M/S OJAS INDS. (P) LTD. versus M/S OUDH SUGAR MILLS LTD. AND ORS.

Citation: [2007] 4 S.C.R. 661 · Decided: 02-04-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

) 
MIS OJAS INDS. (P) LTD. 
A 
v. 
MIS OUDH SUGAR MILLS LTD. AND ORS. 
APRIL 2, 2007 
' 
. ' 
[DR. ARIJIT PASA Y AT AND S.H. KAPADIA, JJ.] 
8 
Industrial (Development and Regulation) Act, 1951-Section 29B(J)-
Sugarcane (Control) Order, 1966 as amended by Sugarcane (Control) 
Amendment,Order, 2006--Clauses 6A, 6B, 6C, 6D & 6E-Notification issued 
de-licensing sugar industry under the Act-Distance requirement prescribed C 
between an existing and a proposed sugar factory-Two Industrial 
Entrepreneur Memorandums (!EM) filed by two entrepreneurs with Central 
Governmentproposing to set up their sugar factories within the prescribed 
distance requirement-Central Government approving the !EM filed earlier 
and rejecting the !EM filed subsequently-Writ Petition by subsequent !EM D 
holder challenging the decision of the Central Government was allowed by 
High Court holding that· the prescribed distance requirement is between an 
existing and a proposed sugar factory and not between two proposed sugar 
factorin.s-Amendment Order introduced prescribing the distance requirement 
between two proposed sugar factories also and setting up conditions for 
approved !EM holder for taking effective steps within stipulated period-
E 
Retrospective applicability of the Amendment Order-Held, the object of 
prescribing distance requirement is for disciplined procurement of sugarcane 
and sufficient supply of sugarcane to the sugar factories-Amendment Order 
is introduced by Central Government to put an end to several litigations and 
to plug loopholes in the Order-Hence, the Amendment Order is clarificatory F 
and is applicable retrospectively. 
Central Government issued a Notification under section 298(1) of the 
Industrial (Development and Regulation) Act, 1951 de-licensing sugar 
industry. It prescribed a minimum radial distance of 15 kilometers between 
an existing sugar factory and a proposed sugar factory in order to avoid 
unhealthy competition among sugar factories to procure sugarcane. 
Appellant-company fded Industrial Entrepreneur Memorandum (IEM) with the 
Central Government for setting up a sugar factory. Thereafter, respondent-
company also filed its IEM for setting up a sugar factory at a place which is 
661 
662 
SUPREME COURT REPORTS 
[2007] 4 S.C.R. 
A only 7.2 kms from the proposed sugar factory of the appellant The appellant 
filed a Writ Petition before High Court for setting aside the IEM filed by the 
respondent. The respondent also filed a Writ Petition for the same prayer 
against the appellant. The High Court disposed of both the Writ Petitions by 
directing the Central Government to look into the dispute between the parties. 
The Central Government approved the IEM filed by the appellant and 
B disapproved the IEM filed by the respondent. The respondent filed a Writ 
Petition before the High Court challenging the decision of the Central 
Government. The High Court allowed the Writ Petition by holding that the 
minimum radial distance prescribed in the Notification is only between an 
existing sugar factory and a proposed sugar factory and not between two 
C proposed sugar factories. The High Court, however, observed that the Central 
Government is free to amend the Notification and prescribe the minimum radial 
distance requirement between the two proposed factories also. 
The Central Government issued a Sugarcane (Control) (Amendment) 
Order, 2006 inserting clauses 6A to 6E to the Sugarcane (Control) Order, 
D 1966. Clause 6A of the Order provided that no new sugar factory shall be set 
up within the radius of IS kilometers of any existing sugar factory or another 
new sugar factory in a state or two or more states. The Amendment Order 
further provided that a new sugar factory shall mean a sugar factory which 
has filed the IEM and has submitted a performance guarantee of rupees one 
crore with the Central Gcvernment for implementation of the IEM within the 
E stipulated time. The Amendment Order further provided that an existing sugar 
factory shall also include a sugar factory that has taken all effective steps as 
specified in Explanation 4 to 6A of the Amendment Order to set up a sugar 
factory. 
F 
In appeal to this Court, the appellant contended that the distance 
requirement from existing sugar factories provides full protection to 
inefficient existing sugar factories which was not the intention of de-licensing 
the sugar industry; that this will discourage new investments in sugar 
industry and would 

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