SHIVASHAKTI SUGARS LIMITED versus SHREE RENUKA SUGAR LIMITED & ORS.

Citation: [2017] 2 S.C.R. 947 · Decided: 09-05-2017 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2017] 2 S.C.R. 947 
SHIVASHAKTI SUGARS LIMITED 
v. 
SHREE RENUKA SUGAR LIMITED & ORS. 
(Civil Appeal No. 5040 of2014) 
MAY09,2017 
[A. K. SIKRI AND ABHAY MANOHAR SAPRE, JJ.) 
Sugar/Sugarcane: 
Sugarcane (Control) Amendment Orde1; 1966: Cl. 6A -
Restriction on setting up of two sugar factories within the radius of 
15 km - Establishment ~f sugar factory - Permission for - Sought 
by the appellant - Appellant granted permission to establish sugar 
factory - In the writ petitions, the High Court held that RS was an 
existing factory within the meaning of Cl. 6A; that the distance 
between the factory of the appellant and RS is less than 15 kms, 
thus, setting up of the factory by the appellant was in vio!ation of 
Cl. 6A; and that since ejfective steps were not taken, extension could 
not be given - On appeal, held: On facts, since Mis. RS would not 
be treated as 'existing sugar factory' within the meaning <!f Cl. 6A, 
the necessity of distance requirement between Mis. RS factory and 
the appellant :S factory as contained in Cl. 6A was not attracted -
Furthermore, appellant has established sugar mill and ii is 
continuing to crush sugarcane since the year 2011 - Ke.eping in 
mind all the given factors cumulatively, no pwpose would be sen•ed 
in getting the unit of the appellant closed - Public purpose demands 
that the appellant '.5 factory remain in operation and continue to 
fimction - Apart from these equitable considerations on the side of 
the appellant, economic factors like bank loans, employment, 
generation and production at the factory serving useful public 
purpose tilt the balance totally in favour of the appellant - These 
cannot be overlooked, where there is hardly any statutory violation 
- Directions contained in the judgment of the High Court ~et aside 
- Appellant's factory to continue its operation subject to the 
condition given. 
Jurisprudence - Eco110111ic approach to law - Held:. Firstly, 
the Court is to decide the case by applying the statutory provisions -
However, while interpreting a particular provision, economic 
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948 
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SUPREME COURT REPORTS 
[20 I 7] 2 S.C .R. 
impact/effect of a decision, wherever wari;anted, has to be kept in 
mind - Equally, in a situation where two vi~ws are possible or there 
is a discretion given to the court by law, Court needs to lean in 
favour of a view which subserves the economic interest of the nation 
·- Conversely, the Court to avoid that particular outcome which has 
a potential to create an adverse affect on employment, growth of 
infrastructure or economy or revenue of the State. 
Allowing the appeals, the Court 
HELD: 1.1 As regards the issue as to whether Mis. RS 
would be treated as 'existing sugar factory' within the meaning 
of Clause 6A of the Sugarcane Control Order, 1966 (as amended 
in 2006), the submission that if a sugar factory, is not 'in operation' 
on the date when a new sugar mill applies for an Industrial 
Entrepreneurs Memoranda (IEM), the old sugar factory, shall 
not be considered as an existing sugar mill, is accepted. [Para 
27] [973-F; 974-B] 
1.2 The requirement of Explanation 1 to Cl 6A is that in 
order to qualify as an existing· sugar mill, it needs to crush for 
five consecutive years. The High Court wrongly recorded that 
the requirement is of crushing for any of the one season out of 
five and this led to error on the part oflligh Court in holding that 
Mis. RS was an existing sugar factory. [Para 28) [974-C] 
1.3 The case of the appellant for setting up of the factory 
was processed keeping in view the fact that Mis. RS was not in 
operation. Further, in one case way back in the year 1995, it had 
even granted 'no objection' certificate for setting up of the factory 
hy the appellant. Another _significant aspect to be borne in mind 
is that the State Government had passed order of liquidation of 
Mis. RS in exercise of its power under Section 72 of the 
Karnataka Co-operative Societies Act, 1951. Even a liquidator 
was appointed to undertake the liquidation process. }'rom this 
scenario, everybody would get a bonafide impression that such a 
factory which is non-operational, is going to be liquidated in due 
course of time. No doubt, subsequently the State Government 
decided to revive this factory and steps in this behalf were taken 
in the year 2008. However, .much before that IEM of the appellant 
got acknowledged on Jone 08, 2006. As on that date, then: was 
no 'exist

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