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CASE NO.: Appeal (civil)  4796 of 1998

PETITIONER: M/s. Kurali Khandsari Udyog      

RESPONDENT: Excise Commissioner & Controller of Molasses,U.P. & Ors.

DATE OF JUDGMENT: 20/04/2004

BENCH: S. N. VARIAVA & H. K. SEMA.

JUDGMENT: J U D G M E N T

S. N. VARIAVA, J.

       This Appeal is against the Judgment of the Allahabad High Court  dated 18th February, 1998.  The Appellants’ Writ Petition challenging  Orders dated 10th December, 1997, 11th December, 1997 and 19th  December, 1997 has been dismissed.   These Orders have been issued under the Uttar Pradesh Sheera  Niyantran Adhiniyam, 1964 (hereinafter referred to as the Act) and the  rules framed thereunder.  Section 2(a) of the Act defines "Controller"  as the Controller of Molasses.  Section 2(d) defines "Molasses" as the  heavy, dark coloured viscous liquid produced in the final stage of  manufacture of sugar by vacuum pan, from sugarcane or gur, when  the liquid as such or in any form or admixture contains sugar.     Section 2(h) defines "Sugar Factory" or "Factory" as any premises  wherein twenty or more workers are working and in which a  manufacturing process connected with production of sugar by means  of vacuum pan is being carried on or is ordinarily carried on with the  aid of power.   Section 22 of the Act gives to the State Government  power to make rules.   The State Government has framed the U.P.  Sheera Niyantran Niyamavali, 1974 (hereinafter referred to as the  Rules).  Rule 22 provides that molasses produced in sugar factory shall  be sold or supplied only to distilleries or other persons bonafidely  requiring it for purposes of industrial development.   Rule 24 reads as  follows: "24. Restriction on transportation of molasses.- No  person shall, transport or cause to be transported outside  Uttar Pradesh any molasses unless permission in writing  obtained from the Controller."

       In pursuance of this Rule, the Controller issued Orders dated 10th  December, 1997, 11th December, 1997 and 19th December, 1997,  which prohibited transport of "any molasses" without permission.  The  Appellants who are manufacturer of Khandsari molasses felt aggrieved  by these Order and challenged the same on the ground that such a  restriction imposes an unreasonable restriction on their right to carry  on business as guaranteed under Article 19(1)(g) of the Constitution of  India and on the ground that Rule 24 cannot go beyond the Act and  cannot apply to molasses which is not produced by vacuum panning.           It is submitted that the Act only applies to vacuum pan  molasses.   It is submitted that this is clear from the definition of the  term "Molasses" in Section 2(d). It is submitted that even the  definition of the term "Sugar Factory" or "Factory" makes it clear that  the Act only applies to those sugar factories or factories which  manufacture sugar by the process of vacuum panning.   It is submitted  that the rules which can be framed under Section 22 cannot exceed  the provisions of the Act.  It is submitted that Rule 24 in so far as it  seeks to place restrictions on purchase, transport or possession of

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molasses can only apply to molasses prepared by the process of  vacuum panning and not Khandsari molasses.  It is submitted that the  term "any molasses" in Rule 24 must necessarily mean any molasses  prepared by the process of vacuum panning.  It is submitted that  therefore the three Orders which prevent transport of molasses  without permission can apply only to molasses prepared by vacuum  panning. It is submitted that if the Orders seek to restrict transport of  any molasses then they are restrictive of the right of freedom of trade  as guaranteed under Article 19(1)(g) of the Constitution of India and  beyond the scope of the rule making power under Section 22.         On the other hand Mr. Dwivedi points out that in U.P. 90% of the  molasses is produced by vacuum pan process.  He submitted that the  purpose of the Act was to control supply and sale of vacuum pan  molasses so that it is available for industries in the State.  He  submitted that Sections 7 and 8 permits regulation of removal, sale  and supply of molasses. He submitted that in the guise of exporting  Khandsari molasses, vacuum pan molasses was being smuggled out of  the State.  He pointed out that it is impossible to differentiate vacuum  panned molasses from khandsari molasses by merely looking at it. He  pointed out that the difference could only be made out by sending the  molasses for testing in a laboratory. He submitted that in order to  control the smuggling of vacuum panned molasses as khandsari  molasses it was necessary to control transport of molasses. He  submitted that Section 22 of the Act gave power to the State  Government to makes rules for carrying out the purpose of the Act.   He admitted that the purpose of the Act was to control sale and supply  of vacuum pan molasses. He submitted that this included controlling  the illegal or unlawful removal thereof.  He submitted that one of the  method of control was to prevent removal of any type of molasses  without permission.  He submitted that permission was required to be  taken so that Government could check that only Khandsari molasses  was being exported.  He stated that if khandsari molasses was to be  exported then permission would be given. He submitted that at  present the trucks had to be held up for a number of days till the  molasses carried by them was got tested to ensure that vacuum  panned molasses was not being exported. He submitted that the aim  in enacting Rule 24 was to ensure that the power of search and  seizure, given under Section 14 of the Act, need not be used, as once  permission is granted it would be known what is being transported is  Khandsari molasses.         In reply to this Ms. Goswami submitted that the Allahabad High  Court had already noted that the transporters of khandsari molasses  were being harassed by having their trucks detained and had directed  that proper course was to keep a close check in the sugar mills  premises itself and by verifying at the premises receiving such  molasses. She showed to Court the Judgment dated 11th December  1998 in Writ Petition No. 39733 of 1998. However this Judgment does  not deal with or consider Rule 24 or the impugned Orders. This  Judgment also recognizes the need for control. Keeping a watch on the  premises may be one method of control. However requiring  transporters to take permission is also a method of control. Such  regulatory measures do not impose unreasonable restriction and  cannot be challenged on the ground that they affect the right to carry  on trade as guaranteed under Article 19(1)(g) of the Constitution of  India.   This Court in the case of Bishambhar Dayal Chandra Mohan vs.  State of U.P. reported in (1982) 1 SCC 39 has held in respect of a  regulatory measure which required an endorsement of the Deputy  Marketing Officer or a Senior Marketing Officer not to be a restriction  on freedom of trade, commerce and intercourse within the country.   It  was held that even if these were considered as restrictions the  limitation so imposed cannot be considered to be arbitrary or of an  excessive nature.  It was held that such restrictions satisfy the test of  reasonableness.             We are also unable to accept the submission that these Orders  are without jurisdiction and in excess of the rule making power. The

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purpose of the Act is to control vacuum panned molasses. In order to  achieve this object it would be necessary to regulate movement of any  molasses. Thus the term "any molasses" in Rule 24 must necessarily  mean any molasses and not just molasses manufactured by the  process of vacuum panning.      Even presuming that the rule making  power did not enable the Government to make such a rule, such a  restriction could always be imposed by virtue of Article 162 of the  Constitution of India.   We therefore see no infirmity in the Judgment of the High Court.  The Appeal stands dismissed.  There will be no order as to costs.