1. Applicability of the Bihar Saw Mills (Regulation) Act, 1990, to a vehicle manufacturer operating sawmills within its factory premises. (Para 1 , 2 )
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2000 Supreme(SC) 835
SUPREME COURT OF INDIA
Doraiswamy Raju : V.N.Khare
Tata Engineering And Locomotive Company Limited
Versus
State Of Bihar And Another
Case No. : 14755 of 1996
Date of Decision : 4/24/00
Advocates Appeared: Dwivedi Rakesh : Nariman R.F. : Singh B.B. : Singh Kumar Rajesh : Sukumaran S.
Licensing requirements for sawmills apply to any entity operating such facilities as defined by law, regardless of whether the activity is for commercial trade or internal industrial consumption, to ensure forest conservation and prevent illicit felling through comprehensive tracking of wood utilization.
Headnote:(A) Bihar Saw Mills (Regulation) Act, 1990 - Sections 2(g), 2(h), 2(i), 2(k), 5, 9, 10 and 25 - Bihar Saw Mills (Regulation) Rules, 1993 - Rule 4 and 7 - Requirement of licence for operating sawmills - Whether a company using sawmills for internal consumption in the course of manufacturing other products is exempt from licensing requirements - Preamble emphasizes public interest for protection and conservation of forest and environment - Definitions of "sawmill" and "sawing" are of all-comprehensive nature to rope in all activities connected with use and consumption of wood - Term "business of the sawmill" used in relation to submission of returns to be construed in generic sense of calling or pursuit and not restricted to commercial trade parlance - Object is to trace origin of timber and prevent illicit felling of trees (Paras 15, 16).
(B) Interpretation of Statutes - Statutes should be construed with imagination of purposes lying behind them - General words and phrases interpreted from context and scheme underlying the Act - "Disposal" of wood to include internal consumption within factory premises and not just sale to outsiders (Paras 15, 17).
Facts of the case:
A company engaged in manufacturing vehicles operates several sawmills within its premises to create wooden components required for its main business. While the company purchases timber from registered dealers and uses it for internal consumption without selling to outsiders, it did not obtain the necessary licences under the relevant Act or Forest Act.
Findings of Court:
The admitted activities of the company are sufficient to attract the provisions of the Act. The theory of end-product use or the fact that sawing is incidental to the main business of manufacturing vehicles has no relevance in determining the liability to obtain a licence. The definitions of "sawmill" and "sawing" are broad enough to cover the company's operations.
Issues: Whether the operation of sawmills for internal consumption as part of an ancillary activity to a main manufacturing business requires a licence under the Act, and whether such activities are exempt from licensing and accounting obligations because they do not constitute a "trade" in timber.
Ratio Decidendi: The legislation is aimed at regulating both the trade of sawing and the general operation of sawmills to protect forests and the environment. The regulatory requirement to maintain accounts and obtain licences is intended to track the transit and origin of wood to prevent illegal deforestation. Therefore, any entity operating a sawmill as defined by the Act, regardless of whether the wood is sold or consumed internally, must comply with the licensing and reporting requirements to ensure the supply chain is legal.
Result: The appeal fails and is dismissed.
Legal Category Hierarchy
- administrative law
- environmental law
- statutory construction
Table of Contents
2. Appellant argued sawing was ancillary to main business, not trade in timber. Respondent argued broad definitions and conservation object covered the activity. (Para 4 , 5 )
3. The Act's definitions are wide and the object is to conserve forests. The word 'disposal' includes any process of dealing with wood. (Para 15 , 16 , 17 )
4. A sawmill used for manufacturing components as an integral part of a main business is covered by the Act; the activity need not be a trade in timber. (Para 15 , 16 , 17 )
5. Appeal dismissed; the High Court's order rejecting the challenge to the applicability of the Act and Rules was upheld. (Para 18 )
6. Does the Bihar Saw Mills (Regulation) Act, 1990 apply to a manufacturer who runs sawmills only for making components for its own main product?
Yes. The Act's definitions of 'sawing', 'sawmill', and 'saw-pit' are broad enough to cover such operations, and the activity need not be a trade in timber. (Para 15 , 16 , 17 )
7. Is an end-product use or incidental-to-main-business argument relevant for determining liability under the Bihar Saw Mills (Regulation) Act, 1990?
No, such arguments are irrelevant. The Act's objective of forest conservation and its wide definitions require regulation of all sawing operations, regardless of the end use. (Para 3 , 5 , 16 )
8. What is the proper interpretation of the word 'disposal' in Form D under the Bihar Saw Mills Rules, 1993?
The word 'disposal' is of wide import and includes all processes of dealing with wood, including consumption as a component in the licensee's own factory, not just sale. (Para 17 )
Judgment
RAJU DORAISWAMY, J.
(1) THE above appeal is against the judgment of a Division Bench of the Patna High Court whereunder the claim of the appellant to quash the notice dated 16-11-1995 asking the Vice-President of the appellant Company to take licence under the Bihar Saw Mills (Regulation) Act, 1990 (hereinafter referred to as "the Act") came to be rejected and the Court also declined to grant a declaration sought for that the provisions of the Act and the Rules framed thereunder, namely, the Bihar Saw Mills (Regulation) Rules, 1993 (hereinafter referred to as "the Rules") are not applicable to them.
(2) THE appellant Company is engaged in manufacturing and assembling of vehicles of various descriptions including trucks and light motor vehicles, such as car, jeep, etc., at its various factories situate in different parts of the country including the State of Bihar. The activities of the Company consist of manufacturing of trucks of various descriptions and size, as also their components. The Company, in the course of its manufacturing activities, requires articles and components made of wood for being used as battery base for chassis, gaggers for production of tool box, pallet platform, staging platform, staging for CED/MC wheel carrier, etc. To meet such requirements, the Company claims to purchase substantial and huge quantity of wood/timber from registered dealers having valid licences and the same is used in their own sawmills located inside their factory premises for manufacturing the various wooden components required for their main business. On an inspection made, the Company was found to have been running about 5 to 8 sawmills inside their premises and indisputably they have not obtained any licence either under the Act in question or the Forest Act for transport of the timber purchased by them, their claim throughout being that they are not carrying on any trade in timber as such, by selling the wood to any outsider nor are they engaged in the activities of saw trading as such and that they are not covered under the Act with any liability to take out any licence or pay any licence fee therefor.
(3) THE Division Bench of the High Court repelled the contentions of the Company and held that the admitted nature of activities of the Company are sufficient to attract the provisions of the Act and the theory of end-product use or that they are only incidental to the main business activity of manufacturing automobile vehicles, have no relevance in adjudging their liabilities under the Act and the Rules made thereunder. The definitions contained in the Act of "sawmill", "saw-pit" and "sawing" were held to be of sufficient amplitude to cover the activities of the Company. Hence, this appeal.
(4) SHRI R.F. Nariman, learned Senior Counsel, while ably presenting the case of the appellants reiterated the stand taken before the High Court and vehemently contended that the existence of "sawmills" or "saw-pits" or the mere activity of "sawing" by themselves are not sufficient to attract the provisions of the Act and the Rules made thereunder - those activities of the Company being carried not by way of trade in timber but only as ancillary and incidental to their main business of manufacturing and selling automobiles of various kinds and varieties. The further submission on behalf of the appellant is that it is always necessary to find out the object and reason as well as the reach of the statutory provisions and the general words in the statute/rules would take colour only from the reason for it. Argued the learned counsel further that as long as the activities of the Company are not in the course of any trade as such in timber and the machineries installed in the factory premises are for cutting the timber purchased by them lawfully from registered and licensed dealers for manufacturing the various components of the automobiles only the provisions of the Act and the Rules made thereunde
