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Official Citation: 2024 PLD 348
Court / Jurisdiction: Sindh High Court
Year of Decision: 2023
Decision Date: 2023-03-07
Parties: JDW Sugar Mills Limited & others, JK Sugar Mills Private Limited & another vs Federation of Pakistan & others
Ruling Summary: This decision was rendered by the Sindh High Court on 2023-03-07, officially reported as 2024 PLD 348. In this matter between JDW Sugar Mills Limited & others, JK Sugar Mills Private Limited & another and Federation of Pakistan & others, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as PLD 2024 Sindh 348
Court Name: Sindh High Court Judge(s): Muhammad Shafi Siddiqui Title:JDW Sugar Mills Limited & others, JK Sugar Mills Private Limited & another
vs Federation of Pakistan & others Case No.: Suit No.145 of 2023, Suit No.149 of 2023 Date of Judgment:2023-03-07 Reported As: 2023 SHC 106, PLD 2024 Sindh 348 Result: Application Allowed Judgment ORDER Muhammad Shafi Siddiqui, J.- Security Advisory Board (SAB), in consideration of national stocks of sugar, its domestic consumption and in thoughtfulness of issues that concern with the problems of sugar industry, recommended federal government their mind to export excess sugar. Such recommendations dated 03.01.2023 were based on the sugar stock of 2021-22, sugarcane production estimates for 2022-23 and sugar production estimates for 2022-23 and estimated/projected annual sugar consumption in the country, It seeks permission of the Chairman ECC for convening a meeting by adding the subject agenda. The concerned Ministry of National Food Security Et Research informed ECC accordingly of the above data as adjudged by SAB. The recommendations were placed before Economic Coordination Committee who made a decision thereon later ratified by the federal government. The stock disclosed to be in excess was 1,004,689 metric tons of sugar (surplus sugar). 2. Initially by a meeting held on 03.01.2023 it was resolved that 250,000 metric tons of sugar shall be exported and that includes previously approved quota of 100,000 metric ton. Realization of export proceeds was also framed as 60 days from the date of the opening of LC for export of sugar whereas the quota for export was to be determined on the basis of installed crushing capacity of sugarcane of the provinces. 3. Ministry of Commerce vide its Office Memorandum dated 18.01.2023 conveyed an amended view of the ECC on the export of sugar during 2022-23. Based on decision of ECC dated 11.01.2023 in which cabinet reconsidered earlier summary of 03.01.2023, as submitted, it was agreed by ministry via office memorandum and export of 250,000 metric ton of sugar was allowed inclusive of
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previously approved quantity of 100,000 metric ton on same conditions and has allocated quota for export of sugar to three provinces i.e. Punjab, Sindh and KPK having 61, 32 and 7 percent quota allocation respectively and is further required to be distributed through cane commissioner to the sugar mills. It was initially on first come first serve basis for Punjab and KPK whereas for Sindh it was through cane commissioner. This was a reviewed decision of the ECC and cabinet that claimed to have superseded the earlier decision of 03.01.2023 though summary was common. Revised decision of 11.01.2023 was considered by the Ministry of Commerce in their Office Memorandum of 18.01.2023 and ratified (with above changes) by Office Memorandum of 28.01.2023 of the Ministry of Commerce. The allocation of quota to provinces remained same in terms of its percentage whereas its further distributions through cane commissioner of the provinces were made identical for all provinces i.e. through cane commissioner. Based on the ECC's recommendation of 26.01.2023, Ministry of Commerce through Office Memorandum of 28.01.2023 approved the amendments of ECC's earlier decision in case No.12/02/23 dated 11.01.2023. The only amendment as could be seen is that sugar mill quota was ordered to be allocated through cane commissioner of the respective provinces and that the consignment to be shipped within 45 days of the allocation of the quota. 4. While the manner of distribution of provincial quota has remained same along with two of the provinces i.e. Punjab and KPK, however the formula/discretion exercised by the cane commissioner Sindh, in distributing quota to mills, was different from those of Punjab and KPK. The distribution through cane commissioner in Sindh was based on number of sugar mills to whom identical quota was distributed, notwithstanding the installed crushing capacity, amount of sugarcane crushed by an industry and the amount of sugar produced and rendered sugar as surplus, in terms of its percentage by the respective mill, whereas the cane commissioner of Punjab and KPK distributed it in terms of sugar mills capacity i.e. the amount of sugarcane crushed/sugar produced by the respective mills. Having 32 functional sugar mills in Sindh, the cane commissioner distributed 2500 metric ton to each sugar mill, which comes to 80,000 MT as received under a policy from federal government. 5. The federal government distributed quota, in terms of respective percentage out of excess/surplus sugar available for distribution as first trench; distribution is as under:- Of 250,000 surplus sugar 61%to Punjab = 152,500 MT 32%to Sindh = 80,000 MT 7%to KPK = 17,500 MT Total 250,000 MT
6. On these admitted facts, it is plaintiffs' case that the allocation of quota by cane commissioner Sindh to sugar mills, treating them alike, irrespective of their performance and contribution, which is main criteria when provinces were allocated, is arbitrary, discriminatory, illogical, irrational and
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does not demonstrate the application and implementation of federal policy in distributing the quota to the sugar mill owners. 7. Mr. Makhdoom Ali Khan, Mr. Khalid Jawed Khan and Mr. Ali Almani argued that following the matrix of distribution of quota to provinces on performance basis (since provinces were also distributed on the same strength per counsel) and that of cane commissioner Punjab and KPK, the mandate should have been followed while allocating the quota to respective sugar mills in Sindh also, in proportionate to the sugarcane crushed/sugar produced by a mill, which is correct rationale and sounds logical and more importantly carries the intent of federal policy, whereas actions of cane commissioner found violative of federal policy. It is claimed that federal government's policy is not designed for different treatment in different provinces and that also by a cane commissioner. 8. It is claimed that the allocation of quota by cane commissioner Sindh is obviously designed to unfairly and unlawfully benefit a group of mill owners having no significant contribution at all in the process of crushing of the sugarcane and the production of sugar and that they were given benefit at the expense of other mill owners being efficient and contributing to a large extent towards the national need. 9. Plaintiffs' counsel have attempted to demonstrate that the large sugar mills in the province of Sindh have produced sugar in the crushing season 2021-22 up to 200,000 metric ton and based on such production their allocation should have been more than 7,600 metric ton as against sugar mill having production of sugar in crushing season 2021-22 as 9040 metric tons who on the application of policy, if same federal formula is applied, would have got 316 metric ton but has ended up in getting 2500 metric ton by the blessings of cane Commissioner Sindh, which goes on to violate Article 3 of the Constitution as well, besides other. 10. The cane commissioner has put different classes of sugar mills in the same pool and/or has blessed dissimilar sugar mills in the similar way, and thus has caused discrimination which otherwise is not the spirit of federal export policy of sugar. It is submitted by the plaintiffs' counsel that there is no logic and rationale for this identical distribution to different classes of sugar mills contributing to the national need of sugar, besides being not in consonance with the spirit of the policy. It is argued that cane commissioner is only an instrument to pass an already adjudged quota through its office. 11. Mr. Abdul Sattar Pirzada, Mr. Ovais Ali Shah and Mr. Jaffer Raza have been very vocal in addressing that the Court cannot interfere with the policy matters of the federal government and that it cannot sit in appeal with regard to a policy matter and cannot substitute a policy decision which the Court flavours inappropriate or illogical, to a more appropriate and logical. 12. The arguments, as raised by Mr. Abdul Sattar Pirzada and Mr. Ovais Ali Shah are that any policy adopted by one province (Punjab and KPK) does not provide any basis for determination of question of discrimination; that an attempt has been made to deprive the sugar mills of their vested rights created in pursuance of concluded contracts executed by them in respect of the export of sugar; none of the members of PSMA have objected to the export of sugar on the allocation of quota, as decided by the cane commissioner; that plaintiffs have not raised any objection either before PSMA or cane commissioner and thus have acted contrary to the collective will of PSMA Sindh Zone; the cane commissioner has formulated a policy and made a decision in which the export for sugar has been allocated on a lawful, just, fair and reasonable basis and in a non-discriminatory, unbiased, equitable, consistent and uniform manner. 13. With reference to word "through" used for cane commissioner it is argued that the submission of the plaintiffs is misconceived. Firstly, if the policy is viewed from the perspective of the cane commissioner, the decision/policy does not provide any direction or guidance as to how the quota, provided to the province, is to be distributed. The decision/policy in no manner conveys that the
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table containing the distribution percentage (for provinces) is in any manner the method/criteria of distribution of quota within the provinces. The silence and absence of clear direction makes it clear that the cane commissioner was empowered to make its own decision for intra-provincial distribution of quota amongst sugar mills. Secondly, the minutes of 03.01.2023 also used the same word i.e. "through" with respect to PSMA. Whereas the minutes while using the same terms "through" clearly indicate grant of complete discretion to the PSMA. As such, the submission that the word "through" in any way restricts the discretion of the cane commissioner is incorrect. 14. With regard to applicability of Article 3 of the Constitution, in order to prove plaintiffs' point that they have greater right to the export quota, it is misconceived. Mr. Pirzada insisted that this principle in the Constitution of Islamic Republic of Pakistan, 1973 in fact imported from the constitution of the USSR which tried to encapsulate the socialist principles of Karl Marx, which demands greater restraint for the rich of the society in exploiting the resources of the society at the expense of the less fortunate, which he claimed to be an unbalanced approach. 15. On the grant of injunction, learned counsel for defendants have argued that the policies of the ECC, cabinet and/or the cane commissioner cannot be filled in by this Court as the Court is deciding injunction application. Even if it were to do so, such observation would only be tentative without any binding effect. CANE COMMISSIONER'S/DEFENDANT NO.8'S RESPONSE 16. The cane commissioner has placed his case on the footing that it has equally distributed the quota to all kind of mills irrespective of their capacity, after completing the exercise as required and on the suggestions of PSMA and on the basis of fairness, which was agreed to and accepted by all; the decision was made in public interest in order to ensure timely payments to the growers across the province of Sindh, which was affected by heavy rain/flood. PSMA/DEFENDANT NO.10'S RESPONSE: 17. Defendant No.10/PSMA has argued that the decision of ECC of the federal cabinet dated 03.01.2023 was on the basis of installed crushing capacity as opposed to sugarcane crushed by each sugar mill, which consideration was superseded; filing of the suits was inspired and influenced by decision of cane commissioner Punjab which is also evident from a bare perusal of the prayer clauses of the suit and hence are after thought; cane commissioner's order is passed in public interest to benefit the farmers of the province of Sindh and hence defendants' sugar mills have not raised any objection to such distribution of quota; plaintiffs fall under the command of a single group, which is seeking to avail unjustifiable interests through instant suits; all sugar mills are part of same class and there is nothing to secerns between plaintiffs and defendants sugar mills as all are in the same business and members of defendant No.10. Thus, per defendant No.10's response, identical distribution cannot be conceived to be a discrimination; the decision of 11.01.2023 is the same as that of 03.01.2023 except condition No.(ii) which has been replaced with the new one and the novated version does not speak of allocation of quota for export of sugar on the basis of "installed crushing capacity"; there is no reason given for the percentage of provincial distribution to respective provinces and at this interlocutory stage Court cannot question as to the terms of such policy (unless clearly framed as arbitrary) and if it were to question, it would be an interference with the policy. 18. In view of the respective arguments and reasoning placed before this Court by the counsels, there are a few questions which are required to be addressed in order to take the controversy in hand to its logical end, under the circumstance of the case. These material questions are as under: I) Whether the cane commissioner Sindh has rightly interpreted, appreciated and implemented the policy of the federal government for the distribution of export quota of 80,000 MT of sugar allocated to the provinces by the federation ?
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II) Whether, with reference to the subject of export, which is under federal domain, could it be presumed that without deciding as to the formula of allocation of sugar to the respective sugar mills, the cane commissioner is empowered to distribute and allocate sugar as per his policy/discretion ? III) Whether it was federal government's intent to delegate powers to cane commissioner alone to apply his wisdom, frame a policy of his own for distribution export quota and distribute it as he deems fit and proper ? IV) What could possibly be done by this Court under the circumstances of the case being time bound? 19. Heard counsel and perused record. 20. Although a brief history has been discussed above, which facts have not been and could not be disputed by the counsels except cane commissioner's role in distributing quota to mills, I would give a gist in the shape of sequential events, which are material for consideration, as under:- 03.01.2023 * The ECC of the Federal Cabinet made the following decisions * Allowed export of 250,000 MT of sugar * Quota of export shall be determined on the basis of installed crushing capacity of sugarcane of provinces. 11.02.2023 * The decision dated 03.01.2023 was superseded by the ECC through the decision dated 11.01.2023, wherein it was decided that:- - percentage of quota for export of sugar should be distributed at 61%, 32% and 7% among Punjab, Sindh and KPK respectively. - Manner of distribution of quota would be allocated for Punjab and KPK on first come first serve basis and for Sindh through the cane commissioner of the province. 17.01.2023 * Federal Cabinet ratified the decision of the ECC dated 11.01.2023 18.01.2023 * Ministry of the Commerce issued the Office Memorandum in pursuance of the decision of the ECC dated 11.01.2023 20.01.2023 * State Bank issued EPD Circular on the basis of the decision of the ECC dated 11.01.2023 25.01.2023 * Cane commissioner, Sindh decided to allocate equal share to the sugar mills situated in the Province of Sindh 27.01.2023 * The federal cabinet ratified the decision of the ECC dated 26.01.2023, whereby the manner in respect of the allocation of quota for the provinces of Punjab and KPK was amended from the first come first serve basis to through cane commissioner of the provinces 28.01.2023 * The Office Memorandum was issued in pursuance of the decision dated 26.01.2023 30.01.2023 The EPD Circular was issued by the State Bank in pursuance of the decision of the ECC dated 26.01.2023 30.01.2023 The cane commissioner, Punjab issued the order in respect of allocation of quota on the basis of data of cane crushed provided by the Punjab Sugar Mills Association 31.01.2023 The cane commissioner, KPK issued the order in respect of allocation of quota on the basis of data of cane crushed 21. The pleadings and the arguments of the plaintiffs' counsel would suggest that they have not thrown a challenge to the policy of the federal government rather seek its interpretation and correct application, as framed by federal government. The manner of allocation of quota of sugar for export to three provinces, as reflected in ECC's decision dated 11.01.2023 and onwards and as ratified by the cabinet on 28.01.2023, (which was designed to be implemented) by an Office Memorandum of concerned ministry dated 28.01.2023 has been left semitransparent and the federal counsel have not attempted to assist this Court as to the basis of provincial distribution on such percentage but it would not be difficult to ascertain since the summary remained the same for such distribution.
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22. Mysteriously, neither the Assistant Attorney General Ms. Mehreen Ebrahim who was appearing in the matter since they were served by order of 01.02.2023 nor the Additional Attorney General Malik Sadaqat Khan who appeared along with Athar Hussain Khokhar, Director General, Ministry of Commerce, assisted at all to complete the puzzle. They were unable to demonstrate as to what should be the basis of allocation of quota for export to sugar mills and should it not be on the same formula as applied while allocating quota to provinces respectively. Strangely, even they have stated that they have no idea at all about sugar mill distribution however provincial distribution as per data of sugarcane crushed and sugar produced not denied. In substance federal government is not denying provincial quota on the basis of performance of sugarcane crushed and sugar produced by a province via sugar mills performance but claimed to have no idea about sugar mill distribution. It is perhaps the instructions given by the Ministry to remain inexpressive as even no counter-affidavit to the applications in hand was filed despite seven dates of hearing after notice. Things were drastically changed in the first two weeks of January 2023 and perhaps they were instructed accordingly. 23. Export of any commodity is a federal constitutional mandate and the posed questions have to be seen in this frame as this constitutional mandate cannot be passed on except with clear frame of policy and intent, if could be seen. Keeping this phenomena in mind, I was and am of the view that the "formula" that was applicable while distributing quota to the provinces should form a mirror image while dealing with distribution of quota to the respective sugar mills and perhaps for this reason the wisdom of the federal government in allocating quota on the basis of a formula was kept away by federal counsels. Certainly, when the policy was framed, federal government never wanted a cane commissioner to frame a policy for them (federal government) for allocating export quota to mills after applying their wisdom. 24. Minutes of 03.01.2023 undisputedly are superseded by the decision of Economic Coordination Committee (ECC dated 11.01.2023. Nevertheless, it was superseded on the basis of same summary as of 03.01.2023 as later it was only "reconsidered". The summary was presented by Ministry of National Food Security Et Research regarding export of sugar during 2022-23. As pointed out by Mr. Ovais Ali Shah the only material thing that escaped when 11.01.2023 decision came out as being an overlapping decision is the basis of provincial distribution i.e. installed crushing capacity of sugarcane of the provinces but the data of provincial distribution remained as it is in the second column (as per Mr. Ovais this does not form part of changes occurred). It was then only left to the extent of first-come-first serve basis for two provinces and through cane commissioner for Sindh province. 25. Mr. Ovais Shah has attempted many ways and applied different formulas, such as population of the provinces, number of sugar mills in Punjab, Sindh and KPK etc. (but all in vain, as he admitted), (except sugarcane crushed and sugar produced in the respective provinces, which exercise was done by Mr. Khalid Jawed Khan and statistics applied exactly). Mr. Ovais Ali Shah fairly conceded that his calculation is nowhere near the given percentage in column 2 of the concluded Office Memorandum of 28.01.2023. This percentage is being viewed since 11.01.2023 when ECC made a decision and more importantly on the same summary data. It cannot be seen as illusory (provincial allocation formula), when the federal government framed this policy and allocated quota. It cannot be conceived that the federal government framed a policy for allocation of quota to three provinces without any rationale, logic and reasoning. It cannot be conceived that in a matter of export,13 the federal government would leave the issue of distribution of quota to sugar mills indecisive rather would leave it to cane commissioner who would conceive and frame his own policy and ideas to distribute the quota only as a cane commissioner. One thing is for certain that cane commissioner has to follow the same mandate as applied when provinces were distributed quota. Now, if identical distribution is a justification according to defendants then provincial
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quota/distribution would fail on the logic. According to cane commissioner's logic, if approved, 250,000 MT sugar should have been distributed equally to all sugar mills of Pakistan as per cane commissioner's formula. Functional sugar mills of three provinces:
Punjab =42 Sindh =32 KPK =5 Functional sugar mills of Pakistan=79
26, Now if all mills are to be distributed identically then the surplus sugar of 250,000 MT should have been divided into 79 parts i.e. 250,000 / 79 = 3164 i.e. each mill should have got 3165 and Sindh alone would have ended up in getting 3164 x 32 = 101,215 MT instead of 80,000 MT. So by no means this formula was correctly applied by cane commissioner when federal government itself has not applied it. Even population based distribution failed, as Mr. Ovais admitted. 27. Mr. Khalid Jawed Khan, learned counsel for plaintiffs, though has not addressed this point at the time when he commenced his arguments but in rebuttal he attempted to place on record a publication (annual report of PSMA) of the Pakistan Sugar Mills Association (PSMA) and according to him the exact formula that could be applicable and rightly so is the cane crushed by the respective sugar mills, as reflected in the annual report of PSMA and this has worked out to be exactly as reflected 14 in column 2 of the Office Memorandum dated 28.01.2023 i.e. 61, 32 and 7 percent of the available/provided stock of sugar to the three provinces respectively, as referred above. The fact of above calculation alone is not denied by Mr. Pirzada and Mr. Ovais Ali Shah, however, the only response to this was that it was not provided in the plaint, therefore, such application of formula would be an extraneous consideration and even if it is so, it should not be made basis of distribution by cane commissioner. He added that this would amount to inserting new terms in the policy of the federal government even if cane commissioner is bound accordingly. He insisted that cane commissioner had to evolve its own formula for further distribution, even if stats for provincial distribution is approved as figured out by Mr. Khalid Jawed Khan. I have already responded to this defence above that in my view the formula applied for provincial distribution should be followed by cane commissioner as he does not carry a constitutional mandate to frame a policy for export, nor such task was assigned to cane commissioner in the policy. 28. The argument thus has force when it is said that the cane commissioner in Punjab and KPK followed the spirit of federal policy i.e. performance-based criteria as applied by the federal government in allocating the quota to three provinces. The cane commissioner in Sindh applied his own logic, conceived his own idea and applied his own policy; it cannot be said that both of them were right in implementing and interpreting policy; one has to yield its way for the other not only as being illogical and incorrect but also being against federal policy and in such confused state of affairs Court has to strike a balance to find out such logic and rationale to streamline the policy as
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framed by the federal government but has left it vague for the interpretation of this Court. Clarifying the obscure and revealing…
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