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SC rejects pleas for review of sugar mills relocation order

Updated February 27, 2019

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Unchecked cultivation of sugarcane affects water resources, destroys cotton crop, says SC judge. — Umair Ali
Unchecked cultivation of sugarcane affects water resources, destroys cotton crop, says SC judge. — Umair Ali

ISLAMABAD: The Supreme Court rejected on Tuesday petitions seeking review of its Sept 13, 2018 order for relocation of three sugar mills from cotton belt districts in southern Punjab to their original sites after dismantling of their machinery.

The industrial units in question — Haseeb Waqas Sugar Mills Limited, Chaudhry Sugar Mills Limited and Ittefaq Sugar Mills — are believed to be linked with the Sharif family.

A three-judge SC bench headed by Justice Sheikh Azmat Saeed had taken up the review petitions filed by Haseeb Waqas Sugar Mills and Ittefaq Sugar Mills against the apex court’s decision to uphold the March 2, 2017 Lahore High Court verdict of shifting the mills from the cotton belt area.

Malik Qayyuum, the counsel for Ittefaq Sugar Mills, argued that the high court had in its decision observed that the sugar mills could apply to the government for the shifting of the industrial units, but the apex court order had no mention of it.

Judge says unchecked cultivation of sugarcane affects water resources, destroys cotton crop

He contended that these mills had been shifted to Bahawalpur from Pakpattan, but when sugarcane was not cultivated how could they take back the mills to Pakpattan again.

At this, Justice Saeed wondered should they pass an order for growing sugarcane in Pakpattan.

When Sibtain Fazli, representing Haseeb Waqas Sugar Mills, said the mills could be set up with the permission of the government, Justice Umar Atta Bandial asked whether the apex court had in its judgment not discussed the matters relating to government policies.

Justice Bandial pointed out that the unchecked cultivation of sugarcane had adversely affected water resources and also destroyed cotton crop in the area, which was a major crop that Pakistan exported.

At a previous hearing on Sept 13 last year, Justice Bandial had stressed the need for giving some incentives to peter out sugar mills from those districts which were known as cotton belt areas but where some sugar mills had massive monopoly.

Justice Saeed observed that everything would start functioning smoothly if the sugar support price was abolished, adding that most of the sugar mill owners were those who decided the subsidy on sugar.

Justice Qazi Faez Isa observed that the owners of sugar mills did have the fundamental rights to shift their mills, adding that sugar mills should be shifted from one location to another in the interest of the country. The prime purpose of the apex court order was not to close the mills but to impose a ban on establishing sugar mills in the two districts.

In its Sept 13, 2018 order, the apex court bench headed by then chief justice Mian Saqib Nisar had held that though the machinery and other industrial equipment would have to be relocated, the buildings in which the sugar mills were installed would remain intact and the appellants could run any other lawful business other than sugar mills.

The main plea of the appellants was to set aside the high court order and allow the petitioner companies to commence function without any restraint.

In 2006, the Punjab government had issued a policy under which neither a new sugar mill could be set up in the province nor could an existing one expand its production capacity. The purpose of the policy was to discourage sugarcane crop in cotton belt areas as the former consumes 18 per cent more water than other crops. It was believed that the relocation of an existing sugar mill would not be covered under the 2006 policy.

Subsequently, petitions were filed in the high court during the hearing of which the then provincial government announced a relocation policy on Dec 4, 2015, allowing relocation of an existing sugar mill but only on the recommendations of a special committee. That policy too was challenged in the high court and was suspended on Jan 4, 2016.

While the operation of the relocation policy was suspended, one of the sugar mills decided to relocate its existing unit to Rahim Yar Khan with an impression that since the relocation policy had been suspended, there was no requirement for the mill to seek permission from the Punjab government for relocating the existing facility.

The petitioners believed that relocation was not in contravention of the 2006 policy since it applied only to setting up of new mills or expanding the production facility of the existing mills in Punjab as neither new mills were set up nor the size of the existing facilities expanded.

The appellants believed that the 2006 notification did not impose restriction on relocation of the existing sugar mills since such relocation would leave the total crushing capacity installed in the province unchanged. They believed that at the time when the mills were established in Pakpattan district, there was an average sugarcane cultivation of 50,000 acres, but with the passage of time the total cultivation reduced to 8,000 acres during 2013-14.

Due to decreasing availability of sugarcane in the area, the petitioner mills were forced to function below their available capacity which constrained their business viability. Contrary to the situation in Pakpattan, Bahawalpur has shown huge growth in sugarcane cultivation and at present approximately 400,000 acres are under sugarcane cultivation.

Published in Dawn, February 27th, 2019