Sant Kabir Food Product and another vs State of U.P. and another

D.S. Sinha, J.—Heard Shri S. D. Kautilya, holding brief of Shri Dinesh Dwivedl, learned counsel of the petitioners and Shri Vinay Malviya, learned standing counsel of the State of U. P. representing the respondents, at length and in detail.

By means of this petition under Article 226 of the Constitution of India, the petitioner No. 1, a registered partnership firm and the petitioner No. 2, who is one of the partners of the firm, seek to challenge the validity of the order dated 29th February, 1992, passed by the respondent No. 1 rejecting their claim for exemption from giving levy of the Kharif year 1991-92 under the provisions of U. P. Rice and Paddy (Levy and Regulation of Trade) Order. 1985 (hereinafter called the Levy Order) as provided in the Government Order dated 30th October, 1991 a copy of which is to be found on record as Annexure-2 to the petition.

The acts and events constituting the facts of the case as they emerge from the averments contained in the petition are these :

For the purposes of establishing a new rice-mill at Basti in the Eastern Zone of the State of U. P. the petitioners applied for permit u/s 5 of the Rice Milling Industry (Regulation) Act, 1958 (hereinafter called the Act). The permit was granted on 26th September, 1990. On 21st January, 1991, Plants and Machinery were purchased, and set up on 2nd April, 1991, which was duly verified on the same day by the Deputy Regional Marketing Officer. Basti.

Prior to setting up of the Plants and Machinery and Its verification, the petitioners had made an application for grant of the licence for carrying on rice-milling operation in the newly established rice-mill as required u/s 6 of the Act. The licence for carrying on milling operation in the newly set up rice-mill was granted on 24th March. 1991.

For setting up the rice-mill, the petitioners had obtained a loan of Rs. 15.34,319 from the U. P. Finance Corporation. The last two installments were given on 11th October, 1991 and 1st November, 1991. After grant of the licence, petitioners had applied for electricity connection which was granted on 11th November. 1991. The petitioners had also applied for registration with the Directorate of Industries which was granted on 18th November. 1991. The registration under the Sales Tax Act was obtained on 11th November. 1991.

Then, the petitioners applied for grant of exemption from the levy under the Levy Order in terms of the Government Order dated 30th October. 1991. The prayer of the petitioners for grant of the exemption from the levy under the Government Order dated 30th October. 1991, was turned down by the impugned order dated 29th February, 1992, a photocopy whereof is Annexure-1 to the petition.

Under the Government Order dated 30th October. 1991, the exemption from the levy for Kharif year 1991-92 was available to such new rice-mills which were established in the Eastern Region of the State of U. P. after 1st October. 1991 and where 40% Levy was applicable.

Counter-affidavit on behalf of the respondents has been filed. No rejoinder-affidavit has been filed on behalf of the petitioners, though the copy of the same was served in the office of the counsel of the petitioners as long back as on 2nd September. 1993.

The uncontroverted averments contained in the counter-affidavit are that the rice-mill of the petitioners was in fact established on 2nd April, 1991 and not after 1st October, 1991, as alleged by the petitioners, that the fact of establishment of the rice-mill on 2nd April, 1991, is admitted in paragraph 3 of the writ petition ; that the petitioners applied for licence under the Act for carrying out rice-milling operation in the rice-mill after establishment of the mill on 2nd April, 1991 ; that the grant of licence for carrying out the rice-milling operation is not relevant to decide the question of establishment of the rice-mill for which only permit is required under the Act ; that the date of production is not relevant for determining the question of establishment of rice-mill : that the date of purchasing paddy, namely, 11th April. 1991 is also not relevant to find out that on which date the rice-mill was established ; that the Plants and Machinery having been set up on 2nd April, 1991 and having been verified by the Deputy Regional Marketing Officer, Basti, the date of establishment of the rice-mill would be 2nd April, 1991 : that the registration of the rice-mill with Industry Department will not determine the date of establishment of the rice-mill ; and that the undisputed fact that the Plants and Machinery were set up before 1st October. 1991, would disentitle the petitioners to the exemption envisaged in the Government Order dated 30th October, 1991.

From the rival contentions of the parties, the relevant question which emerges for adjudication is whether the rice-mill of the petitioners was established before 1st October, 1991 or after 1st October, 1991.

Before embarking upon the exercise of determining the controversy, it will be apposite to notice the relevant provisions of the Act and the levy order.

Section 8 (1) of the Act prohibits the establishment of any new rice-mill except in accordance with the permit granted u/s 5 of the Act. Sub-section (2) of Section 8 of the Act ordains the owner of the rice-mill to obtain licence before carrying on rice-milling operation.

Section 5 (1) of the Act provides that any person or authority may make an application to the Central Government for the grant of permit for the establishment of a new rice-mill ; and any owner of the defunct rice-mill may make like application for the grant of permit for recommencing the rice-milling operation in such mill. The other part of Section 5 of the Act contains, procedure and guidelines for dealing with the application for grant of permit for establishment of new rice-mill or for recommencing rice-milling operation in a defunct mill.

Section 6 of the Act deals with the grant of licence to any owner of existing rice-mill or of a rice-mill in respect of which a permit granted u/s 5 is effective for carrying on rice-milling operation in the rice-mill.

A bare perusal of Sections 8, 5 and 6 makes it abundantly clear that establishment of rice-mill and carrying out rice-milling operation are two distinctly different situations envisaged in the Act. For establishment of a new rice-mill and for recommencing the rice-milling operation in a defunct rice-mill obtaining permit u/s 5 of the Act is a condition precedent. Section 5 contemplates the establishment of new rice-mill or recommencing the rice-milling operation in an already established defunct rice-mill.

Section 6 of the Act postulates the grant of licence to a owner of existing rice mill, i.e., an already established rice-mill or a rice-mill in respect of which permit granted u/s 5 is effective. The grant of licence u/s 6 is a requirement to be met by the owner of an existing rice-mill or owner of the rice-mill for establishment whereof the permit has been granted and that permit is effective.

No rice-mill can be established without a permit. No rice-milling operation can be carried out in a defunct rice-mill unless permit is granted u/s 5 of the Act. No owner of an existing rice-mill car carry on the rice-milling operation without obtaining licence u/s 6 of the Act. Likewise, an owner of the existing rice-mill in respect of which a permit granted u/s 5 of the Act is effective is obliged to take a licence u/s 6 of the Act for carrying on rice-milling operation in that rice-mill. The provisions of Sections 5, 6 and 8 leave no room for doubt that the expressions establishment of a rice-mill and ''carrying on rice-milling operation'' are not either synonymous or interchangeable.

The claim of the petitioners for benefit of exemption from levy for the year 1991-92 is founded on the assertions that the rice-mill was established after 1st October, 1991. To fortify these assertions that mill was established after 1st October, 1991, reliance is placed on the fact that the last two installments of the loan obtained from the U. P. Finance Corporation were received on 11th October. 1991 and 1st November, 1991 : that the electricity connection was granted on 11th November, 1991 ; that they were granted registration by Directorate of industry on 18th November. 1991 : and that the registration under the Sales Tax Act was obtained on 11th November, 1991. For establishment of a rice-mill, what is necessary is obtaining permit under the Act. The grant of loan from the U. P. Finance Corporation or any other such agency or grant of electric connection or registration with the Directorate of industry or registration under the Sales Tax Act is not a condition precedent for establishment of a rice-mill. These factors may be relevant for the purpose of carrying on rice-milling operation. Therefore, on the basis of aforesaid factors, it cannot be held that the rice-mill of the petitioners was established after 1st October, 1991. It is to be remembered that for exemption, under the Government Order dated 30th October, 1991, what is envisaged is establishment of the rice-mill and not carrying of the rice-milling operation therein. As pointed out earlier, for establishment of the rice-mill the factors relied upon by the petitioners are not relevant.

For what has been said above, the Court is of the opinion that the claim of the petitioners for the exemption in terms of Government Order dated 30th October, 1991. Is ill founded and they are not entitled to any relief in that regard.

In the result, the petition fails and is hereby dismissed. The interim order/orders shall stand vacated. There is no order as to costs.