HC quashes sale of molasses to 3 cos by 16 sugar mills

Justice D Hariparanthaman said the entire sale process of one lakh tons of molasses has been vitiated and therefore its sale to Suraj Agimpex House, Integrated Service Point and Imcola Exports is void.

He directed authorities to conduct a fresh auction for the remaining molasses by giving wide publicity and adequate time for submission of filled up tender forms and said authorities must approach the Competition Commission of India for compensation and penalty against the companies.

In June 2012, the mills sold one lakh tons to the three companies through auction-cum-tender method.

A batch of writ petitions were filed against the deal on the ground that molasses, a public property, was sold at a throwaway price, causing a loss of more than Rs 26 crore.

Petitioner's counsel submitted that the Molasses Sales Committee, director of sugar and special officer had failed to take into account prevailing market rate for its sale.

Pointing out that the 2011 price of Rs 1550 was again brought down to 1,372 in 2012, she said in Puducherry it was sold for 3,551 in 2010,Rs 4,000 in 2011 and Rs 4,300 in 2012.

She alleged the Tamil Nadu Transparency of Tenders Act, 1998 was given a complete go-by to accommodate the companies and not enough advertisements were put out at national level.

The tender notice was published on June 7 and the last date for bid submission was June 15, she said, adding such a short time was given though the amount involved was huge.

Companies' counsel said molasses price varied from state to state depending on factors as supply, demand, quality and even administrative charges. They had tied up with foreign firms for molasses supply and would have to pay a huge penalty if supplies were not maintained.

Justice Hariparanthaman said fixation of Rs 1,330 per ton as upset price for public auction when tenderers had quoted Rs 1,550 made it clear the Molasses Sales Committee had failed to fix the upset price based on prevailing market rate and failed to take into account the price in neighbouring states."

He imposed a cost of Rs 50,000 each on them, to be paid to the petitioners.