Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1997 Supreme(Mad) 791

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE AR. LAKSHMANAN AND THE HONOURABLE MR. JUSTICE P. THANGAVEL
Shree Janardana Mills Ltd., Bombay and Others - Appellant
Versus
Textile Commissioner, Govt. of India, Bombay and Another - Respondents
W. A. Nos. 963 to 965 of 1996, C.M.P. Nos. 14160 to 14162 of 1996 and W.M.P. Nos. 25138 to 25140 of 1996
Decided On : 06 August 1997

Appearing Advocates: Mohan Parasaran, /, V. T. Gopalan, Sr. Central Govt. Standing Counsel Assisted By Mrs. Meena Gupta, Addl. Central Govt. Standing Counsel.

A sick industrial company is not entitled to exemption from the hank yarn obligation imposed under the Textile Control Order, 1986, on the grounds of hardship and difficulty.

Headnote:
Textile Control Order, 1986 - Hank Yarn Obligation - Exemption - Sick Industrial Company - Rehabilitation Scheme - Whether exemption can be granted.
Fact of the Case:

The petitioner, a textile company, was declared a sick industrial company and a rehabilitation scheme was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). The scheme included a provision for exemption from hank yarn obligation, which was imposed by the Textile Commissioner under the Textile Control Order, 1986. The petitioner applied for exemption from the hank yarn obligation, but the application was rejected by the Textile Commissioner and the Union of India. The petitioner challenged the rejection orders by filing a writ petition.
Finding of the Court:

The court held that the petitioner was not entitled to exemption from the hank yarn obligation on the grounds of hardship and difficulty. The court observed that the hank yarn obligation was imposed in the interest of the general public and also in the larger interest of the textile industry. The court also noted that the petitioner had failed to perform its statutory obligation, which would affect the workers of the other industries and would also render the scheme framed by the Central Government in public interest purposeless.
Issues: 1. Whether the petitioner was entitled to exemption from the hank yarn obligation on the grounds of hardship and difficulty? 2. Whether the rejection orders were passed arbitrarily?
Ratio Decidendi: 1. The court held that the petitioner was not entitled to exemption from the hank yarn obligation on the grounds of hardship and difficulty. The court observed that the hank yarn obligation was imposed in the interest of the general public and also in the larger interest of the textile industry. The court also noted that the petitioner had failed to perform its statutory obligation, which would affect the workers of the other industries and would also render the scheme framed by the Central Government in public interest purposeless. 2. The court held that the rejection orders were not passed arbitrarily. The court noted that the respondents had examined the difficulties experienced by the petitioner and put forward by it before them and found out that they were without substance.
Final Decision: The writ petition was dismissed.

Judgment :-

AR. LAKSHMANAN, J.

Writ Appeals Nos. 963 to 965 of 1996 have been filed by the writ petitioners challenging the order of J. Kanakaraj, J., in W.M.P. Nos. 19540, 19541 and 28065 of 1995 in W.P. No. 12246 of 1995 dated 12-7-1996.

2. W.P. No. 12246 of 1995 has been filed by the appellants/petitioners for the following relief :

To issue a writ of certiorarified mandamus calling for the records comprised in the proceedings of the 1st respondent dated 11-4-1995 in Lr. No. 14/1202/91/CSS/43 and of the 2nd respondent dated 19-7-1995 in Lr. No. 31/4/94 GTI and quash the same and consequently issue a mandamus directing the respondents to grant exemption to the petitioners in respect of hank yarn obligations which is the subject-matter of the Notification of the Textile Commissioner in CER/23/90/CLB dated 29-3-1990.

3. Notice of motion was ordered by the First Bench of this Court in the Writ Appeals on 16-10-1996 and on service of notice, the respondents are represented by their Standing Counsel. After hearing the learned counsel for the appellants, all the Writ Appeals are admitted. W.P. No. 12246 of 1995 was also directed to be posted along with the Writ Appeals as the argument in both the cases will be the same. Accordingly, arguments were advanced by both parties in the main writ petition as well as in the writ appeals.

4. First, we take up the writ petition. The short facts leading to the filing of the writ petition are as follows :- By the order of the 1st respondent/Textile Commissioner dated 11-4-1995 and confirmed in appeal by the 2nd respondent/Union of India by order dated 19-7-1995, the respondents have rejected the request of the petitioners for grant of exemption to the petitioners in respect of Hank Yarn Obligation prescribed under the Notification No. CER/23/90/CLB dated 29-3-1990 of the 1st respondent. According to the petitioners, the respondents have rejected the request of the petitioners in an arbitrary manner without even adverting to the directions of a Division Bench of this Court in the earlier writ petition filed by the petitioners in W.P. No. 12765 of 1994 dated 21-2-1995.

5. The 1st petitioner was carrying on textile spinning activities by employing more than 400 workers. Its operations had come to a grinding halt in the year 1983 mainly in view of the fact that the labour productivity was low and the machineries used by the petitioners were out-dated. Even though the then promoters infused Rs. 3 crores, the 1st petitioner company could not be revived and became a sick company facing acute shortage of resources. As on 31-12-1989, the accumulated liabilities of the 1st petitioner was to an extent of Rs. 6 crores. Considering the plight of the petitioners, the Government of Tamil Nadu interfered and wanted to revive the 1st petitioner from its sufferings. By virtue of this, a memorandum of understanding was entered into between the management of the 1st petitioner and the workmen before the Joint Commissioner of Labour on 30-4-1987. The said memorandum of understanding provided for abolition of the reeling department which produced hank yarn because this department was very uneconomical, and that the workers had agreed to receive consolidated wages during the period of rehabilitation for ten years.

6. The petitioners had moved the Board for Industrial and Financial Reconstruction (hereinafter referred to as BIFR), which declared the 1st petitioner as a sick industrial company by its order dated 20-6-1988 and also appointed the Industrial Development Bank of India (hereinafter referred to as IDBI) as the operating agency under Section 17(3) of the Sick Industrial Companies (Special) Provisions) Act, 1985 (hereinafter referred to as the Act) for preparing a scheme for revival/rehabilitation. The IDBI submitted its proposals on 22-12-1987 and ultimately BIFR proceeded to pass an order on 20-6-1988 by recording its opinion that the 1st petitioner company should be wound up in view of the fact that there was no

Click Here to Read the rest of this document