A factory for production of only ethanol is also considered as a “sugar factory” as per the changes made in the laws, and restriction imposed in the law against setting up another “sugar factory” within 15-km radius of the existing one applies even for establishing a factory to produce only ethanol, said the High Court of Karnataka.
Analysing the provisions of the Sugarcane (Control) Order from 1966 and 2021, the court said that from 2021, the manufacture of both sugar and ethanol was not necessary and the manufacture of either sugar or ethanol was sufficient to define it it as “factory or sugar factory” under this law.
Justice N.S. Sanjay Gowda passed the order while dismissing a petition filed by Askins Biofuels Pvt Ltd., and Shri Bhramanandasagar Jaggery Industries. The petitioners had questioned the July 25, 2022, order of Commissioner for Cane Development and Director of Sugar directing Askins to stop construction of ethanol factory, not to commence production of ethanol using sugarcane juice, and directing Bhramanandasagar not to supply sugarcane juice to Askins.
The commissioner had restrained establishment of ethanol factory as it was abutting the area in which permission for establishment of a sugar factory was granted to one Alagawadi Bireshwar Sugars Pvt. Ltd.
The petitioner companies had claimed that restriction of setting up “sugar factory” within 15-km radius applies only if both sugar and ethanol are produced in the same premises and a factory, which intends to manufacture ethanol by not crushing sugarcane but directly procuring sugarcane juice cannot be defined as a “factory or sugar factory” under the law.
However, the court pointed out the manufacture of both sugar and ethanol was necessary till 2021 to describe the manufacturing unit as a “sugar factory” under Sugarcane (Control) Order to attract 15-km radius restriction.
From 2021 onwards, on analysing the language and punctuation mark used used in the definition of ‘factory’ in the Sugarcane (Control) Amendment Order, 2021, the court said even if only ethanol was manufactured in a premise/factory, it became a “sugar factory” by way of a legal fiction created in the definition. It was not necessary for sugar also to be produced for it to be considered as a “sugar factory” and consequently, the restriction of 15-km radius attracted even for setting up a factory to manufacture only ethanol, the court said.
It is obvious that this definition became necessary since the manufacture of ethanol was based on sugarcane juice/sugar syrup/ molasses, which were byproducts of sugarcane, and as a consequence the procurement of sugarcane by the existing factories would be hampered if a factory manufacturing only ethanol was permitted within 15-km radius restriction, the court observed.