Coastal Papers Limited vs Government of India and Others

T.N.C. Rangarajan, J.—This writ appeal arises from the order of N.Y. Hanumanthappa, J. dismissing the writ petition at the admission stage. The writ petition challenged grant of letter of intent to Vasavi Jute Mills Private Limited (herein after referred to as ''Vasavi'', even though it has since been renamed as Varalaxmi Sugars Limited) for setting up a sugar factory, on the grounds that the petitioner Coastal Papers Limited (hereinafter referred to as ''Coastal'') which had already been given a letter of intent to set up a sugar factory, would be adversely affected. The learned Judge was of the view that the matter was one of the economic policy, there were no mala fides in the grant of letter of intent to Vasavi and no grievance that can be adquately redressed and consequently, there was no requirement of giving notice to the petitioner before grant of letter of intent to Vasavi with the result that the petitioner, as a rival trader, had no right or locus standi to maintain the writ petition.

The learned counsel for the writ petitioner took us through a mass of documents to urge that certain norms relating to the provisions of adequate raw material to the proposed unit had not been followed and the letter of intent had been given to Vasavi in contravention of the regular procedure. He also pointed out that if the letter of intent already given to the petitioner was to be meaningful, then the Government had a duty to protect the supply of the raw material to the extent required for the optimum functioning of the unit and when that was not possible, the Government had no jurisdiction to issue another licence to any other person and such an issue of licence violated also the policy guidelines. He further argued that the grant of the licence to Vasavi in disregard of the policy and procedure affected the viability of the petitioner''s unit and, consequently, the petitioner had a right to be heard and the locus standi to question the grant of licence to Vasavi. The learned counsel thus submitted that the impugned order granting the letter of intent, should be quashed.

The learned counsel for Vasavi submitted that the impugned order was well within the revised policy which was aimed at developing the potential of sugar-cane and it was for the petitioner to achieve that potential within the area allotted to him and could not object to the different area being allotted to Vasavi. The learned counsel also submitted that there was no violation of any norms and since the area of operation was quite different from that of Coastal, there was no locus standi for Coastal to maintain the writ petition. It was also pointed out that the extent of allocation of raw material depended upon the order of the Cane Commissioner under the Andhra Pradesh Sugarcane (Regulation and Supply and Purchase) Act, in respect of which alternative remedies were available and, therefore, the writ petition was not maintainable.

The learned Standing Counsel for the Central Government submitted that the grant of licences particularly in the liberalised atmosphere was a matter of policy and when no violation of the policy guidelines had been established, the petitioner had no locus standi to question the grant of licence to another person outside his area even if there was any procedural irregularities. The learned Standing Counsel submitted further that the grant of licence to Vasavi was in accordance with the policy guidelines and the procedure laid down for the issue of licences, and it was not required to be interfered with.

Sugar Industry is governed by the Industries (Development and Regulation) Act, and licences are to be given by the Government of India. Guidelines are issued by the Government for the grant of such licences from time to time. The raw material viz., the sugar cane required for the sugar factories is regulated by the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. Under that Act, there is a cane development council which approves the development of factory zone and also devises ways and means for execution of development plans in all its essentials such as cane varieties, rotation, cane seed, sowing programme, fertilisers and manures besides the other infrastructure. The Cane Commissioner is required under the Act to estimate the quantity required by a factory, declare the area as the factory Zone for the supply of cane so that the cane grown in that area is offered for sale only to that factory. In Srikakulam District, there was only one sugar factory established in 1962 at Amudalavalasa with the crushing capacity of 1000 tonnes, while the District had thirty seven mandals which was divided on the south by the river whereas the mandals on the north of the river was a backward tribal area remaining undeveloped. A Committee had, therefore, been appointed by the Government of Andhra Pradesh to examine the feasibility of establishing another sugar factory in Palakonda. In the report given in 1987, it was noted that sugar cane was being grown in 30 out of 37 mandals, even though nine of them did not have the irrigation facilities and the existing irrigation facility could feed 50% of the cultivable area, to develop the full potential of the District. It was noted that the two main conditions which existed at that time was that there should be adequte area to produce 4 to 4.5 lakh tonnes of cane and the location of a new factory should be such that no factory exists within a radius of 40 K.Ms. Therefore, it was recommended that any application for licence to set up a factory for 2500 TCD (tonnes crushed per day) could be entertained at Palakonda by developing the unexploited areas in the District. In 1988, site selection committee considered the places in Srikakulam District and decided that the site at Sankhili would be an ideal location for setting up a new factory by the cooperative sector. In 1990, the Government of Andhra Pradesh decided that the factory may be set up in the private and joint sector also and not necessarily by the co-operative sector and recommended the application of Sri M.S. Rama Rao for setting up a 2500 TCD sugar factory at Palakonda. Thereafter, Coastal made an application and this was also processed on 21-7-1990. On 19-4-1991, the application of Vasavi for setting up a sugar factory at Veeraghattam was also forwarded pointing out that the radial distance between the proposed factory at Veeraghattam and the earlier proposed sugar factory at Palakonda was 27 kilometres, though the area of operation was the same and hence, the possibility was for setting up one factory only. On 20-7-1991, by another application East India Commercial Company Limited also joined the fray, and the State Government requested the Government of India to issue a letter of intent in favour of any one of them. Thereafter, a press-note was issued on 8-11-1991 revising the policy guidelines. One of the important difference between the new policy and the old one was that the distance between the proposed factory and an existing factory was reduced to 25 kilometres, which could further be relaxed to 15 kilometres in special cases where cane availability so justified it. Secondly, while the basic criterion for new units was earlier the adequate availability of sugar-cane in a compact area around the proposed factory site, and the potential for cane cultivation would be only an additional factor, the new guidelines stated that the basic criterion for grant of licences for new sugar units would be their viability, mainly from the point of view of cane availability and potential for development of sugarcane. The new policy also indicated that priority will be given to sugar factories with capacity less than 2500 TCD to expand to the aforesaid minimum economic capacity, and when there is more than one application received in any zone of operation, priority will be given to application received earlier as well as to the co-operative sector in preference to the public sector and private sector in that order. Applications in respect of down-stream units for the use of molasses will also be entertained readily. It is to be noted that the zone of operation being the compact area was reduced from a radius of 40 kilometres to 20 kilometres. It would be apparent that the application of Sri M.S. Rama Rao and Coastal for setting up factories at Palakonda; East India Commercial Company Limited at Sankhili; and Vasavi at Veeraghattam, related to the same zone of operation. In the earlier guidelines, applications were to be initially screened by the screening committee taking into account the comments of the State Government and, accordingly, the screening committee consisting of ten members including a representative of State Government, was set up by a memorandum dated 11-11-1991. Meanwhile, D. Srinivasa Rao made an application on 6-11-1991 for setting up a factory at Korasavada north to the river Vamsadhara, and that application was also sent to the Government of India for consideration by letter dated 10-1-1992, calling attention to the earlier applications and pointing out that the cane available in Srikakulam District was sufficient to meet the requirements of the existing co-operative sugar factory as it was going for expansion from 1000 TCD to 2500 TCD and the possibility of bringing the area under cultivation may be sufficient for another factory and as such it may be possible for setting up only one sugar factory in the District for all the applications put together. The State level screening committee recommended the location of Korsavada after noting that if the factory is set up at Palakonda area it may adversely affect the existing cooperative sugar factory at Amadalavalasa. In the proforma giving information in respect of each of the applications it was stated by the State Government that there was potential for development of sugar factory in the factory zone of Amadalavalasa and also in the new mandals for the cane requirement of one new sugar factory only. In the proforma B, it was stated that Sankhili, Veeraghattam and Korasavada were 26.4, 39.6 and 37.0 kilometres away from the existing factory and were suitable for setting up factories by carving out areas supplying sugarcane to that factory, but it was felt that the location at Korasavada was ideally suited because the area of operation will be totally on the left side of the river Vamsadhara and the zones will be clearly seperated. On 3-7-1993, the Vasavi gave consent for considering its application for alternative place also. Similarly, the petitioner also gave its consent for change of place on 1-9-1993. The screening committee had its meeting held on 27-12-1993 and considered that the area to the north of the river Vamsadhara can easily accommodate one new sugar factory since it has good irrigation potential and the site at Korasavada satisfies the distance criterion of 25 kilometres. Since there were only two applications for that location viz., that of D. Srinivasa Rao and Coastal, of whom Coastal had better financial capacity, the committee recommended its application. Accordingly, on 2-3-1994 a letter of intent was issued to Coastal for setting up a factory at Korasavada.

The meeting of the licensing committee was held to consider the recommendation of the screening committee in respect of the applications mentioned above, on 4-2-1994. In the meanwhile, Mr. V. Chandramouli, Principal Secretary to Government, Petro-chemicals & Sugar Industries and Commerce Department of Government of Andhra Pradesh, who had also been a member of the screening committee, wrote a letter dated 17-1-1994, as follows:

"The Screening Committee meeting held on the above subject recently by your department, has not accepted the proposal of the two following applications/locations recommended by the State Government although 13 other applications/locations from the State has been approved.

Srikakulam - Sri G. Mallikarjuna Rao at Veeraghattam.

Nellore District - Sri S.V. Sudhakara Reddy at Sangam.

There are five taluks in this disctirct i.e., Kanigiri, Atmakur, Podalakuru, Rapur, Udayagiri not having a single factory. I am directed to inform you of the need to convene Central Screening Committee to consider feasibility on the basis of the possibilities of present and future varied developments to justify and clear the above two proposals."

Consequently, the office memorandum was issued on 4-2-1994 by the Director, Ministry of Food, Directorate of Sugar, Government of India, stating that the ministry was reviewing the proposal of Vasavi and hence the recommendation for rejection of that application should be deleted from the list of the rejected applications. The licencing committee, therefore, recommended on 4-2-1994, as follows:

The licencing committee agreed with the recommendation of the Administrative Ministry to grant letter of intent to M/s. Coastal Papers. The LC also recommended rejection of the other applications on the grounds given by AM, and noted that recommendation in respect of Shri Vasavi Jute Twine Mills Limited was withdrawn by AM.

Thereafter, on 9-2-1994, the Deputy Director of Sugar Directorate, forwarded a suitable recommendation in the form of a summary note to the licencing committee. The note stated that according to the recommendations of the screening committee the site at Korasavada was ideal and Coastal was selected for that site. The Administrative Committee commented as follows:

This Ministry has reviewed the matter and is observed that Srikakulam district has immense potential for development of sugarcane and the area which includes the taluk od Rapur, Venkatagiri and Udaigiri among others, is not covered by the existing sugar factory of Amudalavalasa, has a tremendous potential of cane development. It is a traditionally a cane growing area and if a new Sugar Factory comes up at Veeraghattam sufficient cane would be available within two years. Not only is the area also part of Vamsadhara project of river Vamsadhara but due to existence of two perinnial rivers, Mahendratanaya and Nagavali, ground water in the area is available in abundance.

It was recommended that the distance of the proposed location at Veeraghattam being 30.6 kilometres from the existing Amudalavalsa factory, the letter of intent can be given to Vasavi for setting up a factory at Veeraghattam. On 10-2-1990, the licencing committee considered the new choice of location in the following terms:

The AM noted that although there was no surplus cane available in the District, in view of an irrigation project being implemented on river Vamsadhara, the area has good irrigation potential for further development of cane. The Screening Committee had already indentified one site in the District for which M/s. Coastal Papers Limited was recommended for letter of intent. On reconsideration, AM found that another location Veeraghattam could also be considered for grant of letter of intent. The area was traditionally cane growing area with abundant ground water potential, apart from being part of the Vamsadhara project. Also, the distance of the proposed location at Veeraghattam from the existing sugar factory (M/s. Amadalvalasa Cooperative Sugar Factory) was 39.6 km.

The licencing committee then agreed with the Administrative Ministry recommending grant of letter of intent to Vasavi to set up a new sugar unit at Veeraghattam. Accordingly, the letter of intent was given to Vasavi on 7-3-1994.

Coastal wrote a letter on 15-3-1994 to the Secretary of the Ministry of Industry, Government of India, pointing out that earlier the State Government had recorded that there is scope for setting up only one factory and, therefore, grant of another letter of intent should be avoided. On 18-10-1994 a reply was given stating that the issues raised do not fall in the jurisdiction of the review committee and advising the coastal to take the matter with the ministry of food. On 12-10-1994, an office memorandum was issued stating therein that the three taluks of Rapur, Venkatagiri and Udayagiri which are in Nellore District were included through oversight in Srikakulam District while forwarding the recommendations to the Department and they may therefore, be treated as deleted from the recommendation. It was further stated:

It may be mentioned here that even after the deletion of the three talukas mentioned above, there is immense potential for future development of sugarcane and irrigation facilities in the area of operation of the proposed sugar factory. It may also be noted that the following Mandals have been included by the applicant for cane development in the area of operation of the proposed factory at ''Veeraghattam'', district Srikakulam:

Veeragattam

Regidi Amadalavalasa

Vangara

Santakaviti

Palakonda

Sarubujjili

BurJ.

Ponduru

Seetampeta

On 20-3-1994, Coastal applied to the Cane Commissioner for allocation of the zones u/s 15 of the Act. Similar application was made by Vasavi on 5-5-1994. A joint meeting was held on the 1st & 2nd August by the Cane Commissioner with the representatives of Coastal and Vasavi as well as the co-operative sugar factory. On 25-8-1994, the Cane Commissioner passed an order declaring the Zone for Vasavi, which immediately appealed to the State Government. On 20-3-1995, the Government passed an order having considered the objections of both the co-operative sugar factory as well as Coastal and modified the zone, allocating further 45 villages of six mandals from the area of co-operative sugar factory and allotting the same to Vasavi. Subsequently, the Cane Commissioner passed an order on 28-7-1995 declaring the factory zone for Coastal. He noted that the area north of the river will yield only 1,86,900 Mts., which was not sufficient to meet the requirements of the sugar factory and the Government has stated that the zone of Amadalavalasa co-operative sugar factory, will be restricted to the areas which have potential around 2.00 lakh Mts., as further expansion was not contemplated. In view of this clarification, he allotted certain areas in the south of the river also to Coastal. An appeal against this order by Coastal is stated to be pending. Since this development occured after the writ petition was dismissed on 28-12-1994, Coastal has filed an application to amend the prayer in the writ petition to quash the order of the Cane Commissioner and the Government, in favour of Vasavi, and to direct the Government to make available the minimum quantity of 4.25 lakh tonnes of sugar-cane. It is stated that the Government has since permitted Vasavi to change its location to Sankhili.

The main question that arises is whether the grant of letter of intent to Coastal, carried with it an obligation on the part of the Government to guarantee the minimum sugar cane requirement for ensuring the optimum crushing capacity of 2500 TCD. There is a difference of opinion whether the minimum requirement is only 3.75 Mts., or whether it should be 4.25 Mts. This requirement differs according to the computation based on the number of crushing days and the seed requirement. The actual figure is not so important as the question whether the minimum quantity required should be guaranteed by the Government while issuing a letter of intent. Section 11 of the Industries (Development and Regulation) Act, 1951, provides that no industrial undertaking shall be established without a licence and such licence shall contain conditions as to the location of the undertaking and the minimum standards in respect of size to be provided therein as the Central Government may deem fit to impose in accordance with the Rules, if any, made u/s 30. The Rules provide for grant pi licences and the necessary enquiry in relation thereto as well as matters that are to be taken into account in granting licences. Section 14 provides for the procedure, which is that the Central Government may require an officer to make a full and complete investigation in respect of all applications. Rule 7 provides for applications being made before raising any capital or constructing any factory building or placing any order for plant and machinery, and similarly, an application for permission for changing the location has to be made before acquisition of any land. These applications are to be referred to a committee appointing under Rule 10, which has to submit a report to the Ministry of Industrial Development. Rule 12 provides that the said report shall have regard to the approved plans of the Central Government for development of the Industry and, where no such plans exist, to the existing capacity of the industry, the demand and supply position, availability of raw materials and plant and machinery. It is also required to contain recommendations regarding capital and its structure, suitability of the location proposed from the point of view of the approved plans for the industry, availability of transport and skilled personnel and collaboration with foreign manufacturers. The committee may also recommend a public enquiry being required. Thereafter, the Ministry has to consider the report and grant the licence. If the licence is refused, the applicant has to be informed the reasons for such a refusal. In the present case, such a committee was appointed on 11-11-1991 and the committee had considered all the applications and had given its report We shall deal with the criticism regarding the procedure adopted, later. We now focus on the question whether the licence guarantees the minimum availability of raw material for a viable unit. As noted above, the availability of raw material is one of the relevant factors on which the screening committee has to give a report. Under the earlier policy, the basic criterion was the adequate availability of sugarcane in the compact area, and the potential cultivation was only an additional factor. Therefore, on the earlier occasion when the co-operative sugar factory was established and another co-operative sugar factory was proposed, the recommendations considered the actual availability of sugar cane. But, in the revised policy, which was in supersession of the earlier policy, in areas specified as industrially backward areas and agro-climatically suited for development of sugarcane, licencing of new sugar factories was to be allowed, and the basic criterion was their viability, mainly from the point of view of cane availability and potential for development of sugarcane. As noted above, Rule 12 provided that the committee should have regard to the approved plans of the Central Government for the development of the industry. Consequently, the screening committee had to keep this policy of the Government in view viz., that new factories are to be allowed to be set up not based on the existing availability of raw material, but on the potential availability of the raw material and the development that is possible. In this context, the letter of the Government of India, dated 15-5-1995 giving year-wise measures to be taken for implementation of the project, is very relevant. It states that in the first year there will be purchase of land; placement of orders for plant and machinery; tie-up for loan from financial institutions/banks; and preparation of cane development programme. In the second year, there should be commencement of civil works for factory buildings, main office building etc., commencement of erection of plant and machinery; commencement of cane development plan; and submission of Pollution Control Scheme to State Pollution Control Board. And in the third year there will be completion of civil works, completion of erection of plant and machinery; conversion of letter of intent into an industrial licence; and commencement of trials. This underlines the point that the policy statement had kept in mind the fact that existing sugarcane availability was inadequate and there must be development plans for realising the potential for making the new factory viable. The learned counsel for Coastal was at pains to demonstrate that even according to the order of the Cane Commissioner, the minimum potential was inadequate for sustaining two new units even if the plan of the co-operative sugar factory for expansion was negatived. Whether the picture is bleak or rosy, will depend upon the capacity of the new entrants. In every new project for exploiting natural resources, there is an element of estimation. For instance, if a licence is given for mining an ore, it is for the prospector to estimate the ore that will be available and certainly the Government cannot guarantee that the raw material will be available to the adequate extent for sustaining the new project. In respect of the agro-industry, the present cultivated area may give the existing availability of raw material, but when there are plans to expand the agro-industry, bringing greater areas under cultivation for supply of raw material, as an essential part of the project, the expansion plan depends upon the capacity of the prospector and all mat the Government can do is to identify the area which could be developed. This part of the programme is essentially a policy matter and as long as the Act and the Rules do not provide that the licences can be given only in respect of existing adequate supply of raw material for making the unit viable, it is not possible for the appellant to contend that no licence should be granted to any other person until the minimum requirement of the appellant is satisfied.The learned counsel for Vasavi pointed out that Coastal had adopted the proposed given by another person for establishment of a new unit north of the river Vamsadhara, which was a completely uncharted backward tribal area, without even making a feasibility report of its own. In projects of this kind, every applicant is expected to make a feasibility report and apply for the licence on the basis of that. If the applicant takes a risk, it cannot be said that the Government should underwrite that risk by ensuring that there will be no other competitor. The economic policy of the Government was to develop backward tribal areas, and the location of Korasavada was identified as ideally suited for the establishment of a new sugar factory. The factory zone would be an area of a radius of 25 kilometres surrounding that factory and if the entire area of the proposed factory at Korasawada was to the north of the river Vamsadhara, we are unable to see how grant of additional factory south of the river Vamsadhara outside the zone of the appellants factory, could be regarded as adversely affecting the appellant. The Delhi High Court has held in The Simbhaoli Sugar Mills Ltd. and Another Vs. Union of India and Others, that an existing factory cannot object to the grant of a letter of intent to a new factory outside the reserved area of the existing factory. On the same principle, we are of the opinion that it is for the appellant to develop the area allotted to it and it has not legal right to object to another letter of intent being given outside its zone of operation. We are also of the opinion that neither the Act nor the Rules provide for guaranteeing adequate supply of raw material particularly when the letters of intent were given for development of backward area with potential availability and not existing availability of raw material.

The alternative thrust of attack by the learned counsel for the appellant was with reference to the manner in which the letter of intent was given to Vasavi. This consisted of the twin objections viz., that Vasavi was given letters of intent inspite of the recommendation of the screening committee while forwarding all the four applications initially, that only one new unit could be licenced; and the other objection being that the application of Vasavi is considered without following the regular procedure of recommendation by the screening committee. With regard to the first point, no doubt the earlier letters do say that only one unit would be viable. In the proforma-B of the recommendations of the State Government, the specific recommendation was that there is possibility of the location of one new sugar factory at Korasawada, but the reasons given in column No. 10 do say that the location Korasawada was ideally suited because the area of operation will be totally on the left side of the river Vamsadhara and the existing factory on the right side of the river, being dearly seperated. It must be remembered that at the time this recommendation was made, the only object was to protect the existing co-operative sugar factory from any adverse effect as can be seen from the report of the Commissioner dated 10-1-1992. It is also noticed that when the application of M.S. Rama Rao was rejected on 29-4-1994, the Government of India has stated that the proposed location given by M.S. Rama Rao viz., Sankhili was not selected by the Government for grant of letter of intent and if there is a request for review, it will be examined in consultation with the State Government. It is stated that MS. Rama Rao has filed a writ petition, which is pending, but that need not affect the consideration of this case. The only factor, according to us, is that the entire consideration in the grant of the letter of intent to the appellant-Coastal was with reference to setting up of a sugar unit north of river Vamsadhara, which would not affect the existing co-operative sugar unit, south of the river Vamsadhara. Subsequently, the application of Vasavi for setting up a sugar factory south of the river Vamsadhara has been entertained. The only question that can arise in such circumstances is whether the area south of the river could support two factories. But that question does not affect the prospects of the appellant setting up a factory in the north of the river. With regard to this, there was an earlier report by the site selection committee on 5-8-1988 stating that the site at Sankhili can support a sugar factory even with the existing raw material without adversely affecting the co-operative sugar factory. At that point of time there was no proposal for any sugar factory north of the river. The proposal of another applicant for a factory in the north of the river has been adopted by the appellant, though it originally applied for setting up a factory at Sankhili. It appears to us that geographically the two areas were kept separate, and once Korasawada was selected as an ideal site in the backward area, the question whether another sugar factory can be established in the south of the river at Sankhili, was an independent issue, and could not affect the setting up of the factory at Korasawada, which was seperated by a natural boundary. The entire exercise has to be understood in the context of the proposed development of the backward area and the potential development of sugarcane and not the existing availability of sugarcane. When the matter is approached thus, we are unable to find fault with the State Government for recommending another factory south of the river even though initially they have said there could be only one additional factory in the district and that too on the north of the river at Korasawada. The appellant having opted out of the choice of Sankhili as the location and having accepted Korasawada as the location for his factory, his objection to consider the cases of the other applicants for setting up a factory at Sankhili, cannot be entertained.

The other objection was with reference to the manner in which the application was entertained. This criticism is based on the fact that the name of Vasavi was deleted from the list of the rejected applications and included for review on the basis of a summary note prepared by the administrative ministry. It was vehemently argued that such a consideration of the application without going through the steering committee, was contrary to the Rules. We are unable to accept this contention because the application had already been considered by the committee and had been listed along with other applications to be rejected only because the appellant''s application had been selected for the location at Korasawada. The letter of Mr. Chandramouli, Principal Secretary to Government, indicated a rethinking on the part of the State Government that the full potential of the district had not been taken into account. In the letter, five taluqs had been named as not having a single factory. These taluqs are in Nellore District, and the sentence occurs below the mention of the application of Sri S.V. Sudhakara Reddy for a factory at Sangham in Nellore District. But, in the summary note, these districts have been added as part of Srikakulam district. This mistake has later been corrected in the record. It is clearly an obvious mistake. But, this mistake does not vitiate the recommendation because in the recommendation the reason given was that Srikakulam district has an immense potential and if a new sugar factory comes up at Veeraghattam sufficient cane would be available within two years to feed the same particularly because of the proposed Vamsadhara project and the existence of two perennial rivers Mahendrathanaya and Nagavali. This recommendation also refers to the fact that the appellant had already been recommended for a letter of intent at Korasawada. We are unable to accept the objection that the application did not go through the screening committee, because it was already considered by steering committee. All that the Rule requires is that the report of the screening committee, has to be considered before granting the licence. Even if the report had recommended the rejection of the application, the licensing committee has ample powers to overrule the same and grant a letter of intent In the present case, the earlier recommendation with reference to the appellant was for a location at Korasawada and when it was found that there was ample potential for another factory south of the river, the licencing committee considered the application of Vasavi for that site particularly when there was no other application for that site, the appellant having opted out of the same, and M.S. Rama Rao''s application" having been rejected. If at all any one was aggrieved/it would have been Rama Rao, and his objections cannot be taken advantage of by the appellant.

This takes us to the question whether the writ petition itself was maintainable on the issue of locus standi. The Supreme Court has held in several licencing cases such as The Nagar Rice and Flour Mills and Others Vs. N. Teekappa Gowda and Bros. and Others, and Mithilesh Garg, Vs. Union of India and others etc. etc., , that where the right of an existing licencee is not infringed, it has no locus standi to question the grant of licence to another person even if it was contrary to the provisions of any statute or Rules. The learned counsel for Vasavi also raised the point of laches on the ground that the writ petition has been filed on 22-8-1994 challenging the licence granted on 7-3-1994. The answer of the appellant is that he had filed a review on 16-4-1994 which is still pending. In the case of Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , it was observed that in a writ petition filed more than five months after the acceptance of tender when the respondent had already incurred considerable expenditure, it would not be a fit case to interfere. We do not think that the said principle could be applied to the facts of this case because the letter of intent itself gives three years time with staggered investment to start the project. The crux of the case is only that the appellant apprehends that there will not be adequate supply of sugar cane to make his factory viable at the optimum capacity of 2500 TCD. This is a risk inherent in the operation because the condition of the letter of intent itself is that the applicant has to make its own arrangement for the development of the cane and only the area of operation will be declared. As can be seen from the prospectus issued by the other sugar factories, projection of capacity utilisation takes 3 to 5 years for commencement of production and in the first year it is only 70%. The letter of intent itself gives that it takes three years to commence production and convert the letter of intent into an industrial licence. It would follow that that the matter refers to the projection of the quantity of sugar cane that could be developed in a period of six years for meeting the optimum capacity. If the appellant should feel that it is inadequate, as has been asserted in several ; representations, then it is a matter for review by the Government. If it is a question of meeting the risk by the subscribers to the capital, clearly it is a point which has to be advertised in the prospectus of the company as one of the external risk factors. If the company feels that this risk factor cannot be managed without Government''s support, all that we can say is that the appellant has to give way to another applicant who could manage that risk. In one of the representations made by the appellant, it is staed that even the land available for development of sugar-cane is restricted because it is also declared to be the land for development of oil palm cultivation, and that the only solution would be to allot mandals of neighbouring district to Vasavi so that the appellant can have not only the areas north of the river but also the mandals south of the river Vamsadhara to assure adequate supply of raw material. Even very recently on 5-10-1995 giving the quarterly progress report, Coastal has submitted that it would not be in a position to take effective steps for implementation of this project unless adequte sugar-cane zone is allowed and would be compelled to seek extension of time. This indicates that the Coastal is only trying to shift the responsibility to the Government for facing the risk, which, in the economic sphere, squrely lies on the entrepreneur. The risk factor, to our mind, is a matter of zoning, completely within the jurisdiction of the Cane Commissioner and subject to review by the State Government. Since an appeal of the appellant is pending on this aspect, we are of the opinion that the writ petition is not maintainable on this ground also. We deem it fit to direct the State Government to dispose of the appeal expeditiously in any event not later than 2 months from the receipt of a copy of this order. Hence we are in complete agreement with the decision of the learned single Judge, and we have no hesitation in dismissing the writ appeal. No costs.