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Official Citation: 2017 PLD 848
Court / Jurisdiction: Lahore High Court
Year of Decision: 2017
Decision Date: 2017-09-11
Parties: Messrs CHAUDHRY SUGAR MILLS LTD vs PROVINCE OF PUNJAB and others
This judicial decision was delivered by the Lahore High Court on 2017-09-11. The matter involves proceedings between Messrs CHAUDHRY SUGAR MILLS LTD and PROVINCE OF PUNJAB and others, officially reported as 2017 PLD 848. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.
Case cited as PLD 2017 Lahore 848
Court Name: Lahore High Court Judge(s): Shujaat Ali Khan, Syed Mansoor Ali Shah Title: Messrs CHAUDHRY SUGAR MILLS LTD vs PROVINCE OF PUNJAB and others Case No.: I.C.A. No,1456 of 2016 Date of Judgment:2017-09-11 Reported As: 2017 LHC 3082, PLD 2017 Lahore 848 Result: Order accordingly
JUDGMENT
JUDGMENT "The essence of law lies in the spirit, not in its letter, for the letter is significant only as being the external manifestation of the intention that underlies it" - Salmond SYED MANSOOR ALI SHAH, C.J.-- Statutory Backdrop. The Punjab Industries (Control on Establishment and Enlargement) Ordinance, 1963 (W.P. Ord. IV of 1963) ("Ordinance") provides for organized and planned growth of industries in the Province. The Ordinance requires prior permission of the Government to set up an industrial undertaking in any area in Punjab under section 3. Section 11 of the Ordinance provides that the Government can exempt any industrial undertaking from the provisions of the Ordinance. Over the years, various notifications have been issued, primarily under section 11, exempting the provisions of the Ordinance for an industrial undertaking, being set up in different areas in Punjab, in addition to, imposing certain restrictions and conditions. In respect of sugar mills, a series of notifications, spanning over years from 1986 to 2015 , have been issued under the Ordinance. 2. The two sets of cases involved in the present litigation relate to two different notifications issued by Government of Punjab under the Ordinance. The first set of cases stems from Notification dated 06.12.2006 (referred to as the "Ban Notification') whereby a <u> complete </u>ban on establishment and enlargement of sugar mills was imposed in Punjab. These cases consist of writ petitions filed by various sugar mills in Punjab in the year 2015, against the relocation/shifting of existing sugar mills from Central Punjab to the South of Punjab. The prime contention of the petitioners in these cases is that the shifting/relocation of the sugar mills is illegal in the presence1 2 3 4 5
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of the Ban Notification. They pray that the relocation/shifting be declared to be illegal and the Government be directed to proceed against the said sugar mills. 3. The second set of cases consists of appeals (ICAs) which are directed against the judgment passed by learned single judge of this Court dated 10.10.2016 reported as JDW Sugar Mills Ltd. and others v. Province of Punjab and others PLD 2017 Lah. 66. In these cases Notification dated 04.12.2015 (Relocation Notification") has been impugned whereby relocation of existing mills has been permitted subject to certain conditions. It is contended that the Relocation Notification is ultra vires the Ordinance. Learned Single Judge of this Court accepted the writ petitions through the impugned judgment and held that the Relocation Notification is ultra vires the Ordinance. 4. The existing sugar mills that have relocated and established themselves in the South of Punjab from Central Punjab and are the subject matter of these writ petitions and appeals are: M/s. Haseeb Waqas Sugar Mills Limited (IIWSM), Ittefaq Sugar Mills Limited (ISML) and Chaudhry Sugar Mills Limited (CSML) (collectively referred to as the "Three Sugar Mills"). The geographical shifting and establishment of these sugar mills has been in the following manner: Sugar MillEarlier established at DistrictRelocated to District HWSM Nankana Sahib Muzaffargarh ISML Sahiwal Bahawalpur CSML Toba Tek Singh Rahim Yar Khan Arguments: 5. Learned counsel representing the appellants (the "Three Sugar Mills") submit that the Ban Notification does not cover relocation of an existing sugar mill, therefore, relocation of the Three Sugar Mills is not illegal. They add that as relocation is not the subject matter of the Ordinance, therefore, no permission was required to be sought from the Government under section 3 of the Ordinance. It is submitted that during the shifting of the mills, Relocation Notification was issued, permitting the appellants to re-locate their mills within the Province of Punjab. The appellants, however, could not seek permission under the Relocation Notification because the same was suspended by the learned Single Judge on 04.01.2016. They submit that they can still seek ex-post facto permission under the Relocation Notification and regularize the establishment of the Three Sugar Mills. 6. Supporting the legality of the Relocation Notification they submit that as the Relocation Notification advances the purposes of the Ordinance, it can be considered as Rules under section 13 of the Ordinance instead of an exemption under section 11 of the Ordinance and be saved. 7. Khawaja Haris Ahmad, Advocate, representing the Government of the Punjab, submitted that setting up of the aforesaid Three Sugar Mills was without seeking permission under the Ordinance or under the Relocation Notification and frankly concedes that he does not support the contentions of the appellants. He, however, underlines that the Relocation Notification framed by the Government was a bona fide exercise; as it catered to the economic exigencies of the time and was geared towards alleviating the faltering financial condition of the sugar mills in Central Punjab. He submitted that a detailed exercise took place and reports were sought from all the relevant Departments and after a thorough environmental and ecological survey of the area, the Relocation Notification was framed. He submits that Relocation Notification confirms that there shall remain a ban on the setting up of new sugar mills but only permits relocation of existing sugar mills and that too after complying with certain very strict conditions. He, therefore, submits that there is no mala fide on the part of the Government in promulgating the Relocation Notification. 8. Submitting further, he clarifies that while the position of the Government of the Punjab before the august Supreme Court of Pakistan in the case titled Tariq Khan Mazari and 3 others v. Government of Punjab through Secretary Industries and 3 others (PLD 2016 SC 778) was that the ban on the new6
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sugar mills should be up-held, it had no bearing on the Relocation Notification as it did not deal with establishment of new sugar mills but was confined to the relocation of the existing sugar mills. He submits that Relocation Notification is not inconsistent with the ban but creates an exception in the public interest for the ailing sugar mills of Central Punjab facing acute economic and operational problems. It is for this reason that the Government of the Punjab, while supporting the ban on establishment of new sugar mills did not discuss or raise the concept of relocation before the august Supreme Court of Pakistan in the cited case. 9. In the end, he reiterated that he does not support the setting up of the Three Sugar Mills mentioned above and states that they should have applied for permission under the Relocation Notification. His main emphasis is that the Relocation Notification is not tainted with mala fide but is rather a bona fide effort of the Government to address the acute economic, financial and operational problems faced by the sugar mills located in Central Punjab. 10.Mr. Aitzaz Ahsan, learned counsel for the respondent company, in the ICAs, submits that in spite of the ban imposed by the Government, the Three Sugar Mills started setting up their mills in the South of Punjab. He submits that in spite of repeated stay orders/injunctions granted by this Court the sugar mills, without any remorse, continued to establish their mills. He prays that the establishment of the Three Sugar Mills be declared illegal and the mills so established by offending and violating the Court orders be directed to be demolished and the position at the time of issuance of first stay order be restored. 11. The second limb of the arguments of learned counsel for the respondents companies was that during the process of setting up of the Three Sugar Mills, the Government promulgated Relocation Notification, which was in violation of the Ordinance, as the Ordinance did not provide for relocation, as a concept, separate from that of an establishment of a sugar mill in an area. It is submitted that establishment of a sugar mill after relocation or afresh has no distinction under the Ordinance and both require prior permission of the Government under the Ordinance. They submitted that Relocation Notification offends the provisions of the Ordinance. It is also submitted that the sugar mills established by the appellants are in violation of section 12 of The Punjab Environmental Protection Act, 1997 ("PEPA") (amended up-to date), as the Three Sugar Mills, never had an Environmental Impact Assessment submitted or approved under PEPA. 12.Lastly, submits that the Relocation Notification itself is tainted with mala fide as it was conceived to give legal cover to the Three Sugar Mills, which belong to the ruling Sharif family and their cousins. OPINION OF THE COURT Impugned judgment (PLD 2017 Lahore 68). 13. Learned Single Judge in impugned judgment dated 10.10.2016 has held that the Three Sugar Mills have been set up without obtaining permission under the Ordinance and in violation of explicit Court orders restraining establishment of sugar mills in the South of Punjab. It has also been held that Relocation Notification is in violation of the scheme of the Ordinance, as there is no difference between relocation and establishment of a new sugar mill in the area. 14. Learned Single Judge has also held that in the presence of the ban imposed under the Ban Notification, Relocation Notification was not justified, specially when the said ban had been upheld by the august Supreme Court of Pakistan in Tariq Khan Mazari and 3 others v. Government of Punjab through Secretary Industries and 3 others (PLD 2016 SC 778). Questions of law 15. This judgment, while deciding the above two sets of cases, examines the following questions: A. Whether the shifting/relocation of the Three Sugar Mills did not require permission under the Ordinance and fell outside the purview of the ban on establishing new sugar mills under the Ban Notification ?
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B. Whether the setting up of the sugar mills was in violation of the law and restraining orders passed by the Court, if so, its effect ? C. Whether Relocation Notification dated 04.12.2015 is ultra vires the Ordinance and smacks of malice ? D. Whether the establishment of the Three Sugar Mills is in violation of the Punjab Environmental Protection Act, 1997 ? Legal Framework. 16. The preamble to the Ordinance provides for organized and planned growth of industries in Punjab. This organization and planning is actualized through section 3 of the Ordinance, which provides for seeking prior permission of the Government before establishing or enlarging an industrial undertaking. The permission is to be granted after meeting the public interest requirements listed in section 3 of the Ordinance, which is reproduced hereunder for convenience:- Section 3 Restrictions on establishment of industrial undertakings 3. No person shall establish or cause to be established any industrial undertaking or enlarge or cause to be enlarged any existing industrial undertaking except with the previous permission in writing of Government: Provided that the application of any person for the grant of such permission shall not be rejected - (a) without giving such person an opportunity of showing cause against it; or (b) unless the Government is satisfied, on the basis of information available to it and after making such inquiry as it may deem fit, that the grant of permission to such person will be prejudicial to the national interest, or injurious to the health of or a source of nuisance for, the residents of the local area in which the industrial undertaking is proposed to be set up or, as the case may be, the industrial undertaking which is proposed to be enlarged is situated." 17. Information regarding any industrial undertaking, to meet the requirement of section 3, can be procured by the Government, from any person under section 5 of the Ordinance which states:, Section 5. power of obtaining information and of entry.-- 5. For the purpose of giving effect to the provisions of this Ordinance, Government or the Director may-- (a)by order in writing require any person to furnish such information in his possession relating to any industrial undertaking as may be specified in the order; (b)enter or authorize any person to enter an industrial undertaking and take such action as may be necessary." 18. The mandatory and obligatory requirement of section 3, is underlined by sections 4 and 8, which provide for sanctions and penalty in case section 3 is not complied with. "Section 4. Check on unauthorized establishment or enlargement of industrial undertaking.- Where the establishment of an existing industrial undertaking is likely to be commenced or has been commenced or has been completed in contravention of the provisions of this Ordinance, Government or the Director, after giving the person responsible therefor an opportunity of being heard, may by order require him - (a) to refrain from such establishment or enlargement; or (b) to stop further construction and to remove the unauthorized undertaking or part thereof and the person concerned shall comply with the order within such period as may be specified. Section 8. Penalty for contravention.--Whoever contravenes any of the provisions of this Ordinance or the rules, or fails to comply with any order made thereunder, or willfully furnishes incomplete or false information required thereunder, or obstructs any person in the discharge of his duties or functions thereunder, shall be punished with imprisonment for a term which may extend to one year, or with fine, or with both." 19. Section 11 provides that an industrial undertaking or class of industrial undertakings can be
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exempted from all or any of the provisions of the Ordinance. "Section 11. Exemption. - Government may, by notification in the official Gazette, exempt any industrial undertaking or class of industrial undertakings from all or any of the provisions of this Ordinance or the rules." 20. Perusal of the above key provisions of the Ordinance reveals that the purpose of the Ordinance is to carryout organized and planned growth of industries in Punjab. For this purpose section 3 provides that any industrial undertaking desirous of establishing or enlarging any existing industrial undertaking, has to seek permission from the Government. Industrial undertaking has been defined as an undertaking pertaining to an industry carried out in a local area. Under section 3, Government has to be satisfied on the basis of the information available to it and after making such inquiry as it may deem fit that the industrial undertaking being established or enlarged is not: i. Prejudicial to National Interest; or ii. Injurious to health of the residents of the local area in which the industrial undertaking is proposed to be set up/enlarged; or iii. A source of nuisance for the residents of the local area in which the industrial undertaking is proposed to be set up/enlarged. 21. The Ordinance requires the Government to thoroughly probe into these matters (section 5 also empowers the Government to collect information regarding the industrial undertaking) and only upon the satisfaction of the Government that the above factors are not attracted, can permission be granted for establishing or enlarging an industrial undertaking in a local area. Section 4 provides that in case the industrial undertaking is established in violation of the Ordinance, the said construction can be removed and demolished while penalties can be awarded under section 8. Section 11 empowers the Government to exempt any industrial undertaking or class of industrial undertakings from all or any of the provisions of this Ordinance or the Rules. 22. Notifications issued, over the years, under sections 3 or 11 (or both) of the Ordinance, starting in the year 1986, not only allow exemption from the Ordinance but also impose restrictions and conditions on the industrial undertakings. The relevant notifications for the purposes of this case are; Ban Notification dated 6.12.2006 and the Relocation Notification dated 04.12.2015 issued by the Industries Department, Government of the Punjab, which provide as under: Ban Notification "No new sugar mill shall be set up and no enlargement in capacity of the existing Sugar Mills is allowed in the Province." Relocation Notification GOVERNMENT OF THE PUNJAB INDUSTRIES, COMMERCE AND INVESTMENT DEPARTMENT Dated Lahore, the 4th December, 2015 NOTIFICATION No,AEA-III 3-5/2011 (Vol-VIII).- In exercise of the powers conferred under Section 11 of the Punjab Industries (Control on Establishment and Enlargement) Ordinance, 1963 (IV of 1963) and subject to the following exceptions and conditions, Governor of the Punjab is pleased to exempt all industries throughout Province of the Punjab from the provisions of Section 3 of the Ordinance. Exceptions and Conditions 1. An industrial unit mentioned in First Schedule or an industrial unit exceeding a total cost of Rs,100.00 million (rupees one hundred million) shall not be set up within 16 Kms of the international border. 2. A District Government may declare "negative area" for industry. Such negative area shall be determined by a District Committee after consultation with all stake-holders in light of general policy guidelines to be issued by the Industries, Commerce and Investment Department and7
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exemptions allowed under Second Schedule. 3. An industrial unit mentioned in Third Schedule shall not be set up anywhere in the Punjab without prior approval of the Government. 4. An industrial unit shall not be set up in the areas affected by flood flowing transversely in the strip of 1.6 Km of either side across the Grand Trunk Road from Shandara Town to Muridke Town, without prior permission in writing of the Government. 5. No new sugar mill shall be set up in the Province, and the capacity of an existing sugar mill shall not be enlarged. 6. Subject to clause 5 and the conditions, criteria and guidelines mentioned in clause 8, the Government,-on the recommendations of the appropriate Committee mentioned in clause 10, may, in public interest, allow the relocation of a functional sugar mill. 7. A sugar mill, which fulfills the requisite criteria and conditions may submit an application, along with the requisite documents and the proof of deposit of the processing fee, for the relocation of the sugar mill or merger of the sugar mills to the Government in the Industries, Commerce and Investment Department. 8. The appropriate Committee may recommend the relocation of a functional sugar mill, if the following conditions and criteria are fulfilled by the applicant-mill: (a) The applicant-mill has cleared all the outstanding amount due to the Government and the farmers; and, for the purpose, a certificate to this effect issued by the Cane Commissioner, Punjab shall be annexed with the application. (b) The applicant-mill has continuously been in operation for the last five years immediately before the submission of application. (c) The application for the purpose of relocation shall: (i) Contain complete details and justification for the proposed relocation; and (ii) be accompanied by the requisite documents, including environmental, ecological and spatial planning feasibility and NOCs from Government departments or the agencies concerned, and the original receipt of the deposit of non-refundable process fee of rupees five hundred thousand. (d) The applicant-mill, on relocation, shall not in any manner whatsoever, enlarge the crushing capacity of the sugar mill. (e) The ownership of a relocated mill shall not be changed or altered for at least three years from the date the mill starts functioning at relocated site. 9. The Government, on the recommendations of the appropriate committee, may allow the merger of two or more mills which will be subject to surrendering of idle capacity of the sugar mills applying for merger. 10. The following Committees shall be the appropriate committees for purposes of this Notification:- (a) Intra-district Committee: (i) Divisional Commissioner; Convener (ii) Administrator/DCO; Member (iii) District Officer Agriculture; Member (iv) District Officer IPW&M; Member (v) Executive Engineer Irrigation; andMember (vi) District Officer Environment.Member (b) Inter-district Committee: (i) Secretary to Government of IC&I Department Convener (ii) Secretary to Government Agriculture Department Member
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(iii) Secretary to Government Law and PA Department Member (iv) Secretary to Government Food Department Member (v) Secretary to Government environment Protection DepartmentMember (vi) Member, Board of Revenue, Punjab Member (vii)Member Planning and Development Board Member (viii)Administrators or DCOs of the district concerned and Member (ix) Any co-opted member. Member 11. The Government may, after recording reasons, refuse the establishment or enlargement of an industrial unit if it is in derogation of public interest, ecology or environment or contravenes any law or rules for the time being in force. 12. The Government may, for reasons to be recorded, relax any of the provisions of this Notification in case of any class of units or industries. 13. Government of the Punjab, Industries, Mines and Minerals Department Notification No,AEA-III 3.9/91 dated 17th September 2002 is hereby repealed. First Schedule LIST OF STRATEGIC INDUSTRIES (see clause 1) Second Schedule LIST. OF SERVICE INDUSTRIES (see clause 2) Third Schedule LIST OF INDUSTRIES WHICH CANNO T BE SET UP WITHOUT PRIOR APPROVAL OF THE GOVERNMENT (see clause 3) SECRETARY GOVERNMENT OF THE PUNJAB " INDUSTRIES, COMMERCE AND INVESTMENT DEPARTMENT 23.With this legal framework, we address the questions of law before us: A. Whether the shifting/relocation of the Three Sugar Mills did not require permission under the Ordinance and fell outside the purview of the ban on establishing new sugar mills under the Ban Notification ? Schedule A consists of petitions filed in the year 2015 (prior to the Relocation Notification) whereby the petitioner sugar mills prayed that the government functionaries be directed to restrain the appellant (respondent) sugar mills from shifting/relocating to various areas in the South of Punjab for the reason that these mills had not obtained permission as visualized under section 3 of the Ordinance, besides shifting/relocating cannot be carried out in the presence of the ban imposed on the establishment of new sugar mills in Punjab under the Ban Notification. 24. The respondents/appellants sugar mills in these writ petitions have argued that under section 3 of the Ordinance, permission is only required for establishing a new sugar mill or for the enlargement of the existing sugar mill and similarly the ban under the Ban Notification, is regarding setting up of new sugar mills and/or enlargement of the existing sugar mills, both these requirements don't apply to their case as they have shifted/relocated their existing sugar mills from one place to another within the Province.
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Scope and Purpose of the Ordinance 25. Preamble to the Ordinance provides for organized and planned growth of industries in Punjab. Organized and planned growth of industries in Punjab is unquestionably in the public interest and is effectively regulated through section 3. The mechanism provided under section 3 is that no person can establish or cause to establish (i,e,, take steps to establish) an industrial undertaking, unless the following conditions, fashioned to protect public interest; are fully met to the satisfaction of the Government. The establishment or enlargement of an industrial undertaking must not be: i. Prejudicial to National Interest; or ii. Injurious to the health of the residents of the local area, and iii. A source of nuisance for the residents of the local area. 26. The above conditions date back to the year 1963 and in these last 54 years, the public safeguards provided in the above three conditions, have found new expression. National Interest today would mean that the industrial undertaking, being established, will promote economic, trade, fiscal, environmental, climate change, irrigation or agricultural policies of the Federal and Provincial Governments. Health and Nuisance, in today's complex, over-populated and technologically advanced society, are guarded with better or efficient: urban planning, sanitation, drainage, sewerage, solid waste disposal, water supply system, public transport, traffic management, public safety, nutrition, arboriculture, ecology and environment, etc.…
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