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Petitioner: ABDUL QADDUS MUGHAL VS Respondent: FEDERAL GOVERNMENT throughSecretary JUDGMENT
Court Name: Lahore High Court Judge(s): Ijaz Ahmad Chaudhry, Khawaja Muhammad Sharif Title:ABDUL QADDUS MUGHAL vs FEDERAL GOVERNMENT throughSecretary
JUDGMENT
Reported As: 2010 YLR 360 Result: Petitions disposed of Judgment JUDGMENT ' IJAZ AHMAD CHAUDHRY, J.---In pursuance of head-line in daily Jang, Lahore dated 13-8-2009 to the effect that billions of rupees had been earned by the market players due to escalation in sugar price with the active connivance of the political dignitaries suo motu proceedings as follows:-- "There is a head-line news item appealing in daily Jang Lahore, dated 13-8-2009, to the effect that billions of rupees have been earned by the market players due to escalation in sugar price with the active connivance of the political dignitaries whereby the price of the sugar has gone up to upto Rs,52 per kilogram and is likely to further shoot up to the tune of Rs,60 per kilogram in the coming holy month of Ramadan ul Mubarak which would be an addition to the agonies of the poor people of the State. ' I would therefore, like to know how many sugar mills are running, what is their annual production, approximate consumption of sugar in the country, what measures the provincial and central governments have already adopted or suggested to meet the deficiency, if any, as welt as to keep the price in control to make its purchase within the reach of the poor consumers specially in the coming holy month of Ramadan ul Mubarak." ' initiated on 13th August, 2009 and notices were issued to Attorney General of Pakistan for Federation and Advocate-General of the Government of the Punjab for 19th August, 2009. Sardar Muhammad Latif Khan Khosa, Attorney-General for the Federation appeared along with Mrs. Shaishta Sohail, Joint Secretary, Ministry of Industries and Production. A few number of figures and actions taken by the Ministry were reported but, however, the learned Attorney General admitted that the rates announced by the Federal Government were excessive and beyond the reach of
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common man, which required to be revised after consultation with all the stakeholders including the Provincial Government. On the same day, we asked the learned Advocate General of Punjab to submit detailed reply as to what actions had been taken by the Government of the Punjab to maintain supply at a cheaper rate to the people. On 26-8-2009 along with suo motu notice a writ petition (W.P. No,16096 of 2009) filed by Mr. Abdul Qadoos Mughal came up before us with the following prayer:--- "***the respondents may be held responsible for their illegal act of negligence, incompetence and to benefit a portion of society illegally and with ulterior motives. It is further prayed that the respondents may be directed to fix the price of sugar upto Rs,32 per Kg as per retail price, as available on 31-3-2009, when stocks of new production for the year 2009-2010 were available in the market. It is also requested that the arrangements between the respondent Ministry of Industries and Production with the sugar manufactures for fixation of price at Rs,49.75 may please be declared illegal, ultra vires and against the fundamental rights of the general public." ' Thereupon a direction was issued to the Federal Government as well as Government of Punjab to file report and parawise comments and a notice was also issued to Pakistan Sugar Mills Association through its Chairman respondent No,7. As common questions of facts and law are involved in both W.P. No,16096 of 2009 and W.P. No,17744 of 2009 (suo motu), we propose to decide both these matters through this single judgment. 2. We have heard all the concerned on the above mentioned dates in details and also perused reports submitted by Ministry of Industries and Production, Government of Pakistan and by Government of the Punjab. 3. At the very outset, we want to begin with the arguments of Mian Muhammad Athar, Advocate, for writ petitioner Maqsood Mughal. He argued that when the purchase price of sugarcanes to be paid by the sugar manufactures was not more than Rs,80 per 40 kg and the price of sugar in open market was Rs,32 per kg then how ex-mill price of sugar can be fixed at the rate of Rs,49.75 particularly when the circumstances are same and no increase in the taxes or duties had taken place. According to the learned counsel the Ministry of Industries and Production, Ministry of Commerce and Ministry of Food and Agriculture and also the Government of the Punjab were to regulate the prices in the local market; that when it was apparent before beginning of season 2008-09 that the production of sugarcanes was less than the required production of sugar then why the Ministries did not take steps to import raw sugar from the international market before March, 2009 and at that time the price of refined Agar was Rs,32 per kg. The learned counsel has referred to news item dated 27 June, 2009 published in daily Dawn to the effect that Additional Secretary Muhammad Javed Malik told Reuters that the Trading Corporation of Pakistan had decided in February, 2009 to import 200,000 tones of white sugar and bought 125,000 tones since then and cancelled two tenders over the past month for a total of 75,000 tones as, according to the Additional Secretary, there was sufficient home sugar stock and consumption had decreased. It is further submitted by the learned counsel that the sugar mills are owned by political dignities, who have installed mills after obtaining loans from Banks, which were later on waived off and they had been obtaining loans and advances for purchase of sugarcanes before every season on less rate of interest. According to the learned counsel in this season, when the State Bank demanded repayment of the loan till 31 July, 2009 vide BPRD Circular No,2 of February 9, 2009, the PSMA put up its case through the Ministry of Industries and Production and also Ministry of Commerce before the State Bank for deferring repayment of the loans and advances till September, 2009, which was finally approved. According to the learned counsel the Sugar Mills owners in this way succeeded to hoard the sugar and waited for rise of price in market as there remained no pressure upon them to sell the sugar for repayment of loans and advances. Reference in this regard has been made to newspaper clipping of Daily Business Recorder dated 4th May, 2009, June, 26, 2009 (Annex. B and D
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respectively). The learned counsel has also made reference to newspaper clipping daily Business Recorder June, 26, 2009; wherein it has been published that the Ministry of Industries and Production had written a letter to the State Bank of Pakistan on June, 22, 2009 recommending the case of PSMA for postponing the payment of loans and advances, thus the Ministry intervened to facilitate sugar mill owners. 4. Let us now sum up the arguments of the respondents i.e, Federal Government through its Ministry of Industries and Production, Ministry of Commerce, Trading Corporation of Pakistan, Ministry of Food and Agriculture, Government of the Punjab and Pakistan Sugar Mills Association. 5. Sardar Muhammad Latif Khan Khose, Attorney-General, appeared on 19-6-2009. He submitted that 2 lac tons of sugar was ordered to be imported, out of which 1,75,000 tons had reached in Pakistan while the remaining 25,000 tons was arriving in Pakistan within 1/2 days. The learned Attorney-General was asked to specify as to when the Federal Government came to know that there was shortage of sugar and what efforts were made to overcome the shortage, he could not clarify the position and undertook to submit detailed and transparent report in this regard. On 26- 8-2009 only Mrs. Shaista Sohail, Joint Secretary, Ministry of Industries and Production appeared and submitted written report on behalf of the Ministry of Industries and Production. In the report it has been written that the Prime Minister has given strict instructions for checking hoarders and profiteers of essential food items. In compliance Special Magistrate will be carrying out random checks. The Government has announced a Ramzan Package, wherein it is stated that the Government will provide subsidy on sugar in Ramzan Rs,980 Million and total subsidy allocated in the budget is Rs,5200 Million in respect of sugar. It is also mentioned in the report that the Minister of Industries and Production in a meeting with all stakeholders including the Provincial Departments and the Sugar Mills owners has made them agreed upon a ceiling of ex-mill rate of Rs,49.75 for Punjab and has been able to stave off the sugar spiraling prices from reaching Rs,60 per kg in open market. In order to ensure that the common man has access to sugar it will be made available at Utility Stores outlets at Rs,38 per kg during Ramzan. The report also provided some fact and figure about production consumption and prices of previous years and that of this year, which may occasionally be referred by us in latter paragraphs. 6. On behalf of Trading Corporation of Pakistan its Chairman Mr. Saeed Ahmad Khan appealed on 26-8-2009 on court's call. According to him the Federal Government had issued a direction on 3-2- 2009 to import 2 lac tons sugar and pursuant thereto first tender was issued in February, 2009 for 25,000 tons of sugar and the second tender was floated on 13-4-2009 to import 50,000 tons of sugar and third tender was issued for the import of 50,000 tons of sugar on 24-4-2009, when on 29-5-2009 a letter was received from the Ministry of Industries directing to suspend further import of sugar. According to him, the average landed cost of the sugar imported was now Rs,54 per kg. He further submitted that on 11-8-2009 it was decided that remaining 75,000 tons sugar be also imported. According to Mr. Saeed Ahmad Khan, the TCP provides sugar to Army and Utility Stores at the rate of Rs,34 per kg and the remaining amount is to be paid by the government as subsidy. It is submitted by the Chairman TCP that rise in price of sugar in open market is due to increase of rate of sugar in international market and also because of low production of the sugarcane. 7. Mr. Muhammad Hanif Khatana, Acting Advocate-General of Punjab had been appearing on behalf of the Government of Punjab. Report and parawise comments have also been submitted on behalf of the Punjab Government. Mr. Khatana admitted that there is hike of prices of sugar in open market whatever the reasons might be. We have asked him to state that what steps are being taken by the Government of Punjab to control the price. In reply he has submitted that before Ramzan on the direction of Federal Government hoarding of stocks were ceased from the mills and other places, but later on the Federal Government withdrew its direction. However, the Punjab Government to stop the increasing price of the sugar took certain remedial steps and ultimately
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led to fix Rs,45 per kg ex mill price of sugar across the board by the Federal Government. It is also submitted by the Acting Advocate-General that for the next season support price of sugarcanes has been fixed at Rs,100 per 40 kg vide Notification dated 7-4-2009. 8. The moist important party in the sugar crises are sugar mill owners, who are jointly represented by Pakistan Sugar Mills Association (hereinafter to be referred as PSMA). Today, we have heard Mr. Shahid Karim, Advocate, for PSMA. Some representatives of the Association have also attendd the court during the arguments. Mr. Shahid Kareem, Advocate, has submitted that supporting price of sugarcane was fixed Rs,80 per 40 kg before the season 2008-2009 started. According to him due to less cultivation of sugarcane crop the sugarcanes was purchased by the Mills at a higher prices and it went up to Rs,140 to Rs,150 per 40 kg. In support of his contention he has stated that the Government of Punjab while fixing price of sugar at the rate of Rs,45 per kg admitted that the Mills had paid Rs,140 to Rs,150 per 40 kg of sugarcane. The learned counsel for PSMA has also submitted that Ministry of Industries and Production (hereinafter referred to as MI&P) is responsible for the present sugar crisis because it had to maintain a Buffer Stock of 7 lac metric tons of sugar, which was to be floated in market in case of shortage or hoarding, but the MI&P did not maintain such stock. Mr. Shahid Kareem, Advocate, admitted that the Mills when started crushing of sugarcanes the ex-mill price of sugar was Rs,28 per kg. He, however, improved that this price was determined only for the purpose of imposition of sale tax. The learned counsel further admitted that TCP had been purchasing sugar from the mills at the rate of Rs,24 to 28 per kg up to March, 2009 and even in August, 2009 the TCP had lifted sugar from the Mills at the rate of Rs,33 per kg. The learned counsel stated before us that he would produce some documents and reports in support of his arguments that the Sugar Mills Management is not responsible for the hike of price and that cost of production of sugar is above Rs,45 per kg. However, he did not produce any document or reports of any kind. 10. (sic) We have given anxious consideration to the arguments of the learned counsel for parties and the report submitted by the departments. It is the State's responsibility to look after the A minimum food /reeds of its people at all the time. Food subsidies have never worked because of a defective delivery system. Such scheme adds to the hardship of the poor, who are made to stand in long queues for hours, often in scorching heat, only to return home empty handed because the delivery system is defective due to vested interests. The elite of a country is hardly familiar with the worries that the soaring sugar soaring prices over the last two months. It is of great concern that to provide the sugar at reasonable price, the government is issuing licenses for the area-wise purchase of sugarcane and loan facility is provided to Mills owners at low rates for payment of price of sugarcane to the farmers. Moreover, 50% subsidy is being given to the sugarcane growers on the fertilizer while section 144, Cr.P.C. Is imposed in the villages to restrain the farmers to make Gurh and Shakkar from their own product only to facilitate the Mill owners. As such the government has the right to fix the price of the sugar to the general public at reasonable rates, but having failed to perform its bounded duty coupled with head-line in daily Jang, Lahore dated 13-8-2009 to the effect that billions of rupees had been earned by the market players due to escalation in sugar price with the active connivance of the political dignitaries had constrained this court to initiate suo motu proceedings as it is within the domain of this court for issuance of direction to a person performing, within the territorial jurisdiction of the court, functions in connection with the affairs of the Federation, a Province or a local authority, to refrain from doing anything he is not permitted by law to do, or to do anything he is required by law to do. Even otherwise during the pendency of said suo motu proceedings, W.P. No,16096 of 2009 was filed by one Abdul Qaddus Mughal with the following prayer:--- "***the respondents may be held responsible for their illegal act of negligence, incompetence and to benefit a portion of society illegally and with ulterior motives. It is further prayed that the
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respondents may be directed to fix the price of sugar upto Rs,32 per Kg as per retail price, as available on 31-3-2009, when stocks of new production for the year 2009-2010 were available in the market. It is also requested that the arrangements between the respondent Ministry of Industries and Production with the sugar manufactures for fixation of price at Rs,49.75 may please be declared illegal, ultra vires and against the fundamental rights of the general public." ' Thereupon a direction was issued to the Federal Government as well as Government of Punjab to file report and .Parawise comments and a notice was also issued to Pakistan Sugar Mills Association through its Chairman respondent No,7. The report of Ministry of Industries and Production indicates that the production of sugarcanes in the season 2008-09 was 50 million tons, which produced 3.2 million tons sugar and last year stock was 1.1 million tons, meaning thereby the country had a stock of 4.3 million tons of sugar at the end of crushing season of this year. According to the report the sugar consumption in a year is 4.2 million tons. On the other hands it is submitted by MI&P that to cope with expected shortage TCP was allowed to import 200,000 tons refined sugar. During the arguments it has been factually admitted that there was no shortage of supply till the end of March, 2009 and the sugar was available in the open market at the rate of Rs,32 per kg. Thereafter rumors used to spread over that the sugar would not be available in open market and the less cultivation in this year also convinced the stockiest to hoard the sugar for the purpose of earning high profits. 11. We cannot pin point any other stockiest and the sugar mills owners, but have confined us only to ex-mill rate of the sugar. The Chairman TCP when appeared before us stated that hike of prices and shortage of sugar occasioned when India, who was also facing acute shortage of sugarcanes production, floated a tender in the international market for purchase of sugar in bulk. The tender appeared in newspapers and internet in February, 2009. According to him the hike of prices in Pakistan was result of increase of rate of sugar in the world market. It appears that the sugar mills owners were also witnessing the prices of sugar in the world market, who designed a plan to create shortage in Pakistan. They on the one hand abandoned the supply of sugar to the home market and to stock the sugar at mills and on the other hand they started efforts to avoid repayments of loans and advances obtained by them from the Banks for the sugar stock. That is why, when the State Bank of Pakistan called upon them to repay their loans and advances; they made requests to all corners of the Government to place pressure on the State Bank of Pakistan for deferring the payment of loans and advances till 31st October, 2009. It is a fact that PSMA had been making application to the State Bank and the MI&P for extension of payment schedule. The learned counsel for writ petitioner has referred to a letter written by Ministry of Industries and Production to the State Bank for this purpose. The information of the learned counsel for petitioner is based on newspaper items. Though we cannot rely upon news items especially when the MI&P is silent about issuance of such letter, but is a fact that the State Bank of Pakistan extended the period of repayment of loans and advances to the sugar mills owners. Due to such hoarding by the mills owners, shortage of sugar in the market occurred resulting in hike of prices. 12. Mr. Saeed Ahmad Khan, Chairman, TCP, admitted before us that initially in February, 2009 it was decided that 2,00,000 tons sugar would be imported but after importing 75,000 tons the import of remaining 1,25,000 tons sugar was cancelled in compliance with a letter dated 29-5-2009 issued by MI&P to TCP. Again the learned counsel for petitioner has placed on record newspaper clipping, wherein the representative of PSMA had been issuing statements to the effect that import of sugar might be stopped as they had much stock of sugar and on the other hand the consumption of sugar was being decreased. We particularly refer to the press statement of Mr. Muhammad Javed Malik, Additional Secretary MI&P published in daily Dawn dated 27 June, 2009 (Annex-A to the writ petition), which disclosed that the Ministry was agreed to stop further import of the sugar and, however, the matter would have been decided in the meeting. Of Food Advisory Board.
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13. The main stem of the case is that what should be ex-mill price of the sugar. The price of sugarcanes was fixed at the rate of Rs,80 per 40 kg before the start of crushing period. Mr. Shahid Kareem, Advocate for PSMA has alleged that the mills owners purchased the sugarcanes not on the said prices rather at exorbitant rate of Rs,140 to Rs,150 per 40 kg. To make us believe this he has submitted that the Government of Punjab has admitted that the mills owners were constrained to purchase sugarcanes at the rate of Rs,114 to Rs,120 per 40 kg and after deliberations with the sugar mills owner the ex-mill price of sugar was fixed at the rate of Rs,45 per kg. We do not agree with the stance of learned counsel that the mills owners had been purchasing the sugarcanes at the rate as claimed by him as at the same time the learned counsel explained that at the end of crushing period tile ex-mill rate of sugar was Rs,24 to Rs,28 per kg. Then how it was possible that after purchasing sugarcanes at the rate of Rs,140 to Rs,150 per 40 kg, the sugar mills owners would have agreed to sell the sugar at such price. It is also a fact that TCP had been purchasing sugar from mills owners till August, 2009 at the rate of Rs,28 to Rs,33 per kg. It has also been admitted before us that 70% of the raw material for sugar is sugarcanes. In addition to sugar many other valuable by- products are also obtained from the sugarcanes. Even electricity is obtained by burning the crushed sugarcane for the use of whole mills and in excess also. The contention of the learned counsel for PSMA that the cost of production of sugar was Rs,45 per kg could not be substantiated by him in any way. Even otherwise the following table and graph showing year-wise sugarcane support price Rs,40 Kg and Sugar average retail price Rs,Kg prepared by the Ministry of Industries and Production, Islamabad respondent No,2. Years Sugarcane support price Rs.10 KgSugar average retail price Rs/Kg 1997-1998Rs.35-36 18.75 1998-1999Rs.35-36 19.63 1999-2000Rs.35-36 22.85 2000-2001Rs.35-36 26.73 2001-2002Rs.42-43 22.00 2002-2003Rs.42-43 19.83 2003-2004Rs.40-41 19.26 2004-2005Rs.40-43 25.31 2005-2006Rs.45-60 33.07 2006-200760-67-65 30.60 2007-200860-67-65 28.56 2008-200980-81 45.00 does not commensurate with the price of Rs,45 fixed for the year 2008-2009. It has also been brought to our notice that following is the cost of sugar:-- Sugarcane 80% Fuel Energy 5% Administrative costs 10% Contingencies/Storage/Financial costs5% Factors variation Recovery rate purchase of sugar-cane Recovery rate 8 %-9 % Price of sugarcane Rs.110 per Maund Recovery sugarcane 3.6 Kg +11.1 rupees per Kg ' By-Product Molasses 5%, which is being used for making ethanol at the rate of Rs,2500-15,000 per ton, and is not being shown in the Accounts. The cost audit based on purchase price and
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expenditure involved is submitted by every Mill to SECP by Cost Auditors. The Selling Price of Sugar is equal to price of the Mill plus Excise Duty to be paid by purchases excluding the price of molasses, which is varied from Rs,2500 to Rs,15,000 per ton. Besides the above, there are following saving:--- (1) 10% deduction from growers (10% less recovery including Excise Tax); (2) Bagass (3) Energy (Steam/Electricity) ' As such the costs of price of the sugar per Kg of the Mills varied from Rs,28 to 33.06 this year. 14. It is argued that in this season the production of sugarcanes was low. According to the report of MI&P in the coming season 2009-10 the production of sugarcanes will be more decreased. It is submitted by Mr. Shahid Kareem, Advocate, for PSMA that the growers had abstained to grow sugarcanes due to the reason that the Government had provided much higher support price for other crops e.g. Wheat. We do not think that this was the only reason for low cultivation of sugarcane. What had been done with the sugarcanes growers in past is the main reason for low cultivation. In the season of harvesting of sugarcanes, the farmers were bound to park their tractor trolleys loaded with sugarcanes on roads at the gates of mills for many weeks and the mills administration had been buying sugarcanes even at a price low than fixed by the Government and complaints of underweight were everywhere. This harsh and alien attitude of the mills owners was on the one side and on the other hand the Government had been imposing section 144, Cr.P.C. For restraining the farmers from crushing their sugarcanes and making Gurh and Shakkar and number of farmers had been arrested under the said garb, whose crops were seized and the machinery of Government was always ready to pull all strings of the farmers to drag them into poverty and starvation. It was also noticed that on many occasions the farmers had to put their sugarcane crop before their cattle. More than half of our population is residing in rural areas, who had been using Gurh and Shakkar for sweetening their dishes since long. Till now they may adopt the…
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