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Petitioner: JDW Sugar Mills Ltd etc. VS Respondent: Province of Punjab etc.
Court Name: Lahore High Court Judge(s): Ayesha A. Malik Title: JDW Sugar Mills Ltd etc. vs Province of Punjab etc. Case No.: WP No.37 of 2016 Date of Judgment:2016-10-09 Reported As: 2016 LHC 2910 Result: Petitions Dismissed
Judgment Ayesha A. Malik J: This common judgment decides upon the issues raised in Writ Petitions Nos.37/2016, 35/2016, 61/2016, 76/2016, 78/2016 and 23145/2016, as all Petitions raise common questions of law and facts. Writ Petitions Nos.37/2016, 35/2016, 61/2016, 76/2016 and 78/2016 were argued on 20.6.2016 and WP No.23145/2016 being similar to the said Petitions was argued on 28.7.2016. 2. The Petitioners have challenged Notification No.AEA-III-3-5/201 1 (Vol-III) dated 4.12.2015 ("Impugned Notification" ) issued by the Government of Punjab, Industries, Commerce and Investment Department, to the extent of Clauses 6, 7, 8 and 11 which allows existing sugar mills to relocate within the Province. They are also aggrieved by Notification No.AEA-III-3-5/201 1 (Vol-III) dated 4.12.2015 issued by the Government of Punjab, Industries, Commerce and Investment Department, to the extent of clause 2(b) ("Second Impugned Notification" ) which forms a committee to assess the impact of the transportation of sugarcane from the bordering districts of the Punjab to other provinces to determine loss of sugar cess. 3. The Petitioners are public companie s, operating sugar mills in the south of Punjab. Writ Petition Nos.37/2016 and 23145/2016 have been filed by JDW Sugar Mills Limited which is operating a sugar mill in Tehsil Sadiq Abad, District Rahim Yar Khan. Writ Petition No.35/2016 has been filed by RYK Mills Limited which is operating a sugar mill in Rukanabad (Janpur), Tehsil Liaqatabad, Rahim Yar Khan . Writ Petition No.61/2016 has been filed by Indus Sugar Mills Limited which is operating a sugar mill in District Rajanpur . Writ Petition No.76/2016 has been filed by Ashraf Sugar Mills Limited which is operating a sugar mill in Ashrafabad, District Bahawalpur . Writ Petition No.78/2016 has also been filed by Mian Mahmood Ahmad who is in the cotton ginning busines s in District Rahim Yar Khan and is aggrieved by the Impugned Notification as the relocation policy has failed to take into consideration the national interest and in particular the plight of the cotton industry . 4. The main contesting Respondent in these Petitions is theGovernment of Punjab, the Agriculture Department, the Industries, Commerce and Investment Department, the Food Department, the Environm ent Protection Department as well
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as the Law and Parliamentary Affairs Department have been impleaded through their competent authorities. The District Coordination Officers of Muzaf fargarh, Rahim Yar Khan, Bahawalpur , Rajanpur have also been impleaded. The Federal Government through the Ministry of Textile Industry and the Ministry of National Food Security and Research, Islamabad have also been impleaded to explain the Federal Government 's policy and the national interest. Report and parawise comments have been filed by all the stated Respondents. The Learned Law Officer on behalf of the Provincial Government stated that the report and parawise comments of the Government of Punjab can be read in all the petitions as the position of the Government is the same in all petition s including WP No.23145/2016. Same is the position of the learned DAG appearing for the Federal Government. 5. The contesting Respondents also include sugar mills and their owners who are in the process of shifting their mills to a new location. The specific allegation against Respondent Ittefaq Sugar Mills Limited is that it is establishing a new sugar mill in Channi Got, District Bahawalpur . Respondent Haseeb Waqas Sugar Mills Limited is establishing a new sugar mill in Mauza Jagmal, Tehsil Jatoi, District Muzaffargarh. Respondent Abdullah (Yousaf) Sugar Mills Limited is establishing a new sugar mill in Tehsil Jampur, District Rajanpur. Respondent Abdullah Sugar Mills Limited is establishing a new sugar mill in District Rahim Yar Khan and the Respondent Chaudhry Sugar Mills Limited is establishing a new sugar mill in District Rahim Yar Khan. Report and parawise comments have been filed by the stated Respondents. 6. The basic grievance of the Petitioners is that the Respondents under the garb of shifting/relocation of a functional sugar mill are in fact establishing a new sugar mill despite the ban imposed under the Punjab Industries (Control on Establishment and Enlargement) Ordinance, 1963 ("Ordinance") read with Notification No.AEA-III 3-3/03 (VOL-III) dated 6.12.2006. One of the main arguments raised by the Petitioners is that Respondent sugar mills are owned by the Chief Minister, Punjab and the Prime Minister of Pakistan along with close family relatives. Hence the Impugned Notification has been issued to benefit their business interest. Further that the Impugned Notification has been issued simply to facilitate and legalize the establishment of new sugar mills owned by the families of the Chief Minister, Punjab as well as the Prime Minister given the ban on establishing sugar mills in the Province. In this regard, it is specifically alleged that Ittefaq Sugar Mills Limited and Chaudhary Sugar Mills Limited are owned by Mian Muhammad Nawaz Sharif, Hassan Nawaz Sharif, Hussain Nawaz Sharif, Mrs. Marriyam Nawaz, Mrs. Kalsoom Nawaz and Hamza Shahbaz along with other family members. Haseeb Waqas Sugar Mills Limited is owned by Haseeb Ilyas, Zakia Ilyas, Mrs. Shahzadi Ilyas and other family members. Abdullah Sugar Mills Limited is owned by Mian Mohammad Ejaz Miraj, Yasmin Riaz and other family members. It is noted that the ownership alleged by the Petitioners and the documents relied upon have not been denied by the Respondent sugar mills. 7. Mr. Aitzaz Ahsan, Syed Ali Zafar , Mr. Shehzad A. Elahi, Mr. Jawad Hassan and Mr. Imtiaz Rashid Siddiqui, Advocates on behalf of the Petitioners argued that Section 3 of the Ordinance prohibits the establi shment or the enlargement of any industrial undertaking unless specifically permitted in writing by the Provincial Government. It is their case that the Ordinance provides for the organized and planned growth of industry in the Punjab thereby regulating the establishment of an industry as well as its location. In terms of the proviso to Section 3 of the Ordinance, a person may establish an industrial undertaking with the prior permission, in writing, by the Government of Punjab who has to satisfy itself that the establishment of the industrial undertaking will not prejudice the national interest. Section 11 of the Ordinance allows the Government to exempt any industry from the provisions of Section 3 of the Ordinance. It is their case that pursuant to Section 11, Notification dated 6.12.2006 imposed a ban on the establishment or enlargement of sugar mills throughout the Province and that the Impugned Notification violates the mandate of Section 3 of the Ordinance as well as the ban imposed on 6.12.2006 as it was issued to benefit the Respondent sugar mills. 8. Counsels for the Petitioners further argued that the Respondent sugar mills are in the process of establishing new sugar mills and in some cases have already established their sugar mills under the garb of shifting/relocation. They argued that none of the Respondent sugar mills have been given permission to establish or even relocate their sugar mill and Respondents No.1 to 6 have acted partially , in collusion with the Respondent sugar mills to give legal cover to their illegal acts. During the course of arguments it was admitted by the counsel for Ittefaq Sugar Mills Limited, Haseeb Waqas Sugar Mills Limited and Abdullah Sugar Mills Limited that the said mills have relocated and are functional at the new locations. So far as Respondent Chaudhary Mills Limited is concerned, they are still in the process of constructing the mill at the new
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location. All the Respondent sugar mills accept that they do not have permission for relocating under the Impugned Notification or under the Ordinance. 9. The case of the Petitioner in WP No.78/2016 is that the districts of Rahim Yar Khan, Muzaffargarh, Bahawalpur and Rajanpur are primarily cotton producing areas of Punjab. Cotton products are the main exports of Pakistan, contributing over 60% of the export value of the country. Therefore, cotton and the textile industry is a major contributor to the national economy, hence this industry is of national interest. The Petitioner's grievance is that without considering the national interest and in particular the plight of the cotton industry, the Government of Punjab has introduced the relocation policy which is not permitted under the law. Mr. Jawad Hassan, Advocate for the Petitioner argued that additional sugarcane cultivation in these areas will reduce cotton production in the area and will have an adverse effect on the soil and environment thereby causing heavy loss to cotton growers. Consequently national interest will suffer because the growth of cotton will be reduced. It is also his case that the Respondent sugar mills have violated the mandatory provisions of the Punjab Environmental Protection Act, 1997 ("Act") as the Respondent sugar mills have established themselves without fulfilling the requirements under the Act. Learned counsel further argued that relocation of sugar mills is nothing more than relaxation or exemption from the complete ban on establishing sugar mills within the Province. Submitted that the consistent stance of the Government of Punjab and the Federal Government over the years remained to prohibit establishment of new sugar mills especially in the areas of Bahawalpur, Muzaffargrh, Rajanpur and Rahim Yar Khan so as to protect the cotton crop. Therefore the Impugned Notification was issued simply to facilitate the business interest of the Respondent sugar mills owned by the family members of the Chief Minister of the Punjab and the Prime Minister of the country . Further submitted that the Government of Punjab issued the Impugned Notification to validate the concept of relocation and to validate the illegal act of establishing new sugar mills in the Province. 10. In terms of the order of this Court dated 07.03.2016 reports have been submitted by the local commission comprising of the Cane Commissioner , District Coordination Officers and Syed Waqar Hussain Naqvi, Advocate. The reports testify to the fact that Ittefaq Sugar Mills Limited, Haseeb Waqas Sugar Mills Limited and Abdulla h Sugar Mills Limited have shifted and were functional in the crushing season from December 2015 to March 2016. During the course of arguments, counsel for the said sugar mills also admitted to the fact that the mills had shifted and were functional during the crushing season from December 2015 to March 2016. So far as Chaudhary Sugar Mills is concerned, construction work started in January 2016 and is still under way . 11. The basic case of the Respondent sugar mills is that they are not establishing new sugar mills nor are they enlarging the sugar production capacity of their existing sugar mills. They are simply relocating their sugar mills from one area to another which is not prohibited under the Ordinance or Notification dated 6.12.2006. It is their case that they have not violated the ban imposed under the Notification of 6.12.2006. It is also their case that since there is no prohibition on relocation, hence they have not committed any illegality and there was no obligation to obtain permission for relocation. Learned counsel for Chaudhry Sugar Mills argued that since the Impugned Notification came in December , 2015 and was suspended by this Court on 4.1.2016, hence the question of taking any permission unde r the Impugned Notification did not arise. 12. The case of the Government of Punjab set out by the Learned Law Officer is that a policy for relocation of existing sugar mills was introduced through the Impugned Notification in order to regulate and facilitate the process of relocating a functional sugar mill. He argued that since relocation does not increase the production capacity of sugar mills hence it does not fall within the domain of Section 3 of the Ordinance read with Notification dated 6.12.2006. He further argued that the relocation policy was introduced after a full deliberative process in which it was concluded that relocation should be permitted in order to save the sugar industry . In this regard, Government of Punjab has relied upon minutes of meeting as well as the reports considered during the deliberation process. 13. A report has been filed on behalf of Respondent No.8, Ministry of Textile Industry , Government of Pakistan, Islamabad. Learned DAG stated that as per report of the stated Respondent the matter falls within the domain of the Government of Punjab. It has been further stated in the report that Pakistan Central Cotton Committee, Multan is working under the administrative control of the Ministry . The said Ministry is responsible to protect the growth and production of cotton in the country . It is further stated that with the installation of new sugar mills in cotton growing areas of Punjab the
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cultivation of cotton will be adversely effected and curtailed which will cause a decline in cotton production, causing loss to the economy of Pakistan. It is also argued that the stated Ministry is against the insta llation of sugar mills in the cotton growing areas being against the national interest. Preliminary Objections 14. Preliminary Objections were raised on the maintainability of the Writ Petitions on the ground that alternate remedy is available to the Petitioners in the form of appeal and revision under Section 7 of the Ordinance. The Petitioners have challenged the government policy on relocation of functional sugar mills and have also challenged the intent behind the issuance of the policy on the ground that it is malafide and intended to benefit the Respondent sugar mills. Under the circumstances, any remedy before a government functionary in the form of an appeal or revision would not be proper and efficacious as a government functionary cannot deliberate on the vires of the policy nor is it likely that he will comment on the allegations of collusion and malafide intent given that the Respondent sugar mills are owned by the families of the Chief Minister , Punjab and the Prime Minister . This issue was also considered by the august Supreme Court in Civil Appeal Nos.1242 to 1245 of 2013 vide judgment dated 25.7.2016 where Notification dated 6.12.2006 was challenged. The august Supreme Court held that availing the alternate remedy under the Ordinance would be an exercise in futility since a government functionary is not likely to take a decision contrary to government policy . Hence there is no merit in this objection. 15. Preliminary objections were also raised on the locus standi of the Petitioners that they are not aggrieved parties and that they could not challenge a government policy. The basic contention is that the Petitioners are competitors of the Respondent sugar mills and are operating their own mills in the Southern Region of Punjab where the Respondent sugar mills have relocated. The argument is that these Petitions have been filed simply to oust the competitors and maintain a monopoly in the region. It has been argued that no fundamental or legal right of the Petitioners have been violated, hence they are not aggrieved and cannot invoke the constitutional jurisdiction of this Court. 16. The Petitioners have challenged the Impugned Notification on the ground that the Impugned Notification is arbitrary , discriminatory , tainted with partiality and malafide. The main grounds are that it has been issued without consideration of national interest and violates the ban of 6.12.2006, that it is a personal relaxation or exemption granted to the Respondent sugar mills who are close relatives of the Chief Executive of the Province and the country . The record shows that the Government has defended the ban on establishment of sugar mills and has consistently maintained the position that the relocation of a functional sugar mill from one district to another tantamounts to establishing a new sugar mill. On this understanding, the Government has time and again rejected applications for relocation by sugar mills. However it changed its long standing position in December 2015 by introducing the relocation policy notwithstanding the ban on the establishment of sugar mills. Furthermore the Respondent sugar mills admittedly did not apply for permission to relocate yet they have relocated their sugar mills despite the ban imposed through Notification dated 6.12.2006. Since the Respondent sugar mills have relocated to the south of Punjab, where the Petitioners have functional sugar mills, the relocation policy and the acts of the Respondent sugar mills give cause to the Petitioners to file the instant Petitions. Furthermore since the policy is stated to be against public interest and national interest, this Court can look into the reasonableness of the policy and review the manner in which the executive exercised its powers to ensure that the rights of the citizens are protected. Reliance is placed on the case titled Engineer Iqbal Zafar Jhagra and others v. Federation of Pakistan and others (PLD 2013 SC 224). The Court can also exercise its power of judicial review to ensure that the decision making process was reasonable and not arbitrary or tainted with malafide. Reliance is placed on the case titled Dr. Akhtar Hassan Khan and others v. Federation of Pakistan and others (2012 SCMR 455). Therefore as such there is no merit in the preliminary objections. Law and Policy governing the establishment of sugar mills. 17. The basic law governing the establishment or enlargement of sugar mills is the Punjab Industries (Control on Establishment and Enlargement) Ordinance, 1963. Section 3 of the Ordinance provides as under:- 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
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(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. In terms of this Section, an industrial undertaking can only be established with the specific permission of the Government and permission can be refused if national interest is prejudiced or if it adversely affects public health or is source of nuisance for the locality . Section 11 of the Ordinance empowers the Government to grant exemp tion from the requirements of the Ordinance, in specific from the requirements of Section 3 in the following terms:- 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. 18. The Government of Punjab has from time to time issued several notifications under Section 11 of the Ordinance regulating the establishment of sugar mills. The first Notification was issued on 2.10.1986 in which all industries and areas in the Province of Punjab were exempted from the application of Section 3 of the Ordina nce except those specified in the Notification. As a consequence border areas, areas prone to flooding, urban areas and other specified locations mentioned in the Notification were not exempted from the provisions of Section 3 of the Ordinanc e. The area-wise restriction in the Notification of 2.10.1986 was referred to as the location policy for the purposes of organizing and planning the growth of sugar mills in the Punjab. In terms of this Notification a sugar mill was not exempted from Section 3 of the Ordinance, hence for the establishment of sugar mills permission was required from the Government. 19. On 3.11.1988 a new Notification was issued which amended the earlier notification of 2.10.1986. In terms of this Notification, no sugar mill was allowed to be set up in the area of Multan, Bahawalpur, DG Khan and Okara. On 17.9.2002 the location policy continued such that no new sugar mill could be set up or enlarged in the districts of Multan, Sahiwal, Vehari, Khanewal, Pakpattan, Lodhran, Bahawalpur, Rahim Yar Khan, Bahawanagar, DG Khan, Rajanpur, Layyah, Muzaffargarh and Okara. On 4.9.2003 the location policy was again amended such that no new sugar mill could be set up and no existing sugar mill could be enlarged anywhere in the Province. Therefore by way of the 2003 Notification, an absolute ban was imposed prohibiting the establishment or enlargement of sugar mills throughout the Province. On 1.4.2004 yet another Notification was issued which changed the absolute ban to an area wise ban. The districts of Multan, Sahiwal, Vehari, Khanewal, Pakpattan, Lodhran, Bahawalpur, Rahim Yar Khan, Bahawalnagar, DG Khan, Rajanpur, Layyah, Muzaffargarh, Okara and Toba Tek Singh were areas within which no new sugar mill could be established or enlarged without the permission of the Government. 20. On 2.10.2004 by way of another amendment in the location policy it was stated that no new sugar mill could be set up in the Province and existing sugar mills could not be enlarged in the Districts of Sahiwal, Pakpattan and Toba Tek Singh. By way of Notification dated 15.7.2005, the ban was lifted but soon thereafter through letter dated 23.11.2005 the ban was again imposed on the establishment and enlargement of sugar mill throughout the province of Punjab. Thereafter Notification No.AEA-III-3- 5/2003(V ol-III) dated 6.12.2006 was issued whereby a complete ban was once again imposed such that no new sugar mill could be set up and no existing sugar mill could be enlarged within the province of Punjab. This Notification continues even today and states the location policy of the Government of Punjab with respect to sugar mills. 21. On 8.4.201 1 the ban imposed vide Notification dated 6.12.2006 was reconsidered by a committee constituted by the Chief Minister . The committee deliberated on the issues and decided that the ban should continue because the establishment of sugar mills in the cotton growing belt of Punjab was not in the natio nal interest in view of the risk of increased production in sugarcane which would harm the cultivation of cotton as sugarcane is a water intensive crop which would have an adverse ef fect on the water resources necessary for cotton production. Case Law 22. The various notifications issued by the Government of Punjab under Section 11 of the Ordinance have been challenged before this Court several times. In the judgment cited as Muhammad Aslam v. Government of the Punjab through Secretary Industries Department and another (PLD 2013 Lahore 528) and Madina Sugar Mills v. Secretary , Ministry of Industries and others (PLD 2001 Lahore 506) the location policy of the Government was upheld. The judgment in Muhammad Aslam and others was challenged before the august Supreme Court of Pakistan which ultimately resulted in
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judgment dated 25.7.2016 passed in Civil Appeal Nos.1242 to 1245 of 2013. Leave was granted to consider the scope of the provisions of Sections 3 and 11 of the Ordinance, that is whether the Government has the power to impose a ban upon the establishment/enlargement of the sugar industry specifically under Notification dated 6.12.2006 and whether the Government had valid reasons for issuing the Notification of 6.12.2006. The august Supreme Court of Pakistan in the above judgment held that: The decision to impose the ban was not to benefit or punish anyone but to ensure the organized and planned growth of the industry , which may include the factors noted in paragraph 16 above, even though by imposing a ban, the existing sugar mills may have obtained an advantage of reduced competition. The decision to impose the ban was taken after long deliberations and on the advice of experts and we have not been shown any malafide or ulterior motive of the Government in taking this decision. The august Supreme Court of Pakistan further held that: The Act starts with the position of not permitting the setting up of any industry except by the prior written permission of the Government and then proceeds to state that the applications…
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