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Art.21 of Constitution Section 170 of the Uttar Pradesh Revenue Code, 2006 Section 17 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 – Direction by High court to arrest the Director or Occupier of the company till realization of due as certified by the commissioner as per Act – Division Bench declined to grant stay – New plea in Apex court that the Director is Senior citizen of aged 65 , liable from exemption under sec.170 of Revenue Code and already properties of company were attached and as such with out ascertaining reasons , the arrest is against Art.21 of Constitution – the Apex court rejected on 3 Grounds 1. New plea .2. No liquidation mere attachment is not enough and 3. Promised to pay the due amount to the farmers several times declined to stay the arrest order of director and confirmed the orders of D.B. High court = Anand Agro Chem India Ltd. .. Appellant(s) -vs- Suresh Chandra & Ors. .. Respondent(s) = 2014 ( January – Vol – 1) Judis.nic.in/ S.C./ file name =41176

Art.21 of Constitution Section 170 of the Uttar Pradesh Revenue  Code,  2006 Section 17 of the U.P. Sugarcane (Regulation of Supply  and  Purchase) Act, 1953 – Direction by High court to arrest the Director or Occupier of the company till realization of due as certified by the commissioner as per Act – Division Bench declined to grant stay – New plea in Apex court that the Director is Senior citizen of aged 65 , liable from exemption under sec.170 of Revenue Code and already properties of company were attached and as  such with out ascertaining reasons , the arrest is against Art.21 of Constitution – the Apex court rejected on 3 Grounds

1. New plea .2. No liquidation mere attachment is not enough and 3. Promised to pay the due amount to the farmers several timesdeclined to stay the arrest order of director and confirmed the orders of D.B. High court =

the

property of the sugar mill has already been attached  to  recover  the  dues

and the sale notice has been  issued  and  unless  there  is  proof  of  the

minimal fairness of willful failure to pay in  spite  of  sufficient  means,

the arrest cannot be ordered and it would be violative of Article 21 of  the

Constitution of India and placed reliance on the decision of this  Court  in

Jolly George Varghese and Another  vs.  The Bank  of  Cochin  (1980)  2  SCC

360.  He further contended that 

in any event the Director, whom he –representing, is a senior citizen above 65 years of age and hence he  cannot be arrested as  a  defaulter  in  payment  of  arrear  of  land  revenue  as

stipulated in Section 171 of the Uttar Pradesh Revenue Code, 2006.

 

Section 17 of the U.P. Sugarcane (Regulation of Supply  and  Purchase)

Act, 1953 stipulates that 

the occupier of the sugar –

 

factory shall make speedy payment  of  cane   price  and  in  the  event  of

default,  sub-Section  (4)  stipulates  that  the  Cane  Commissioner  shall

forward to the Collector a certificate specifying the amount of  arrears  of

the cane price due from the occupier and  the  Collector  shall  proceed  to

recover the said amount from such occupier as if it were an arrear  of  land

revenue. 

  Section 170 of the Uttar Pradesh Revenue  Code,  2006  prescribes

the process  for  recovery  of  arrears  of  land  revenue,  wherein  it  is

mentioned that it may be recovered  by  anyone  or  more  of  the  processes

mentioned therein which includes by arrest and detention  of  the  defaulter

and attachment and sale of his movable property.

whether  or

not one of the Directors who is said to be 65 years old  could  be  arrested

as a defaulter and committed to  prison  under  Section  171  of  the  Uttar

Pradesh Revenue Code, 2006, could and indeed ought to have  been  raised  by

the appellants either before the High Court or before this Court  in  appeal

preferred against the order passed by the High  Court.  

No  such  contention

was, however, urged at that stage.

 

Directors –

 

had assured the Commissioner that they would pay Rs.160 lacs  towards  price

of sugarcane within two weeks besides an amount of Rs.700 lacs  to  be  paid

in installments, the first of which installment was to be paid on 15th  May,

2013. No such payment was, however, made by the company and  its  Directors.

Thirdly, because there is  nothing  before  us  to  suggest  that  the

company and its Directors are incapable of  raising  funds  for  liquidating

the outstanding liability  towards  dues  payable  to  the  farmers. 

 Simply

because the sugar factory has been attached, is no reason for us  to  assume

that the company or its Directors are  in  any  financial  distress  thereby

disabling them from making the payments  recoverable  from  them.  The  fact

situation in the –present case is, therefore, completely different from that in  Jolly  George

Varghese case (supra) relied upon by Mr. Ram Jethmalani.

 

12.   In the light of the above, we see  no  compelling  reason  for  us  to

interfere with the order passed  by  the  High  Court  in  exercise  of  our

extraordinary jurisdiction. We regret to say that the  amounts  due  to  the

farmers towards price of the sugarcane and incidentals remains  to  be  paid

to them for several years in the past thereby  accumulating  huge  liability

against the company.  That  is  not  a  happy  situation  nor  can  repeated

invocation of the process of law by the appellant be a remedy for it.

 

13.   The appeal is devoid of merit and is accordingly dismissed.

 

 

2014 ( January – Vol – 1) Judis.nic.in/ S.C./ file name  =41176

 

T.S. THAKUR, C. NAGAPPAN
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 897 OF 2014
[Arising out of Special Leave Petition (Civil) No.30515 of 2013]

 

Anand Agro Chem India Ltd. .. Appellant(s)

 

-vs-

 

Suresh Chandra & Ors. .. Respondent(s)

 

J U D G M E N T

 

C. NAGAPPAN, J.

 

1. Leave granted.

2. This appeal is directed against the interim Order dated 31.7.2013
passed by the High Court of Judicature at Allahabad in Writ Petition
no.14936 of 2013 whereby the Division Bench rejected the prayer of the
appellant to stay the arrest of the Directors and occupiers of the
appellant company.

3. The facts in nutshell are as follows. Respondents 1 to 3 supplied
sugarcane to the sugar mill of the appellant in the year 2007-08, for which
the appellant has not paid the price in spite of several representations
made by the respondents 1 to 3 herein. This led to the filing of Writ
Petition in Writ-C no.14936 of 2013 by respondents 1 to 3 seeking for
issuance of the Writ of Mandamus directing the appellant herein to release
the sugarcane price to them. The Division Bench of the High Court after
hearing both sides directed the District Magistrate, Hathras to take
immediate action against the Directors and occupiers of the appellant-sugar
mill against whom several orders have been passed under the U.P. Sugarcane
(Regulation and Supply) Act, 1913 and it further observed in the order that
the District Magistrate may in exercise of his powers cause arrest of the
Directors and occupiers of the sugar mill to recover the dues and in the
event of such arrest, they will not be released until they have paid the
entire amount due against them. The appellant-sugar mill aggrieved by the
said order preferred a Special Leave Petition in SLP(C) no.16633 of 2013
and this Court by order dated 1.5.2013 dismissed the petition by observing
thus :


“We have heard Shri Sanjay Parikh, learned counsel for
the appellant and perused the record.
A reading of the order under challenge shows that the
appellant has not paid Rs.16.12 crores to the farmers for the
crushing year 2005-06 to 2009-10, which includes the price of
sugarcane, the cane development commission and the interest. It
is also borne out from the record that vide letter dated
24.11.2012, the Director of the appellant had assured the Cane
Commissioner that the company will pay Rs.160 lacs as the price
of the cane within two weeks and an amount of Rs.700 lacs in
installments, the first of which will be paid on 15.01.2013, but
the company did not fulfill its assurance.
In the above backdrop, it is not possible to find any
fault with the direction given by the Division Bench of the High
Court and there is absolutely no justification for this Court’s
interference with the impugned order.
The special leave petition is accordingly dismissed.……..”

 
Thereafter the appellant-sugar mill filed an application in the pending
Writ Petition in the High Court of Judicature at Allahabad seeking for stay
of arrest of the Directors pursuant to the order dated 26.4.2013 and the
Division Bench of the High Court after –

hearing both sides and after referring to the earlier orders held that no
modification/vacation of the order dated 26.4.2013 is required and,
accordingly, rejected the prayer of stay of arrest. Challenging the said
order the appellant-sugar mill has preferred the present appeal.

4. We have heard Mr. Ram Jethmalani and Dr. Rajeev Dhawan, Senior
Advocates appearing on behalf of the appellant, Ms. Shobha Dixit, Senior
Advocate appearing on behalf of the respondents and Mr. Prabodh Kumar,
Advocate appearing on behalf of the intervenor.

5. The contention of Mr. Ram Jethmalani, Senior Advocate is that the
property of the sugar mill has already been attached to recover the dues
and the sale notice has been issued and unless there is proof of the
minimal fairness of willful failure to pay in spite of sufficient means,
the arrest cannot be ordered and it would be violative of Article 21 of the
Constitution of India and placed reliance on the decision of this Court in
Jolly George Varghese and Another vs. The Bank of Cochin (1980) 2 SCC
360. He further contended that in any event the Director, whom he –

representing, is a senior citizen above 65 years of age and hence he cannot
be arrested as a defaulter in payment of arrear of land revenue as
stipulated in Section 171 of the Uttar Pradesh Revenue Code, 2006.

6. When the matter was listed before this Court on 7.10.2013, Dr. Rajeev
Dhawan, learned Senior Advocate appearing for the appellant said that the
Directors of the mill undertake to pay Rs.4.55 crores representing fifty
per cent of the total amount to the concerned authority within a period of
six weeks and this Court stayed the arrest subject to fulfillment of the
condition. Again the matter was listed on 19.11.2013 and Dr. Rajeev
Dhawan, learned senior counsel said that by mistake he made a statement
about the total amount payable by the writ petitioner but the amount is far
less than that and requested for time to file additional affidavit on
behalf of the appellant. In the next two hearings the matter was adjourned
on the request made by the appellant and thereafter the matter was heard.

7. Section 17 of the U.P. Sugarcane (Regulation of Supply and Purchase)
Act, 1953 stipulates that the occupier of the sugar –

factory shall make speedy payment of cane price and in the event of
default, sub-Section (4) stipulates that the Cane Commissioner shall
forward to the Collector a certificate specifying the amount of arrears of
the cane price due from the occupier and the Collector shall proceed to
recover the said amount from such occupier as if it were an arrear of land
revenue. Section 170 of the Uttar Pradesh Revenue Code, 2006 prescribes
the process for recovery of arrears of land revenue, wherein it is
mentioned that it may be recovered by anyone or more of the processes
mentioned therein which includes by arrest and detention of the defaulter
and attachment and sale of his movable property.

8. The Division Bench of the Allahabad High Court in its order dated
26.4.2013 has directed the District Magistrate, Hathras, namely, the
Collector to take immediate action against the Directors and occupiers of
the appellant-sugar mill against whom several orders have been passed under
the U.P. Sugarcane (Regulation and Supply) Act, 1913 and this Court has
confirmed the said order. The Division Bench in the present application
considered the plea of the –

appellant for the stay of arrest and after hearing both sides rejected the
said plea by the impugned order and we find no error in it.

9. We say so firstly because order dated 26th April, 2013 passed by the
Division Bench of the Allahabad High Court directing the District
Magistrate to take immediate action against the Directors of the sugar mill
has already been affirmed by this Court in appeal. The question whether or
not one of the Directors who is said to be 65 years old could be arrested
as a defaulter and committed to prison under Section 171 of the Uttar
Pradesh Revenue Code, 2006, could and indeed ought to have been raised by
the appellants either before the High Court or before this Court in appeal
preferred against the order passed by the High Court. No such contention
was, however, urged at that stage.

10. Secondly, because the company and its Directors have not made their
promises good by paying even the amounts which they had offered to pay. A
plain reading of order dated 1st May, 2013 passed by this Court in SLP (C)
No.16633 of 2013 extracted above would show that the company and its
Directors –

had assured the Commissioner that they would pay Rs.160 lacs towards price
of sugarcane within two weeks besides an amount of Rs.700 lacs to be paid
in installments, the first of which installment was to be paid on 15th May,
2013. No such payment was, however, made by the company and its Directors.
That apart, the statement made at the bar on 7th October, 2013 by Dr.
Rajeev Dhawan, learned senior counsel, for the appellant that the Directors
would pay Rs.4.55 crores is also sought to be withdrawn on the ground that
the same was made under a mistake. It is evident that the company and its
Directors have been despite promises made on their behalf committing breach
of such assurances on one pretext or the other.

11. Thirdly, because there is nothing before us to suggest that the
company and its Directors are incapable of raising funds for liquidating
the outstanding liability towards dues payable to the farmers. Simply
because the sugar factory has been attached, is no reason for us to assume
that the company or its Directors are in any financial distress thereby
disabling them from making the payments recoverable from them. The fact
situation in the –

present case is, therefore, completely different from that in Jolly George
Varghese case (supra) relied upon by Mr. Ram Jethmalani.

12. In the light of the above, we see no compelling reason for us to
interfere with the order passed by the High Court in exercise of our
extraordinary jurisdiction. We regret to say that the amounts due to the
farmers towards price of the sugarcane and incidentals remains to be paid
to them for several years in the past thereby accumulating huge liability
against the company. That is not a happy situation nor can repeated
invocation of the process of law by the appellant be a remedy for it.

13. The appeal is devoid of merit and is accordingly dismissed.

 

…………………………….J.
(T.S. Thakur)

 
……………………………J.
(C. Nagappan)
New Delhi;
January 24, 2014.

 

 

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