ISLAMABAD: While dismissing appeals against a Lahore High Court order in a sugar mills case, the Supreme Court on Thursday ordered relocation of three sugar mills from cotton belt districts in southern Punjab to their original sites after dismantling of their machinery within two months.

“We do not find any merit in these appeals, consequently the petitions are dismissed,” announced Chief Justice of Pakistan Mian Saqib Nisar while closing the hearing of the appeals moved by Haseeb Waqas Sugar Mills Ltd, Chaudhry Sugar Mills Ltd and Ittefaq Sugar Mills, believed to be linked to the Sharif family.

In a short order, a three-judge bench of the apex court, however, allowed the appellants to conduct any lawful business other than running sugar mills in the buildings after the relocation of the machinery.

Dismisses appeals against LHC order

The appellants had requested the apex court to set aside the LHC order of March 2, 2017, by allowing the petitioner companies to commence functioning.

A number of petitions, including those by JDW Sugar Mills Ltd, Ashraf Sugar Mills and Indus Sugar Mills, were earlier moved before the court pleading that the relocation of the existing sugar mills would amount to establishing a new sugar mill in the local area.

On Thursday, the Supreme Court announced its short order after senior counsel Aitzaz Ahsan, who was representing JDW Sugar Mills, suggested that the appellants could be ordered to take the machinery back with nuts and bolts but he would have no complaint if the facility was utilised by them for a textile factory.

During the proceedings Justice Umar Ata Bandial observed that some incentives should be given to gradually remove sugar mills from those districts, which were known as cotton belt areas but where some sugar mills had been given massive monopoly.

But on a lighter note, CJP Nisar observed that Omni Group would take over and monopolise everything if all the mills were relocated from Punjab. Apparently, CJP Nisar without naming anyone was referring to Omni Group of the Majeed family which is believed to be close to former president Asif Ali Zardari.

One of the sugar mills — Ittefaq Sugar Mills Limited — was relocated from Pakpattan district to Bahawalpur district during the period when a ban was in place on the establishment of new sugar mills or the expansion of the existing sugar mills.

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

Subsequently, petitions were filed in the LHC 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 on the recommendation of a special committee. That policy too was challenged before the LHC and was later suspended on Jan 4, 2016.

While the operation of the relocation policy was suspended, Chaudhry Sugar Mills decided to relocate its existing sugar mills to Rahim Yar Khan with an impression that there was no requirement for the mills to seek permission from the Punjab government as the relocation policy was suspended. The petitioners believed that the relocation was not in contravention of the 2006 policy as it applied only to setting up of new mills or expanding the production facility of the existing mill in the province, as neither new mills had been set up nor the size of the existing facilities expanded. The mills were only relocated.

The appellants argued that the 2006 notification did not restrict relocation of the existing sugar mills since such relocation would leave the total crushing capacity installed in the province unchanged.

They argued that at the time when the mills were established in Pakpattan district, there was an average sugarcane cultivation of 50,000 acres and average yield per acre was approximately 550 maunds but with the passage of time the total cultivation area reduced to 8,000 acres during 2013-14.

Due to decreasing availability of sugar cane in the area, the petitioner mills were forced to function below its available capacity that also constrained its business viability. Contrary to the situation in Pakpattan, Bahawalpur had shown tremendous growth in sugar cane cultivation and at present there were 400,000 acres under sugar cane cultivation.

Published in Dawn, September 14th, 2018