certain supplies of sugarcane from the Saharanpur Co-operative Cane Development Union Ltd. (hereinafter referred to as the Cane-growers' Society). The supply of sugarcane in Uttar Pradesh is governed by various statutory provisions, namely the Sugarcane (Control) Order, 1966 (hereinafter referred to as the Order of 1966), the U. P. Sugarcane (Regulation of Supply and Purchase) Act, l953 (hereinafter referred to as the Act of 1953) and the U. F. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 (hereinafter referred to as the Rules of 1954). Without going into details at this stage we may indicate that the net effect of these statutory provisions is that specific areas are earmarked for all sugar factories by the Cane Commissioner, U. P. One such area was allotted to the petitioner company which was bound to take all its supplies from the cane-growers in that area. The supply of sugarcane is made through the Cane-growers' Society. The Government of India has a right to fix the statutory minimum sugarcane price for any particular season and during the crushing season 1971-72 with which we are concerned in these appeals the Government of India had fixed the minimum sugarcane price for the petitioner's sugar factory at Rs. 7.37 p. per quintal. There was also a statutory provision under which it was incumbent on the Cane-growers' Society to offer its crop of sugarcane to the petitioner who in turn was bound to accept the offer within 14 days. It was further provided that any factory which buys sugarcane which the cane-growers offer to it in the manner indicated above has to pay the price of the sugarcane within 14 days and if the payment of cane-price falls in arrears, the Cane Commissioner is to send a certificate to the Collector indicating the amount of arrears together with interest that may be due from any particular sugar factory. Upon the receipt of such a certificate from the Cane Commissioner, the Collector can proceed to recover from the factory concerned the amount certified as if it were an arrear of land revenue.

(3.) We now turn to what actually happened in this case. During the crushing season 1971-72 the petitioner purchased sugarcane from the Canegrowers' Society between 14 November 1971 and 7 March 1972. Prior to this purchase the Society had sent an offer for supply of 14 lakh quintals of sugarcane. The petitioner accepted that offer and the price agreed between the parties was Rs. 11.44 p. per quintal. Altogether 12,07,987.64 quintals of sugarcane were sold by the Society to the petitioner for which the price payable at the contracted rate was Rs. 86,76,026.89 p. The petitioner contends that due to several factors over which the petitioner had no control but for which both Government and the Cane-growers' Society are responsible, the petitioner's financial position deteriorated and the petitioner was not in a position to pay off the cane dues. On 24 March 1972 the petitioner received from the Cane Commissioner a Recovery Certificate which showed that a sum of Rupees 53,28,668.86 p. was the outstanding dues of the petitioner for the price of sugarcane and commission thereon for the period ending 29 February 1972. On 24 March 1972 the actual outstanding dues from the petitioner amounted, according to the petitioner, to Rs. 21,25,877.19 p. We are told that on 21 March 1972 the Collector, Saharanpur attached the cash - credit account of the petitioner with the Central Bank of India. Saharanpur and also its accounts with the Punjab National Bank and the State Bank of India, Saharanpur. On the very next day i.e. on 22 March 1972 the Tehsildar of Saharanpur attached the entire stock of sugar which the petitioner had pledged with his banks. On 27 March 1972 the petitioner received a revised Recovery Certificate in respect of the cane dues for the period ending 15 March 1972. This Certificate put the figure of the petitioner's dues at Rs. 32,43,877. The petitioner explains the discrepancy between those figures of the Recovery Certificates and its own statement of dues as on 25 March 1972 by saying that both the Recovery Certificates do not - as in fact they possibly could not, take note of certain payments made by the petitioner subsequent to the dates upto which the Recovery Certificates calculated the dues. The petitioner, thereafter, moved a writ petition before the High Court of Allahabad challenging the validity of both the Recovery Certificates dated 20 March 1972 and 25 March 1972 respectively as well as the order dated 22 March 1972 of the Tehsildar by which the said officer sought to attach the stocks of sugar pledged with the petitioner's banks. Three principal grounds on which the Recovery Certificates were challenged by the petitioner are as follows: