SHC declares allocation of export quota to sugar mills in Sindh illegal

The Sindh High Court (SHC) has held that the allocation of 2,500-metric-ton (MT) quota for export of sugar to every sugar mill of Sindh by the cane commissioner was illegal.

In a recent hearing, the high court directed the Sindh cane commissioner to implement the federal government’s policy in letter and spirit regarding sugar export. The direction came on a lawsuit of three private sugar mills that had challenged the distribution of sugar export criteria by the cane commissioner to the sugar mills in the province by treating them alike irrespective of their performance and contribution.

They had submitted that the cane commissioner’s action was arbitrary and did not demonstrate the application and implementation of the federal policy in the distribution of export quota to the sugar mill owners.

The plaintiff’s counsel submitted that the federal government had distributed quota in term of respective percentage out of surplus sugar available for distribution as first trench wherein 152,500 MT was awarded to Punjab, 80,000 MT to Sindh and 17,500 MT to KPK.

They submitted that the allocation of quota by the cane commissioner was obviously designed to unfairly and unlawfully benefit a group of mill owners having no significant contribution at all in the process of crushing the sugar cane and production of sugar and they were given benefit at the expense of other mill owners who were efficient.

They submitted that the large sugar mills in Sindh had produced sugar in the crushing season 2021-22 up to 200,000 MT and based on such production, their export allocation should have been more than 7,600 MT against a sugar mill having the production of sugar in the crushing season 2021-22 as 9,040 MT, which on the application of the federal policy would have got 316 metric ton export quota, but which ended up getting 2,500 MT quota by the blessings of the provincial cane commissioner.

They submitted that the cane commissioner had put different classes of sugar mills in the same pool and/or had blessed dissimilar sugar mills in the similar way, causing discrimination, which was not the spirit of federal export policy of sugar.

Counsel for the sugar mills association submitted that the high court could not interfere with the policy matters of the federal government. They submitted that none of the members of association had objected to the export of sugar on the allocation of quota as decided by the cane commissioner and the plaintiffs had not raised any objection either before the association or the cane commissioner.

They said the cane commissioner had formulated a policy and made a decision in which the export for sugar had been allocated on a lawful, just, fair and reasonable basis.

The cane commissioner submitted that he had equally distributed the quota to all kind of mills irrespective of their capacity, which was agreed to and accepted by all. He said the decision was made in public interest in order to ensure timely payments to the growers across the province, which was affected by heavy floods.

A single bench of the SHC headed by Justice Shafi Siddiqui after hearing the arguments took exception to the conduct of the federal government observing that mysteriously, neither the federal law officer nor the ministry of commerce director general had assisted at all to complete the puzzle.

The high court observed that federal law officials were unable to demonstrate as to what should be the basis of the allocation of quota for export to sugar mills and whether it should be on the same formula that was applied while allocating quota to the provinces.

The SHC observed that the federal government was not denying the provincial quota on the basis of performance of the sugar cane crushed and sugar produced by them via sugar mills situated there. The judge observed that it were perhaps instructions given by the commerce ministry to the relevant government officers to remain inexpressive as even no counter-affidavit to the applications in hand was filed despite seven dates of hearing after the notice.

The high court observed that it had not been denied that there were 32 sugar mills operating and functioning in Sindh in 2020-21, of which the plaintiffs’ three mills produced a significant amount of sugar. The SHC observed that different people could not be treated alike when the law permitted distinctions and when the federal government had not carved out the policy for allocating the quota by treating all the mills alike, why the cane commissioner adopted that criteria.

The high court restrained the cane commissioner from distributing the quota arbitrarily. The SHC observed that it would expect prompt makeup for the losses by adhering to the conclusion drawn by the court as far as sugar mills quota was concerned whose distribution was based on performance that was calculated by the sugar cane crushed and/or sugar produced.

The high court observed that since it was a time bound issue and sugar had its best use if consumed in two years, therefore, it was expected that the cane commissioner would respond and submit a reallocation within two weeks.