RAVINDRA v. GHUGE AND R.M. JOSHI, JJ.) DATE
Legal Reasoning
- 1 -IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD901 WRIT PETITION NO. 579 OF 2024YEDESHWARI AGRO PRODUCTS LTD., THR ITS CHAIRMANVERSUSTHE GOVERNMENT OF INDIA THR ITS SECRETARY AND OTHERSWITH903 WRIT PETITION NO. 1112 OF 2024SAHAKAR MAHARSHI SHANKARRAO KOLHE SAHAKARI SAKHARKARKHANA LIMITED THROUGH ITS MANAGING DIRECTORVERSUSTHE GOVERNMENT OF INDIA THROUGH THE SECRETARY ANDOTHERSWITH904 WRIT PETITION NO. 1627 OF 2024GANGAMAI INDUSTRIES AND CONSTRUCTION LTD THROUGH VICEVISHNU SHRIPATRAO KHEDEKARVERSUSTHE GOVERNMENT OF INDIA THROUGH THE SECRETARY ANDOTHERSWITH905 WRIT PETITION NO. 1864 OF 2024NATURAL SUGAR AND ALLIED INDUSTRIES LTD THROUGH ITSAUTHORIZED OFFICER ASHOK PRABHUAPPA DAMAVERSUSTHE GOVERNMENT OF INDIA THROUGH THE SECRETARY ANDOTHERSWITH906 CIVIL APPLICATION NO. 1725 OF 2024 IN WP/155/2024KARMAYOGI ANKUSHRAO TOPE SAMARTH SAHAKARI SAKHARKARKHANA LTD.VERSUSGOVERNMENT OF INDIA THROUGH THE SECRETARY AND OTHERSkhs/Feb.2024/579
Legal Reasoning
- 2 -Mr.R.N.Dhorde, Sr.Advocate i/b Mr.S.S.Tope, Mr.V.D.Hon, Sr.Advocatei/b Mr.A.V.Hon, Advocates for the Petitioners in respective Petitions.Mr.A.B.Girase, Govt.Pleader for the Respondent/State. Mr.A.G.Talhar, DSGI a/w Mr.S.W.Munde, for the Respondent/Union ofIndia. Mr.A.P.Bhandari, Advocate for the OMCs’( CORAM : RAVINDRA V. GHUGE AND R.M. JOSHI, JJ.) DATE : FEBRUARY 22, 2024PER COURT : 1.We have considered the extensive submissions of thelearned Senior Advocates, the learned DSGI and the learned Advocatesfor the appearing parties, yesterday, for several hours. Considering thepaucity of time as the Court rose at around 6.30 p.m., we have listedthese matters today for dictating orders.2.On 04.01.2024, while issuing notice, we have passed anextensive order in WP no. 155/2024, considering the contentions of theparties and listing out reasons for granting ad-interim protection by‘Staying’ the impugned order dated 07.12.2023. We do not wish toenlarge this order by reproducing the entire order dated 04.01.2024.Suffice it to say, this order being passed today, in view of the filing ofkhs/Feb.2024/579 - 3 -the Civil Applications, is in the backdrop of the order dated 04.01.2024.3.These Petitioners are before us praying for directions to theOil Marketing Companies (Hereinafter referred to as OMCs’). In eachof these matters, the OMC are the Bharat Petroleum CorporationLimited, the Indian Oil Corporation Limited and Hindustan PetroleumCorporation Limited. The request of the Petitioners is that the ethanolmanufactured by the Petitioner/manufacturing factory, was continuedby virtue of our order dated 04.01.2024 and should be purchased / thestock should be lifted, by the OMC. 4.There is no dispute between the parties that each of thesePetitioners has entered into an agreement with the OMC. The terms ofthe agreement are to last till 30.04.2025, for a particular ethanol supplyyear (ESY). By the said agreement, more specifically set out at clause2(iii) under the notification dated 14.01.2021, interest subventionwould be available to only those distilleries which will supply at least75% of ethanol produced from the added distillation capacity to OMCs’for blending with petrol. Based on this condition, the learnedAdvocates have canvassed that the OMCs are under an obligation tokhs/Feb.2024/579 - 4 -receive at least 75% of the manufactured ethanol. In fact, if supply isless than 75%, the manufacturing factory is liable to suffer penalty.5.The learned Senior Advocate Mr.Dhorde has canvassed onbehalf of the Petitioners, that it was the Government of India which wasafter various sugar factories in the country to set up new distilleries orventure into expansion of existing distilleries to produce ethanol fromother feed stocks producing 1G ethanol such as sugar beet, sorghum,cereals etc. The Union of India also promoted conversion of theexisting molasses based distilleries (whether attached to sugar mills orstandalone distilleries) to dual feed (molasses and grain/or any otherfeed stock producing 1G Ethanol) and also convert grain baseddistilleries to dual feed. The Companies were also encouraged to set upgrain based distilleries / expand existing grain based distilleries toproduce ethanol. However, benefits of interest subvention scheme is tobe extended only to those distilleries which are using or will be usingdrying miling techniques to produce Dry Distillers Grain Soluble(DDGS) and for installing Central Pollution Control Board for achievingZero Liquid Discharge (ZLD). khs/Feb.2024/579 - 5 -6.The learned Senior Advocate further canvassed that thepromotion of such distilleries was to such an extent that assistanceunder the scheme was also offered in terms of clause 2 of thenotification dated 14.01.2021, which reads as under :-“(2) Assistance under the Scheme(i) Interest subvention @ 6% per annum or 50% of rate of interestcharged by banks/National Cooperative Development Corporation(NCDC) Indian Renewable Energy Development Agency Limited(IREDA)/ Non-Banking Financial Companies (NBFCs)/any otherfinancial institutions which are eligible for re-finance from NABARD,whichever is lower, on the loans to be extended bybanks/NCDC/IREDA/NBFCs/ any other financial institutions which areeligible for re-finance from NABARD, shall be borne by the CentralGovernment for five years including one year moratorium against theloan availed by project proponents.(ii) Interest subvention under the scheme shall be provided on loanamount sanctioned and disbursed in respect of each project based onthe proposed capacity, limited to the in principle approval byDepartment of Food and Public Distribution (DFPD).(iii) Interest subvention would be available to only those distillerieswhich will supply at least 75% of ethanol produced from the addeddistillation capacity to OMCs for blending with petrol.(iv) Assistance shall not be available to sugar mills and distillerieswhich have availed benefits under any other scheme of CentralGovernment for the same project.khs/Feb.2024/579 - 6 -(v) In case of grain based distilleries, interest subvention would beapplicable only if they are using or will be using dry milling techniqueto produce DDGS.”7.In view of the above submissions, the OMCs’ havevehemently opposed any further relief to be granted by this Court. Eachone of the OMC have filed their affidavits in reply in the lead WritPetition, to be considered in all the matters. Contention is that therevised quantity of supply of ethanol has been conveyed to thePetitioners’ factories through e-mails and they have been informed thatthey would have to supply as per the new norms and as per thequantity that is prescribed. It is further pleaded that in matters ofcontractual agreements, this Court should not issue directions to theOMCs to accept the entire production of the Petitioners.8.3 statements pertaining to the 3 OMCs are tendered beforeus, which are collectively marked as ‘X-1’ for identification. We seefrom the said chart that the original contracted quantity (In kilo liters)are much higher than the revised quantity. The difference isapproximately 50%. However, we have also noted that the actualquantity received until 21.02.2024, from the Petitioners is hardly 30%khs/Feb.2024/579 - 7 -of the original contracted quantity and 2/3rd of the revised quantity.These charts are indicative of a uniform policy adopted by the OMCsunder instructions of the Union of India to maintain around 40% to50% of the original contracted quantity, as the revised quantity. 9.The learned Senior Advocate has relied upon certain orderspassed by the Karnataka High Court wherein the manufactured quantitywas directed to be received by the OMCs.10.Mr.Bhandari, the learned Advocate representing the OMCssubmits on instructions that the OMCs’ are opposing even themaintainability of this Petition. According to the OMCs, a plain andsimple contractual arrangement exists between the parties. If there isany violation of the contractual terms, the Petitioners will have to movethe Arbitrator as is provided in the agreement or the appropriate CivilCourt for seeking appropriate reliefs. It is further pointed out throughthe affidavits filed that there is an arbitration clause and the Petitionersdeserve to be relegated to the Arbitrator. 11.The present situation before us and the circumstanceskhs/Feb.2024/579 - 8 -emerging from the record indicate that on the one hand, the ethanolmanufacturing factories are proceeding with their production activities,and on the other hand, the OMCs’ are under a mandate of the Union ofIndia to receive only the revised quantity and not the originalcontracted quantity. So also, the issue of maintainability of the Petitionshas been raised, which will have to be considered by this Court.12.However, the emergent situation is, as stated by thelearned Senior Advocates Mr.Dhorde and Mr.Hon that, the tankers filledwith ethanol to be supplied to the OMCs, are now parked before thefactories. The stocks/tankers are to be protected and the OMCs’ arenot willing to accept the stock beyond the revised quantities. Theliquid is susceptible to fire as it is inflammable. Leakage in even asingle tanker will lead to disastrous consequences. Per contra, theOMCs have huge storage capacities and they be ordered to receive theentire manufactured quantity of ethanol. We are of the view thatequities will have to be balanced while keeping in focus the revisedquantity norms settled by the OMCs. 13.Mr.Bhandari is right in submitting that the dispute betweenkhs/Feb.2024/579 - 9 -the parties as on date, on account of the impugned order dated07.12.2023 issued by the Union of India, is of purely contractual naturewith an arbitration clause. However, the worrisome factor is as towhether the Petitioners could be relegated at this stage to a statutoryremedy, as time is ticking with regard to their ethanol stocks that havebeen filled into the tankers. Some matters have been entertained bythe Bombay High Court as well as by the Karnataka High Court, whilethe manufacturing of ethanol is still going on. The present situationwill have to be tided over by passing an equitable order. 14.Having duly considered the submissions of the litigatingparties and taking into account the factors placed before us, we directthat until the date when the revised quantity was conveyed by theOMCs to the manufacturing companies, 75% of the originallycontracted quantity shall be received by the OMCs’. From the date therevised quantity norms were communicated, the Petitioners are atliberty to supply 100% of the revised quantity and the OMCs wouldreceive the same the revised quantity, even today, is almost 40% to50% more than the actual quantity supplied by these Petitioners to theOMCs prior to the impugned order dated 07.12.2023.khs/Feb.2024/579 - 10 -15.The learned Advocate for the OMCs submits that therevised quantity norms were conveyed to the Petitioners in the lastweek of December 2023. Until then, whatever has been supplied bythe Manufacturers considering the original contracted quantity, hasalready been received by the OMCs. It shall, therefore, be noted thatfrom the date of the communication of the revised quantity, the ethanolmanufactured by these Petitioners will be received by the OMCs up tothe revised quantity norms.16.The earlier direction of this Court, by which the Petitionerswere under a mandate to maintain date-wise inventory of the ethanolmanufactured, would continue and they would have to file their returnsin this Court as per the directions of this Court, as well as deliver copiesto the OMCs.17.With the above directions, the Civil ApplicationNo.1725/2024 stands disposed off. These directions would apply to allthe Petitioners who have filed such similar Writ Petitions before us andincluding those who have not filed Civil Applications khs/Feb.2024/579 - 11 -18.Since this order has been dictated in open Court, Partiesshall act upon the same without waiting for uploading the order on theofficial website of this Court. ( R.M.JOSHI, J. ) ( RAVINDRA V. GHUGE, J.)khs/Feb.2024/579