SUPREME COURT OF INDIA

Before:- Ruma Pal and C.K. Thakker, JJ.

Civil Appeal No. 2980 of 2005, Arising out of SLP (C) No. 16369 of 2004. D/d. 29.4.2005.

State of Haryana and another - Appellants

Versus

Saraswati Sugar Mills Limited and others - Respondents

Essential Commodities and Services - East Punjab Molasses (Control) Act, 1948 - Constitution of India, Article 226 - Stay order - Relevant considerations - Passing of stay against order of Controller of Molasses without being satisfied (a) that the said order was otherwise without jurisdiction, or (b) that it was based on an unreasonable appreciation of the facts, not justified - Notification imposing control on sale of Molasses - High Court, by an interim order directing (i) that the restrictions imposed by Government would only apply to stocks actually available with sugar mills as on the date of notification, (ii) that since there were no stocks on the date of publication of the notice of Control Order, the respondents could not be asked to supply 50% of the stock of molasses to Government - Controller of molasses holding an enquiry and holding that there was certain amount of molasses available with Respondent an relevant date - Accordingly, the Controller directing to put up proposal for allotment of 50% of the said amount to Government in terms of the notification - Said decision stayed by High Court holding that there was no direction in its interim order to hold the said enquiry - Held, the Controller had power dehors the said interim order of High Court to come to the finding in question - High Court should not have stayed the Controller's order in the manner it did.

[Para 9]

ORDER

Ruma Pal, J. - Leave granted.

2. The respondents filed a writ petition in the High Court of Punjab and Haryana against the present appellants challenging the imposition of control on the sale of molasses by the State Government by Notification dated 15-4-2004. According to the writ petition, by the imposition of such restriction the agreements entered into between Respondent 1, Saraswati Sugar Mills Ltd. and third parties would in fact be superseded and set at naught and that these contracts had been finalised when the policy of the State was of decontrol.

3. The High Court passed an interim order on 25-5-2004 acting upon the respondent-writ petitioners' claim that there were no stocks on the date of publication of the notice of control and therefore, the respondents could not be asked to supply 50% of the stock of molasses to the Government. The High Court directed that the restrictions as imposed by the State Government would only apply to the stocks which were actually available with the petitioner Sugar Mills as on the date of notification i.e. 15-4-2004 and that the appellants would permit Respondent 1 herein to sell the stocks which were the subject-matter of agreement between Respondent 1 and the third parties entered into prior to the date of notification. It was made clear that in the event the writ petition was dismissed, Respondent 1 would refund the excess price charged by it over and above the control price fixed by the Government to the State Government along with interest thereon.

4. The appellants understood this order to mean (a) determination of the amounts of molasses actually in stock with Respondent 1, and (b) existence of agreements between the said respondent and the third parties entered into prior to 15-4-2004. An inspection was held by the appellants and on the basis of that inspection, the appellants found that the existence of the agreements relied upon by the respondent were in fact not established and that for those quantities covered by the agreements in fact entered into between the respondent and third parties, there was still an amount of 1,21,807 quintals of molasses available with the respondent. Accordingly, it was ordered by the Controller of Molasses on 25-6-2004 that a proposal should be put up for allotment of 50% of this amount to the Government in terms of the Notification dated 15-4-2004.

5. On an application for clarification before the High Court by the respondents, the High Court observed that the appellants had proceeded as if the order dated 25-5-2004 had directed the appellants to hold inquiry and found that its order dated 25-5-2004 did not, in fact, contain any such direction. Accordingly, the decision of the appellants relating to the existing stock and the agreements was stayed until the disposal of the writ petition.

6. Being aggrieved, the appellants preferred this appeal by special leave and by an order dated 23-8-2004, this Court stayed the operation of the High Court's order dated 28-7-2004, and thus the Controller of Molasses' order dated 25-6-2004 was revived.

7. According to the appellants, there was ample provision in the East-Punjab Molasses (Control) Act, 1948 ("the Act" for short) as made applicable to the State of Haryana by the Adaptation of Laws Act, 1968 which gave the appellants power not only to control the quantum of molasses to be sold by sugar mills like the respondents, but also to actually regulate the sale and distribution of the molasses. It is also stated that if the respondents were aggrieved by the order of the appellants dated 25-6-2004 of the Controller of Molasses, the respondents had adequate remedy under the Act to question the findings of fact arrived at by the Controller.

8. During the pendency of the matter before this Court, the respondents have filed a counter-affidavit in which it has been contended that the special leave petition had become infructuous because the subject-matter of controversy had already been disposed of by the respondents in accordance with the order of the High Court dated 3-5-2004. The respondents have also submitted that there is no dispute relating to the subsequent assessment period, namely, 2004-2005 and that the matter is now being regulated in terms of the Notification dated 15-4-2004 issued by the appellant Authorities.

9. We are of the view that the High Court should not have stayed the decision of the Controller without being satisfied (a) that it was otherwise without jurisdiction, or (b) that it was based on an unreasonable appreciation of the facts. We are prima facie satisfied that the Controller had the power dehors the order dated 25-5-2004 to have come to a finding as to the actual existence of the molasses and the agreements alleged to have been entered into between the respondents and the third parties prior to 25-5-2004. We also cannot accept that the High Court in its order dated 25-5-2004 would have proceeded on the basis of the figures as given in the writ petition unless the High Court at least prima facie accepted the correctness of those figures. All that the appellants sought to do was to establish that the figures were incorrect. The High Court should not have stayed the Controller of Molasses' order in the manner it did.

10. We are not in a position, at this stage, to determine whether any of the stock relating to the year 2003-2004 had been disposed of between 25-6-2004 and 23-8-2004.

11. We accordingly dispose of the appeal by permitting the Controller to hold a fresh inquiry into the question as to whether any of existing stock in the year 2003-2004 has been disposed of between 25-6-2004 and 23-8-2004. It will be open to the respondents, if they are aggrieved by any such finding, to challenge the same before the revisional authority under the provisions of the Act.

12. If the facts are undisputed, it will also be open to the respondents to raise the issue before the High Court in the pending writ petition which we expect should be disposed of within a short period having regard to the nature of the dispute.

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