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Court Annuls Government Lease

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Motipur Sugar Factory

The Single bench of the Patna High Court cancelled the lease agreement of the Bihar Government with M/s Indian Potash Limited under which the Motipur Sugar Factory and its landed assets were leased out to Indian Potash. It directed Indian Potash to return the factory and the lands to Bihar State Sugar Corporation Limited (BSSCL), and return the same to the former owners, The Motipur Sugar Factory Ltd, within 6 months. The Motipur Sugar Factory was established by Seth Haji Abdur Rahim Oosman, a Calcutta based
Cutchi Memon businessman at Motipur, a sleepy village 17 miles west of Muzaffarpur in North Bihar’s fertile Gangetic plain. The plant was imported from Holland and crushing began in 1933. Over thirty two per cent of the shares of this large sugar manufacturing unit, i.e., Motipur Sugar Factory, were dedicated to five different Wakfs registered in Calcutta in the 1950s. The court issued the ruling on
June 25 on a petition from the Motipur Sugar Factory, Haji Zakaria Oosman Kutchi Memon Wakf Estate and four other Wakfs and a group of employees of the Factory. The Court quashed the lease agreement between the Bihar Government and Indian Potash and directed Indian Potash to return all the assets, properties including the concerned amount to the Bihar State Sugar Corporation  imited
(BSSCL). Further, the State of Bihar and BSSCL, have been directed to divest themselves of the property of the Industrial undertaking and return the same to the petitioners, The Motipur Sugar Factory. The Factory, situated on 66 acres of land had been nationalized by the Bihar Government in 1985, after being under the management and control of the Central Government since 1980. The BSSCL could not however run the unit beyond 1996 when  the curtains came down on the crushing of sugarcane rendering hundreds of workers jobless. Mounting debts, pilferage of machinery and worsening law and order in the State rendered the prospects of renewal bleak. The factory, one of the largest of its kind in Bihar, was crushing around 1,200 tons of cane and was producing 1,200 quintals of sugar every day. Owned by a Cutchi Memon family from Kolkata, Motipur Sugar Factory employed nearly 1,200 workers till 1980 in its factory as also a sizable number of skilled and unskilled workers to manage its well equipped 1,297 acre sugarcane farms, where cane seed was lso produced for distribution to cane farmers. The single-judge bench of the Patna High Court, heard the matter on the direction of the Hon’ble Supreme Court, and whilst deciding the matter on merits, cancelled the lease in its ruling. The Government / Corporation / Lessee Indian Potash are allowed to go in appeal to a higher bench by July 31st. According to a senior member of the erstwhile owner’s family who was accessed on phone in Patna by Islamic Voice, the family was keen to take possession of the unit and revive it with induction of the new technology. He said the factory, which had been taken over by the Government as a completely functional and running unit, has almost turned into junk and its technology had turned obsolete and would require a massive overhaul. He said the industrial climate had improved in Bihar and it was hoped that the revived unit would function at its optimum level if land and power issues were sorted out. He expressed the hope that investment would be available for the revival of the unit from private investors, lending institutions as well as banks. Industrial revival in the vicinity of the sugar unit was also a distinct possibility. The family also owned farms adjacent to the unit and cultivated sugarcane which was carted to the crushers by a privately owned 17-mile rail network. Located at Motipur, the Factory was seen as a boon for the sugarcane cultivators in the area. The court held that such expropriatory legislations, where a citizen’s property are compulsorily acquired, have to be for public purpose with payment of adequate compensation. In the case of the Motipur Sugar Factory, the mill and its assets were acquired without any compensation to the owners / Wakf shareholders and were later leased out to private investors by the Government on receipt of payment of Rs. 56 crore for 60 years long term lease without caring to fulfill their Constitutional obligations under Article 300-A to compensate the  owners before perfecting their title over the assets. “The State and its authorities thus have committed a fraud, by deviating from the avowed public purpose of acquisition to benefit private persons. Providing unwarranted largess and windfall to a third person whilst adversely affecting other sections of society due to indifferences and ignorances of the authorities concerned would be undermining the authority of the law and would not be tolerated”, the Court ruled.