IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: 
MR. JUSTICE MIAN SAQIB NISAR, HCJ 
MR. JUSTICE FAISAL ARAB 
MR. JUSTICE SAJJAD ALI SHAH 
 
 
CIVIL APPEAL NOs. 334 TO 344 OF 2004 
(On appeal against the Judgment dated 27.03.2003 passed by 
the High Court of Sindh, Karachi in Constitution Petition Nos. D-
1364 to D-1369/1998, D-1385 to D-1389/1998, D-1421/1998 
& D-1266 & D-1267/1999) 
 
Army Welfare Sugar Mills 
 
 
(In CAs 334 & 337/04) 
Shahmurad Sugar Mills Ltd.  
 
(In CA 335/04) 
Faran Sugar Mills Ltd.  
 
 
(In CA 336/04) 
Pangrio Sugar Mills Ltd.  
 
 
(In CA 338/04) 
Digri Sugar Mills Ltd. 
 
 
 
(In CA 339/04) 
Dewan Sugar Mills Ltd.  
 
 
(In CA 340/04) 
Seri Sugar Mills Ltd. 
 
 
 
(In CA 341/04) 
Larr Sugar Mills Ltd. 
 
 
 
(In CA 342/04) 
M/s Al-Abbas Sugar Mills Ltd.  
 
(In CA 343/04) 
Mirpurkhas Sugar Mills Ltd 
 
 
(In CA 344/04) 
...Appellants 
VERSUS 
 
1. 
Government of Sindh through  
Secretary Agricultural & others 
(In CAs 334-338, 343, 344/04) 
 
2. 
Federation of Pakistan etc 
 
(In CAs 339-342/2004) 
….Respondents 
 
 
For the Appellants: 
Mr. Khalid Anwar, Sr. ASC 
 
 
 
 
(in CA. Nos.334-338/2004 & 344/2004) 
 
 
 
 
 
 
 
 
 
Nemo 
(in CA. Nos.339-342/2004) 
 
 
 
 
 
Mr. Muhammad Shaiq Usmani, Sr. ASC 
 
 
 
 
(in CA.No.343/2004) 
 
For the Applicant:  
Mr. N.C. Motiani, AOR  
(in C.M.A No.1304/2004) 
 
For Respondents:  
Mr. Zamir Hussain Ghumro, A.G., Sindh. 
Mr. Aslam Butt, DAG 
 
Mr. 
Agha 
Zaheer-ud-Din, 
Cane 
Commissioner, Sindh. 
Mr. Abdul Aziz Channa, 
Deputy Secretary Agriculture Department, 
Sindh. 
 
Date of Hearing:  
05.12.2017 
 
C.As. 334 TO 344/2004. 
 
 
 
2
JUDGMENT 
 
 
 
 
FAISAL ARAB, J.- Appellants are engaged in the 
business of producing sugar and allied products from sugarcane. 
The sugar industry is regulated by the Sugar Factories Control Act, 
1950 (‘the Act’). Sugarcane in Sindh is ordinarily cultivated in the 
months of September and October and becomes ripe for harvesting 
in a year’s time i.e. by October the following year. It is for this 
reason that under Section 2(h) of the Act, the crushing season 
starts on the 1st of October each year. Clauses (i) & (ii) of Section 
16 of the Act empower the Provincial Government to fix minimum 
price for the procurement of sugarcane from the growers that has 
been exercised every year. As the quantity of sugar produced from 
sugarcane depends upon its sucrose content, a base sucrose 
recovery level in the climatic conditions of the Province of Sindh 
was determined to be 8.7% which is the main component of the 
sugarcane 
price 
fixation 
formula. 
Hence, 
whenever 
the 
procurement price of sugarcane is revised under the price fixation 
formula, it is worked out by keeping the base recovery level at 
8.7%.   
 
2. 
 
The level of sucrose content extracted from sugarcane 
depends on a number of factors such as the variety of sugarcane 
used as a seed, the soil conditions, the efforts of the growers and 
the efficiency with which the sugarcane is crushed in the mills. 
Thus the joint efforts and labour of the sugarcane growers and the 
sugar mill contribute towards achieving a sucrose recovery level 
which at times reaches well beyond the base recovery level of 8.7%. 
In or around 1981, due recognition was given to the contribution of 
C.As. 334 TO 344/2004. 
 
 
 
3
the growers by sharing with them the fruits of higher sucrose 
content that is achieved by a mill in a crushing season over and 
above the base recovery level of 8.7%. Thus for the crushing 
season 1981-82, in addition to the minimum procurement price 
fixed under Clauses (i) & (ii) of Section 16 of the Act, it was decided 
that the growers be paid as an additional price described as 
‘quality premium’ at the rate of 9 paisa per maund for each 0.1% of 
excess recovery of sucrose achieved by a sugar mill over and above 
the base recovery level of 8.7%. This policy was implemented for 
about two years before it was given statutory cover under 
Sugarcane Quality Premium Order, 1984 issued for the 1983-84 
crushing season. Under this statutory provision, the rate of ‘quality 
premium’ was enhanced from 9 to 11 paisas per maund. As this 
statutory cover for the payment of quality premium was only for 
the crushing season 1983-84, a permanent statutory provision in 
the form of Clause (v) to Section 16, as applicable in the Province 
of Sindh, was inserted in the Act the following year under the 
Sindh Sugar Factories Control (Amendment) Ordinance, 1985. This 
was done to ensure that the growers at the end of each crushing 
season get quality premium in case the mills to which they have 
supplied sugarcane achieve sucrose level that is higher than the 
base recovery level. Clause (v) of Section 16 of the Act reads as 
under: 
‘(v)  
The Provincial Government may direct the Factories to 
pay quality premium at the end of the crushing season at such 
rate as may be specified by the Provincial Government in 
proportion to the sucrose recovery of factory in excess of the 
base level sucrose content determined by the Provincial 
government, from time to time.’ 
C.As. 334 TO 344/2004. 
 
 
 
4
 
3. 
 
After paying quality premium to the growers for 
seventeen long years right from the crushing season 1981-82 till 
1997-98, the mill owners suddenly felt aggrieved when the rate of 
quality premium for the 1998-99 crushing season was raised from 
32 paisas per maund to 50 paisas. In this regard the appellants 
filed constitution petitions in the High Court of Sindh, questioning 
the vires of clause (v) of Section 16 of the Act on the grounds that 
payment of quality premium is unconstitutional being confiscatory 
in nature. During pendency of the constitution petitions, the 
appellant sought a restraint order against the Provincial 
Government from notifying quality premium which was granted on 
25.02.1999. After dismissal of the constitution petitions vide 
impugned judgment dated 22.03.2003 the appellants preferred the 
present appeals with the leave of this Court and vide order dated 
19.02.2004 the operation of the impugned judgment was 
suspended. Hence, no quality premium notification under the 
provisions of Clause (v) of Section 16 of the Act has been issued 
after the crushing season 1998-99.   
 
4. 
 
Learned counsel for the appellants argued that every 
notification for payment of quality premium issued in terms of 
clause (v) of Section 16 of the Act takes the base recovery level to 
be 8.7% which should not remain constant. According to him, the 
revision of base recovery level from time to time is envisaged under 
Clause (v) of Section 16 of the Act. In this regard much emphasis 
was laid by the learned counsel on the words ‘from time to time’ 
contained at the end of the said clause.  
C.As. 334 TO 344/2004. 
 
 
 
5
 
 
5. 
 
Quality premium is nothing but an additional price 
which becomes payable to the growers only when a sugar mill 
achieves sucrose recovery level that crosses the base recovery level 
of 8.7%. The reason to fix the base recovery level at 8.7% for the 
purposes of determining the rate of quality premium is that this 
8.7% is also taken as base level for fixing the sugarcane 
procurement price under the sugarcane price fixation formula. 
Obviously then the quality premium becomes payable for each 
0.1% of excess recovery of sucrose achieved by a sugar mill over 
and above the base recovery level of 8.7%. In other words it is 
payable for each decimal point of sucrose content that is recovered 
beyond the base level of 8.7%. This base level therefore has to 
remain the same as a constant factor and becomes starting point 
in the determination of the excess decimal points and this is 
exactly the mandate of the law itself. The term ‘from time to time’ 
contained in Clause (v) of Section 16 of the Act therefore has 
nothing to do in any manner with the base recovery level which is 
solely intended to empower the Provincial Government to specify 
the rate of ‘quality premium’ from time to time. Thus it is the 
periodical revision in the rate of quality premium that is intended 
by the term ‘from time to time’ nothing else. One can articulate the 
mandate of Clause (v) of Section 16 of the Act in the following 
words ‘Factory has to pay quality premium in proportion to the 
sucrose recovery that is in excess of the base level at a rate specified 
from time to time.’ This is exactly what was being done by the 
Provincial Government and simultaneously honoured by the sugar 
mills for seventeen long years right from 1981-82 crushing season 
C.As. 334 TO 344/2004. 
 
 
 
6
when the concept of quality premium was first introduced and 
implemented until 1998-99 under statutory provisions. However, 
the grant of quality premium stood discontinued only because of 
restraint orders passed in these proceedings. The argument that 
the words ‘from time to time’ are intended to revise the base 
recovery level is therefore misconceived.  
 
6. 
 
There is another important aspect of this case, which 
needs to be highlighted here. After the temporary restraint orders 
against payment of quality premium were passed in these 
proceedings almost every sugar mill has delayed its crushing until 
the 2nd week of December. Had the start of crushing season been 
strictly adhered to, as required under Section 2 (h) of the Act, the 
harvesting of sugarcane would take place between 1st of October 
and the first week of December as well. This would leave a very 
large area of agricultural land available for cultivation on which 
other valuable and important Rabi crops, mainly wheat and 
sunflower could be sown. One of the reasons that suit the mills in 
delaying the start of crushing season is to derive maximum benefit 
of higher recovery level of sucrose that is achieved when the 
statutorily defined crushing season is delayed by about two 
months. This practice has been consistently adopted over the years 
without impunity as on account of injunctive orders passed in the 
present proceeding the Provincial Government was restrained from 
notifying the rate of quality premium. As a consequence of this, the 
sugar mills no more remained bound to pay quality premium to 
the growers and hence have been exclusively enjoying the benefits 
of high sucrose recovery level unconcerned with the loss of 
C.As. 334 TO 344/2004. 
 
 
 
7
valuable Rabbi crops suffered by the growers that could have been 
cultivated on a very large area of land which becomes available 
when the crushing season starts on 1st of October as provided in 
law.  
 
7. 
 
It would be worthwhile to also examine the financial 
implication of the disputed notification in comparison to some of 
the notifications of the past under which quality premium were 
being paid by the sugar mills without any reservation. In the 
crushing season of 1988-89 for each increase of one decimal point 
in sucrose recovery level beyond the base level of 8.7%, the 
financial impact was only 1.50% of the then prevalent price of the 
sugarcane. In 1989-90 it was 1.35% of the price for each decimal 
point increase. In so far as the disputed crushing season is 
concerned, the impact of increase in the quality premium as to the 
price of sugarcane was no more than 1.38% for each decimal point 
increase. Hence, nothing unusual took place when the rate of 
quality premium for the disputed crushing season 1998-99 was 
raised to 50 paisas per maund. From the comparison of rates of 
quality premium that were declared from time to time, it is evident 
that the rate revised for the disputed crushing season cannot be 
said to be phenomenal as it was more or less the same as was 
determined in the previous crushing seasons. In our view, the only 
situation when an increase in the rate of ‘quality premium’ can 
conceivably be called in question is when it can be demonstrated 
that revision in the rate of quality premium does not commiserate 
with the revision in the minimum procurement price of sugarcane. 
Only in such situation a case of erratic increase without any 
C.As. 334 TO 344/2004. 
 
 
 
8
discernible link to the sugarcane procurement price can be made 
out. In the present case, as the revision of rate of quality premium 
was only 1.38% of the sugarcane price for each decimal point 
increase, there appears to be no logical reason in denying the 
growers their due share in facilitating the mills in achieving higher 
than the base sucrose recovery level which invariably results in 
higher sugar production. 
 
8. 
 
From the above discussion, it is amply established 
that payment of quality premium on sucrose recovery level which 
is over and above the base level of 8.7% is not something which 
can be said to be some kind of benevolence or is bereft of any 
consideration. This right to pay quality premium created under 
Clause (v) of Section 16 of the Act is based upon intelligible criteria 
and, therefore, cannot be regarded as confiscatory so as to 
question its vires. In-fact its denial would be unfair and 
confiscatory in nature as it would amount to disregarding the 
contribution of the growers in achieving a higher level of sucrose 
content, which directly results in higher sugar production. The law 
calling upon the sugar mills to pay quality premium was not only 
acknowledged by them in their pleadings but duly honoured right 
from the crushing season of 1981-82 till 1997-98 without any 
reservation or objection. We find no reason which entitles the 
sugar mills not to honour the mandate of the law and deny the 
growers the fruits of their labour to which they on the principle of 
equity as well as law are duly entitled.  
 
C.As. 334 TO 344/2004. 
 
 
 
9
9. 
 
We therefore conclude that the grant of quality 
premium being just and fair and based on statutory provision is 
legally enforceable. The impugned notification was validly issued, 
hence these appeals are dismissed. We may, however, mention 
here that in future notification as per past practice for payment of 
quality premium should be issued along with the notification of 
fixation of the minimum procurement price of sugarcane and the 
same shall be paid to the growers not later than two months after 
the crushing season comes to an end. 
 
 
CHIEF JUSTICE 
JUDGE 
JUDGE 
 
 
Announced on 05.03.2018 at Islamabad by  
Hon’ble Mr. Justice Faisal Arab 
 
 
Approved For Reporting 
Khurram 
