This writ petition assails certain notifications (discussed below) issued by the Punjab Government under the Punjab Industries (Control on Establishment and Enlargement) Ordinance, 1963 (the "Ordinance"). Also impugned is the order dated 11-7-2000 issued by the Secretary, Ministry of Industries (respondent No,1) pursuant to the aforesaid notifications. Before considering the particular circumstances of this case it is appropriate first to make a note of the relevant provision of the Ordinance and of the notifications referred to above.
2. The stated object of the Ordinance as set out in its preamble is to provide for the organized and planned growth of industries in the Province. Sections 3 and 11 of the Ordinance, which are relevant for the purpose of deciding this petition, provide as under:-- "Section 3.--No person shall establish or cause to be established any industrial undertaking or enlarge or cause to be enlarged any existing industrial undertaking except with the previous permission in writing of Government 2[.] [Provided that the application of any person for the grant of such permission shall not be rejected- -
(a) without giving such person an opportunity of showing cause against it; or
(b) unless the Government is satisfied, on the basis of information available to it and after making such inquiry as it may deem fit, that the grant of permission to such person will be prejudicial to the national interest, or injurious to the health of or a source of nuisance for the residents of the local area in which the industrial undertaking is proposed to be set up or, as the case may be, the industrial undertaking which is proposed to be enlarged is situated.]"
Section 11. Government may, by notification in the official Gazette, exempt any industrial undertaking or class of industrial undertakings from all or any of the provisions of this Ordinance or the Rules."
3. From time to time the Provincial Government has issued notification in exercise of its powers under section 11 of the Ordinance. The first such notification, which bears relevance to the present case was issued on 2-10-1986 and is hereinafter referred to as the "Original Notification". By means of the Original Notification, all industries and areas in the province were exempted from the application of section 3 of the Ordinance except those specified in the said Notification itself. As a consequence, border areas, areas prone to flooding and urban areas among other specified locations, were retained within the regulatory ambit of section 3 of the Ordinance while in the remaining areas of the Province, industries could be set up (subject to certain industry-wise restrictions) without obtaining the prior permission of the Government under section 3 of the Ordinance. The area-wise restrictions, which find mention in paragraphs Nos.1 to 4 of the Original Notification, reflect what is officially termed as the "Location Policy" of the Punjab Government.
4. In addition to the Location Policy the original Notification also set out in paragraph 5 thereof specific industries that were not exempted from the provisions of section 3 of the Ordinance. The requirement for prior Government approval in respect of the industries specified in paragraph 5 (which included the industries listed in Schedule C to the Original Notification) was retained. The sugar industry, which found mention in Schedule C to the Original Notification, therefore, could only be set up subject to the prior approval of the Government under section 3 of the Ordinance. The petitioner, which was interested in setting up a sugar mill, applied for and was granted approval under the aforesaid section, for setting up its sugar mill in Tehsil Hafizabad by means of No- Objection Certificate dated 7-12-1990 .
5. After the Original Notification the Location Policy underwent numerous changes, primarily it would appear, effecting the sugar industry. On 3-11-1988 as Notification (the "First Amending Notification") was issued whereby the sugar industry was brought into the Location Policy of the Government through the incorporation of piragraph 2(a) in the Original Notification. Paragraph 2(a) stipulated that no sugar mill would be allowed to be set up in a defined negative area comprising of the divisions of Multan, Bahawalpur and D.G. Khan and the district of Okara.
6. The frequent changes in the Location Policy of the Government as reflected in the First Amending Notification and five subsequent notifications (mentioned in paragraph 8 below) suggested to me possible arbitrariness and a lack of deliberation in the formulation of the Location Policy. The five later notifications, which have been discussed below, do show whimsicality and absence of objectivity which has been commented upon in a later part of this judgment. However, from the Government's record produced in Court I note that the Original Notification as well as the First Amending Notification were properly thought-out and well-considered instruments. This is borne out by the summaries prepared by the concerned administrative departments of the Government which I have gone through. Both notifications were a result of extensive deliberations commensurate with the policy-making exercise undertaken by the Government affecting both the agricultural and industrial sectors of the Province. A Ministers' Committee was constituted comprising of the Ministers of Industries Agriculture and Food and the Chairman of the Planning and Development Department. The existing cropping pattern and land use in the Punjab was examined in depth on the basis of production figures for the cotton and sugarcane crops, prepared by the Agriculture Department for the years 1983 to 1986. Furthermore, in order to identify suitable areas for the setting up of new sugar mills the availability of surplus sugarcane in various Tehsils of the Province, after meeting the requirement of existing sugar mills, was also worked out before finalizing the Location Policy in respect of the sugar industry. A sub-committee comprising of the Secretary Food, Secretary Industries, the Chief Economist, Planning and Development Department and the Director Crop Reporting, Agriculture Department, was also consitituted for the purpose of giving its recommendations regarding the said Location Policy. Meetings were held with the representatives of the various Chambers of Commerce and Industry in the Punjab to solicit their views. In short it was only after a thorough and extensive exercise conducted by the Government and after the consideration of relevant data that the Location Policy relating to the sugar industry, was notified through the First Amending Notification. It is evident from the Government's record that the notified Location Policy was made with the object of ensuring that additional sugar manufacturing capacity could be set up in the Punjab without the displacement of the cotton crop which was considered to be of special significance to the Government. The Location Policy set out in the First Amending Notification, as such, represented a legitimate exercise of the executive authority of the Government and was also consistent with the stated objective of the Ordinance to ensure the organized and planned growth of industries in the Province.
7. What happened subsequent to the First Amending Notification is a story of distasteful cronyism which was indulged in by the incumbent Chief Ministers of the time which undermined the well- considered Location Policy of the Government and sacrificed the State and public interest to the business. Commercial and political interests of persons who were influential politically or otherwise.
It appears that as and when the Government in power wished to favour such influential persons, the Location Policy was modified without much ado and wholly in disregard of the considerations which had prevailed in the formulation of the Location Policy in the first place. New sugar mills as a result, were allowed to be set up in the negative area comprising of the divisions of Bahawalpur, Mutlan and D.G. Khan and the District Okara.
8. By means of notification dated 4-3-1990 the Location Policy was modified and Tehsil Rahimyar Khan was removed from the negative area. On 6-8-1990, through another notification, District Rajanpur was also taken out of the negative area. Likewise, the Tehsils of Bahawalnagar and Muzaffargarh were excluded from the negative area by means of Notifications dated 14-10-1990 and 18-11-1990 respectively. Finally, through a Notification dated 20-12-1994 Tehsil Depalpur was also excluded from the said negative area.
9. The frequency with which the well-considered Location Policy of the Government was modified and that too in such quick succession, prima facie, raised questions about the good faith of the Government and its motivation for making the modifications. It was for this reason that I found it necessary to direct the respondent department to make its records and administrative summaries available for inspection, to learned counsel in this petition and in some connected writ petitions. It has become apparent from an examination of the official record that each of the notifications mentioned in the preceding paragraph, was issued to accommodate influential persons desirous of setting up sugar mills in the negative area. These notifications are not based on any valid justification for modifying the Location Policy. No committees were constituted nor was any data, information or opinion gathered to justify deviation from the Location Policy which had been formulated after the in-depth and extensive deliberations preceding the First Amending Notification as set out in paragraph 6 above. The learned Advocate-General at the very outset conceded that he could not defend what had happened during the past. He did, however, argue that any failing of misgovernance in the past could not be made the basis for allowing it to continue in the future also.
10. It appears from the record of the Ministry of Industries produced in Court that the ill-motivated and unconsidered deviations from the Location Policy and its detrimental consequences were finally notified by the Government in 1997 when two Members of the Provincial Assembly made separate applications seeking further modifications in the Location Policy with the object of setting up mini sugar mills in the negative area. This triggered a review of the Location Policy and the manner of its past implementation. In an administrative summary prepared for the Chief Minister which I have gone through, it was recognized that various Teshils had been deleted from the negative area in the past under directives of various Chief Ministers to facilitate applicants in setting up sugar mills in the negative area. The need for a Location Policy uniformly applied and enforced, was, therefore, felt. A five-Member Committee headed by the Minister of Industries and including the Secretary Agriculture, Secretary Industries and the Chairman, Planning and Development Department, was constituted for the purpose of evaluating the Location Policy and making recommendations. The Committee held various meetings and after due consideration of various factors concluded that the negative areas policy framed in 1988 and notified through the First Amending Notification, was based on sound reasoning, and should be restored subject only to the exclusion of Tehsil Bahawalnagar which, for reasons found relevant by the Committee, should not be part of the negative area. As a result, the negative area as first notified by the First Amending Notification (barring Tehsil Bahawalnagar) was restored by means of Notification dated 21-11-1998 (the "Final Notification"). Consequently, while the sugar mills, which had been set up following the various notifications specified in paragraph 8 above, were left untouched, the applications of the two M.P.As., referred to above, were rejected.
11. It is in the backdrop of the circumstances narrated above that I now come to the specific circumstances in which this petition has been filed. The petitioner, which is a limited Company, established a sugar mill in Tehsil Hafizabad in 1995. As noted above, permission for setting up of the mill was obtained by the petitioner from the Punjab Government as required by the provisions of section 3 of the Ordinance. It is stated in the petition that the petitioner's sugar mill suffered losses for various reasons including the non-availability of sugarcane in quantities sufficient to meet the needs of the mill. The petitioner, therefore, decided to shift its sugar mill from its existing location in Hafizabad to Tehsil Khanpur which fell in the negative area.
12. It was then that one Malik Nusrat Abbas claiming to be Chief Organizer of Anjuman-e- Kashtkaran Kamad, District Hafizabad, filed Writ Petition No,11888 of 2000 in this Court praying, inter alia, that the shifting by the petitioner of its sugar mill from Hafizabad to Khanpur be declared to be without lawful authority. The said writ petition was disposed of by a learned Single Bench of this Court vide order dated 21-6-2000 whereby a copy of the said writ petition was sent to the Secretary respondent No,1 with the direction to decide the petitioner's applications (which had been earlier moved before him) in accordance with law after providing a personal hearing to Malik Nusrat Abbas and to the petitioner. Pursuant to the said order dated 21-6-2000 the respondent No,1 called the said persons, namely, Malik Nusrat Abbas and the petitioner for a hearing in his office on 11-7- 2000. The petitioner, which was represented at the hearing by its legal adviser, sought an adjournment to obtain instructions from the responsible officers of the petitioner who, according to him, had gone to Saudi Arabia to perform Umra. This request was allowed and the hearing was adjourned to 21-7-2000 on which date the legal adviser of the petitioner was told to come prepared to argue the matter. In the meanwhile, however, the Secretary respondent No,1 directed that the dismantling and shifting of the petitioner's sugar mill should be stopped immediately until further orders,
13. Instead of obtaining the instructions for which the adjournment had been granted to the petitioner, the present writ petition was filed. An application (C.M. No,1/2000) was also moved by the petitioner seeking interim relief praying for suspension of the order dated 11-7-2000 issued by respondent No,1 against the shifting of the petitioner's sugar mill to Khanpur. By means of an interim order dated 1-8-2000 the operation of the impugned order dated 11-7-2000 was suspended pending disposal of this petition. As a consequence, the respondents were restrained from interfering in the installation of the petitioner's mill at Khanpur. It was, however, ordered that the installation of the petitioner's sugar mill at khanpur would be at the petitioner's risk and cost, and would not ipso facto create any rights in favour of the petitioner and also that the installation would be subject to the final decision of this petition. The Court was informed that the petitioner's mill has since been shifted from Hafizabad and installed at Khanpur.
14. It is in the circumstances narrated above that the Original Notification as amended by the First Amending Notification and the final Notification have been impugned in the present petition alongwith the order passed by the respondent No,1 dated 11-7-2000.
15. Learned counsel for the petitioner, firstly, contended that paragraph 2(a) which sets out the Location Policy of the Government in respect of the sugar industry and which was incorporated in the Original Notification by means of the First Amending Notification constituted excessive subordinate legislation. This assertion was made on the ground that paragraph 2(a) contained no guidelines. For the relaxation of the same. According to learned counsel, this omission had resulted in the arbitrary variations in the negative area notified from time to time as mentioned in paragraph 8 above. He, therefore, argued that paragraph 2(a) setting out the Location Policy of the Government should be struck down as arbitrary and unreasonable and also because it was not based-on any sound and objective considerations. The argument of learned counsel is not well founded. I have discussed in some detail the extended process and the serious deliberations which took place in 1988 preceding the First Amending Notification as a result of which paragraph 2(a) was incorporated in the Location Policy of the Government. Far from being arbitrary and unreasonable, the First Amending Notification was a result of the sound and objective considerations noted above. I, therefore. Hold that the contents of paragraph 2(a) fall within the policy making domain of the executive authority of the Province which was properly exercised. The same cannot, therefore, be struck down.
16. However, having so held I am not oblivious of the abusive manner in which the well-considered Location Policy of the Government was tampered with for considerations which clearly were. Based on favouritism and were not motivated by the interest of the State. I have little doubt that if any of the notifications mentioned in paragraph 8 had been challenged in Court, at the relevant time, on the ground of arbitrariness and unreasonableness, such challenge would have merited serious consideration. In this context I find that the Final Notification represents a salutary correction of the waywardness with which the Location Policy of the Government was undermined in the past. It is not for this Court to sit in judgment over the policy decision of the Government once the Court concludes that the process through which such policy decision was arrived at was not open to exception.
17. Learned counsel for, the petitioner next argued that paragraph 2(a) was also ultravires the provisions of section 11 of the Ordinance. He contended that section 11 empowered the Government to exempt any industrial undertaking or class of industrial undertakings from all or any of the provisions of the Ordinance. According to him section 11 did not empower the Government to notify areas (as opposed to industrial undertakings) in exercise of powers vested in it under section 11 of the Ordinance. This argument of learned counsel for the petitioner is also misconceived. The wording of the notifications in question will not be the determining factor in deciding the vires of the said notifications. In substance, the effect of these Notifications is to grant an exemption to all industrial undertakings in the Province other than those finding mention therein. As a consequence, all industrial undertakings proposed to be set up in the Province outside areas notified by the Government, can now, as a result of the aforesaid Notifications, he set up without the prior permission of the Government. The Notifications, therefore, need to be seen in the historical context, where to start with every industrial unit set up in the Province regardless of its nature or location, required the approval of the Government under section 3 of the Ordinance. It is from this whole that industrial undertakings not falling in the notified areas, have been carved out and granted exemption. As a consequence, if the said Notifications, which have been impugned in the present petition, are declared to be unlawful, the result would not provide any benefit to the petitioner. In such event the approval provisions of section 3 of the Ordinance would become applicable throughout the Province. Such consequence would obviously mean that the petitioner would require Government approval for the installation of its sugar mill in Khanpur.
18. Furthermore, any challenge to the vires of paragraph 2(a) on the ground urged by learned counsel for the petitioner could only be allowed (if at all that were legally permissible) by holding that the exemption allowed to sugar mills in the non-negative areas, by the impugned notifications, is beyond the powers vested in the Government under section 11 of the Ordinance.
This conclusion would naturally follow from the finding already recorded above that the Location Policy of the Government relating to the sugar industry is not open to review by this Court. A decision in these terms as to the vires of the impugned notifications again, would not benefit the petitioner as it would not obviate the necessity of obtaining prior approval for installing its sugar mill at Khanpur.
19. Learned counsel for the petitioner also argued although without much vigour, that the plant and machinery of the petitioner's sugar mill had been imported under the Federal Government's Notification No,484(1)/92, dated 14-5-1992 whereby the Federal Government had granted certain fiscal concessions to industries set up in designated areas. He argued that the petitioner had obtained the permission of the Federal Government for shifting the imported plant and machinery from Hafizabad to Khanpur. According to the contents of the petition, which were only half- heartedly pressed through .Arguments, learned counsel contended that the permission obtained from the Federal Government was sufficient to allow shifting the petitioner's sugar mill to Khanpur. I have gone through the various documents relied upon by the petitioner including its application dated 29-3-2000 addressed to the Federal Secretary, Industries, the Memorandum dated 13-4- 2000 issued by the Federal Government and the No-Objection of the Central Board of Revenue dated 17-6-2000 allowing the petitioner to shift its sugar mill from Hafizabad to Khanpur. The said documents clearly show that the Federal Government was merely interested in ensuring that the fiscal concessions set out in S.R.O. 484(1)/92 were not abused by the petitioner. The Federal Government and the C.B.R. Did not have the power nor did they purport to assert any authority or jurisdiction to override the Location Policy set out in the impugned Notifications which clearly fall within the domain of the Provincial Government. The No-Objection of the C.B.R. Dated 17-6-2000 allowing the petitioner to shift its sugar mill to Khanpur is, therefore, wholly irrelevant in the circumstances of the present case,
20. Before parting with this judgment I would like to comment on certain aspects of the regulatory regime which has been put in place by the Provincial Government through the notifications impugned in this petition. Paragraph 7 of the Original Notification, which empowers the Government to relax any of the provisions of the said Notification in the case of a particular industrial unit or class of units or industries does, on its face provide untrammelled authority to the Government. It, therefore, presents potential for abuse of such authority. In the circumstances, the respondent Government is directed to incorporate guidelines in the Original Notification to ensure objectivity and transparency in the exercise of powers under paragraph 7. The Provincial Government is also directed to put procedures in place, or if such procedures already exist, to ensure compliance therewith, to make sure that any future modifications or amendments in its notified policy are subjected to the same rigorous process and deliberation as preceded the Original Notification and the First Amending Notification. This should be done within two months from today and a report of the action taken by the Government as indicated in this paragraph, should be submitted to the Registrar of this Court, by the Secretary respondent No, 1.
21. For the reasons, however, which have been given above this petition is dismissed.