Pakistan. Sugar mills: SC endorses Punjab government ban

26.07.2016

The Supreme Court on Monday declared the Punjab government ban on setting up new sugar mills and extension to the existing ones in public and national interest. On June 23, a two-member bench led by Justice Ejaz Afzal Khan had reserved its judgement in response to pleas filed against a notification of Punjab government, issued on December 6, 2006, through which it has imposed a ban upon the establishment/enlargement of sugar industry in the province.

Punjab government''s Industrial Department notification had stipulated, "No new sugar mill shall be set up and no enlargement in capacity of the existing Sugar Mills is allowed in the province". Muhammad Alam and others challenged before the Lahore High Court the Notification NO.AEA-III.3-5/2003(VOL-III) dated 6/12/2006 issued under Section 11 and 3 of the Punjab Industries (Control on Establishment & Enlargement)Act,1963 as well as a decision of government of Punjab, Industries of January 31, 2008 whereby permission to establish mini sugar plants was refused.

A single-member bench of Lahore High Court comprising Justice Aminud Din Khan rejected the petitions on February 26, 2013. Making secretary Industries Department, government of Punjab as respondents, four appellants including Sardar Tariq Khan Mazari, M/S Punjab Sugar Mills Limited, Arshad Javed Ahmed and Begum Syeda Iqbal filed Civil Petition for Leave to Appeal (CPLAs) to challenge the verdict before the apex court in the matter.

Announcing a 30-page verdict Monday, the apex court Justice Ejaz Afzal said, "The fact that there were a number of reasons justifying the issuance of the impugned Notification and each reason is itself sufficient to be categorised as constituting the public or national interest".

Citing Aitzaz Ahsan, the counsel for Pakistan Cotton Ginners Association, the verdict noted, "The senior counsel was permitted to make submissions on behalf of the Pakistan Cotton Ginners Association who had supported the submissions of the learned Additional Advocate General and supplemented his contentions by stating that districts of Southern Punjab were traditionally cotton growing areas and in recognition of this fact notifications, including Notifications dated 4th September 2003, 9th October C.As. 1242 to 1245/2013 9 2003, 1st April 2004, 12th October 2004, and finally the impugned Notification, were issued stopping the setting up of new sugar mills and expanding the installed capacity of the existing ones to ensure that cotton crop is not substituted with sugarcane. Attending to the Notification of 15th July 2005, on which certain appellants placed reliance, he stated that it was an aberration and was issued contrary to the advice of the experts and could be categorised as mala fide as it was designed to benefit certain parties and on such an aberration, which was against the national interest, a case for the sugar industry could not be raised. According to him, prior to the issuance of the impugned Notification the matter was attended to in an arbitrary manner by allowing the applications of some while disallowing those of others and at times for ulterior reasons".

Ahsan contended that the expansion of the areas growing sugarcane has been economically, agriculturally and ecologically, disastrous, adding that the cotton industry is the backbone of industrialised Pakistan, making value addition to the raw material (cotton) and earning considerable foreign exchange for the country, which heavily relies on such earnings.

Referring to Ittefaq Sugar Mills Limited''s counsel Salman Akram Raja, the court said, "the learned ASC, had submitted an application (CMA No 2977/2016) on behalf of Ittefaq Sugar Mills Limited to be impleaded as a party, as according to him a decision in this matter may adversely affect the said company as it had sought the relocation of its sugar mills installed in District Pakpattan to District Bahawalpur at a place near the border with District Rahimyar Khan. Without granting the said application we permitted him to make his submissions on behalf of the said Company. JDW Sugar Mills Limited and Hamza Sugar Mills Limited, presumably the competitors of Ittefaq Sugar Mills Limited, had filed Writ Petition No 12879 of 2015 seeking to restrain the said shifting whereas Ittefaq Sugar Mills Limited had filed a writ petition No 18827 of 2015 wherein the impugned Notification has been assailed though in the alternative it has been stated that the impugned Notification does not restrict the relocation of existing sugar mills".

The verdict further said, "Both these petitions, we are told, are still pending before the Lahore High Court. The petitioners in writ petition No 12879/2015 are opposing the proposed shifting as it would increase the installed capacity of sugar mills in the Southern Punjab Districts which they state is not sustainable as the available installed capacity is already under utilised. However, Salman Akram Raja controverted their objection. He also referred to a document to show that the cultivation of sugarcane crop in the area has considerably increased if the figures for the years 2005-2006 are compared to those of 2014-2015".

The court further ruled, "It appears that there is a tussle between two different sugar mills'' owners regarding the relocation of an existing sugar mill, whereas the matter considered by us is the determination of the legality of the impugned Notification which has imposed a ban on the setting up of new sugar mills and also expanding the installed capacity of existing ones. Therefore, it would not be appropriate for us to express any opinion on C.As. 1242 to 1245/2013 12 this aspect of the matter which has as yet not been decided by the Lahore High Court where the said two writ petitions are pending adjudication".

The court said that decision to impose the ban was not to benefit or punish anyone but to ensure the organised and planned growth of the industry. The judgement further noted that the decision was taken after considerable deliberations and was in conformity with the advice of experts of the relevant departments, including Agriculture, Food and Industries.

"The decision of the Government is also in accordance with the views of the Government of Pakistan. The factors taken into consideration in coming to such a decision, as gleaned from the referred to documents, included the following ecological / environmental, agricultural, industrial and financial ones: C.As. 1242 to 1245/2013 21, Punjab has an arid climate whereas sugarcane is best grown in tropical zones; Sugarcane consumes far more water than other crops; The water required for growing sugarcane in non-perennial irrigation canal areas is made up by tapping into groundwater/aquifers inducing water scarcity by depleting aquifers; Sugarcane stubble remains rooted in the soil after it has been cut therefore the second (wheat) crop cannot be grown on such land whereas it can be grown on the land from which cotton is harvested;

Sugarcane adversely affects food security; Sugarcane substitutes cotton and wheat; Existing sugar mills have under-utilised capacity; Textile industry is being starved of locally available cotton; Cotton bales are imported by using scarce foreign exchange; Textiles are a major foreign exchange earner; and International price of sugar is cheaper than the local price therefore sugar does not have export potential," the verdict stated.

 


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