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Motipur Sugar Factory Ltd. and anr. Vs. Joint Secretary, Govt. of India, Ministry of Industry and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberC.R. No. 14288 (W) of 1980
Judge
Reported inAIR1984Cal240,[1986]60CompCas955(Cal)
ActsConstitution of India - Article 226; ;Industries (Development and Regulation) Act, 1951 - Section 18AA and 18AA(1)
AppellantMotipur Sugar Factory Ltd. and anr.
RespondentJoint Secretary, Govt. of India, Ministry of Industry and ors.
Appellant AdvocateBhaskar Gupta and ;D.K. Lahiri, Advs.
Respondent AdvocateP.K. Bose, ;S. C. Das, Advs. (for Nos. 1 to 3), ;B.P. Banerjee and ;Subhendu Banerjee, Advs. (for Nos. 4 to 6)
DispositionPetition dismissed
Cases ReferredChamparan Sugar Co. Ltd. v. Union of India). The
Excerpt:
- .....f.m.a. no. 662 of 1982 (union of india v. orient paper and industries ltd.). in the said case, the writ petitioners challenged the propriety of fixation of retention price of white printing papers at rs. 4,200/- per metric tonne. the said order of retention price was passed under the paper (control) order. 1979 and such fixation under the control order was made by. the central government. the question about the maintainability of the writ petition before this court for challenging the said retention price by the writ petitioners came up for consideration before the appeal court in the said f. m. a. no. 662 of 1982 arising out of an order for interim directions passed in the writ proceeding. it was contended that the registered offices of the writ petitioners and their mills were situated.....
Judgment:

G.N. Ray, J.

1. This Rule was issued on theapplication made by Motipur Sugar Factory Limited, a public limited Company within meaning of Companies Act, 1956 having its registered office at Motipur in Bihar and one Hajee Adam Hajee Abdul Rahim and Yacub. Hajee Ibrahim were Directors and Shareholders of the said. Company. The petitioner No. 2, Hajee Adam Hajee Abdut Rahim having died during the pendency ofthis writ petition his name has been ex-punged from the category off the petitioner.

2. In this Rule, the order dated 3rd November, 1980 issued by the Joint Secretary, Ministry of Industry (Department of Industrial Development) passed in exercise of the powers conferred by Clause (a) of Sub-section (1) of Section 18AA of the Industries (Development and Regulation) Act, 1951 authorising the Bihar State Sugar Corporation Limited. Patna to take over the management of the whole of the said Industrial Undertaking, namely, M/s. Motipur - Sugar Factory Limited, Motipur, District Muzaffarpur, Bihar 'for a period of two years commencing from the date of the publication of the said order in the official gazette and the subsequent extension of the period of management have been challenged by the petitioners.

3. It has been contended by the petitioners that in or about June, 1977, the Bihar State Legislature promulgated the Bihar Sugar Undertaking (Acquisition) Act. 1976 under which certain Sugar Factories mentioned in the Schedule to the said Act Vested in the Government of Bihar and/or Bihar State Sugar Corporation Limited. In the said schedule, the petitioner Companywas not, included but subsequently by a Notification issued in October, 1978, thename of the petitioner Company was included in the schedule. By such inclusion, the Motipur Factory was purported to be taken over by the Bihar Government. The petitioners challenged the vires, legality and validity of the said Bihar Sugar Undertaking (Acquisition) Act, 1976 in this Court under Article 226 of the Constitution of India whereupon a Rule being Civil Rule No. 7845 (W) of 1978 was issued. The said Rule was made absolute and the Act was held as ultra vires and void. It is further contended that the petitioners Nos. 2 and 3 who were Shareholders and Directors of the said Company received a copy of the order dated 3rd November, 1980 under. Clause (a) of Sub-section (1) of Section 18AA of the Industries (Development and Regulation) Act, 1951 in Calcutta where according to the petitioners, is also a Sales office for the products of the Motipur Sugar Factory, The petitioners have contended that the petitioners thereafter tried to procure a copy of the Gazette Notification of the said order 'of the' Central Government, but the petitioners were informed on 14th Nov., 1980 that only Gazette up to 20th October,1980 were available. It appears from the order passed under Section 18AA of the said Act that the Central Government was satisfied that the persons in charge of the said Undertaking, had by diversion of funds, brought about a situation which was likely to affect the production of sugar produced by the said undertaking, namely, Motipur Sugar Factory. It is contended by the petitioners that no notice of any kind was ever served on the petitioners regarding the passing of the said order prior to the passing thereof arid the petitioners came to know about the said order only when a copy was forwarded to the petitioners Nos.2 and 3 at Calcutta. The petitioners have further contended that sometime on 4th November, 1980, some persons claiming to be employees of the Bihar State Sugar Corporation Limited had come to the factory of the petitioner No. 1 at Motipur with large police force and had taken possession of the entire factory and also the books and papers relating to the factory. They had also taken possession of the quarters attached to the factory excepting one Bungalow which was being occupied by the petitioner Yacub Hajee Ibrahim for about 20 years. It is contended that the said Bungalow contains valuable furniture and fixtures and other articles belonging to the said petitioner and not to the Company. In respect of the said Bungalow, the said officers of the Bihar State Sugar Corporation Ltd. put their seal so that the petitioner Yacub Hajee Ibrahim was unable to enter or use the same. The petitioners have also contended that on 10th Nov., 1980 without giving any opportunity to the petitioners, one Mr. A. K. Sinha had assumed charge of the said undertaking as General Manager. On 15th November, 1980 the petitioner received another order dated 11th November, 1980 issued by the respondent No. 4 claiming to be an authorised person under the said Industries (Development and Regulation) Act. It was stated in the said order that the petitioners Nos. 2 and 3 had ceased to remain as directors of the said company under Section 18B of the said Act. A copy of the said order has been annexed to the writ petition being marked Annexure 'D'. The petitioners have contended that neither the petitionersnor any of the persons of the said Undertaking had brought about any situation likely to affect the Sugar Factory either by encumbrancing , the assets of the, saidUndertaking or by diversion of funds orotherwise. It is contended that the CentralGovernment issued the said order withoutany application of mind and without anyconsideration of relevant materials and noopportunity was given to the petitioners toplace the relevant materials. It is also contended that the Central Government was under an obligation to consider whether the conditions laid down in Section 18AA were satisfied and it was also obligatory to give an opportunity to the petitioners to make effective representation in regard to the matters concerning the exercise of powers under Section 18AA. It is further contended by the petitioners that the petitioner company has a branch office at Bombay which is in charge of a Manager. For several years, the said Bombay office does not carry on any business in sugar but carries on other business. The petitioners contend that the respondents have no right either to take possession of the said Bombay office or remove any of the employees therein. The petitioners are also contending that the petitioner company has also an agricultural farm in which sugar cane and other agricultural products are grown. It is contended that the Manager purported to have been appointed under the said Industries (Regulation and Development) Act is not entitled to take possession of the sugar cane farm which does not form any part of the Industrial Undertaking but the respondents have wrongly purported to take possession of the said farm also. It has been also contended by the petitioners that there are various litigations pending between the petitioner company and the State of Bihar and/or its officers relating to the proceedings under the Bihar Land Reforms (Fixation of Ceiling Area and Acquisition of Surplus Land) Act and also relating to Sugar Control Orders. It is contended that as the entire records are now in possession of the respondent No. 6 the petitioners are not able to give details of such suits and litigations but some of such suits and litigations have been mentioned being based on memory in a list being Annexure 'E' to the writ petition. The petitioners have contended that as the respondents have assumed control of the said Sugar Factory in terms of the impugned orders and consequential orders passed thereafter, the said respondents should also take appropriate steps in the pending suits and litigations in different Courts so that the Motipur Sugar Factory Ltd. does not suffer any toss and prejudice for want of appropriate action tothe pending litigations. The petitioners have also contended that even assuming forargument's sake, that the taking over of possession under Section 18AA of the industries (Development and Regulation) Act. 1951 was legal and justified, such takingover of possession was for a limited period and after the expiry of the said period further extension of such management cannot be made without giving the petitioner company and/or its Directors all reasonable opportunities of being heard. As such extension has been purported to be made without deciding the necessity of such extension of management after giving reasonable opportunity of being heard to the petitioner company and/or its Directors and/or Principal Officers, the purported extention after the expiry of two years period from the date of initial taking over of management under Section 18AA must, in any event, be held to be illegal and void and the respondents should be directed to forthwith hand over possession of the said factory to the petitioners with all documents and papers in their custody. The petitioners have also contended that during the management, the respondents have not been taking appropriate steps for running the said factory properly and the plants and machineries are also not being maintained or repaired properly. The respondents are incurring heavy losses due to insufficient and improper management thereby seriously prejudicing the petitioner company because in any event, the petitioner company is likely to face the heavy liabilities incurred by the respondents relating to the said factory during its management.

4. A preliminary objection has been seriously urged by the learned Counsel appearing for the respondents about the maintainability of the instant writ petition before this Court It has been contended by the learned Counsel for the respondents that no part of the cause of action had arisen within the jurisdiction of this Court. Accordingly the writ petition is not maintainable before this Court. Mr. Bose, the learned Counsel appearing for the Union of India and the Officers of the Ministry of Industry, Department of Industrial Development of Government of India, has seriously contended that the decision of taking over management under the provisions of Industries (Development and Regulation) Act, 1951 had been taken by the Ministry of Industry, Department of Industrial Development at Delhi and in thematter of taking such decision no part of or the cause of action arose within the jurisdiction of this Court. The Motipur Sugar Factory is situated in Bihar and the registered office of the Company is also in Bihar. The management of the said Factory in Bihar has been taken over in terms of the order passed by the Central Government under Section 18AA of the said Act. Such management has been entrusted to the Bihar State Sugar Corporation Limited, the head office of which is situated at Patna in Bihar. The officers of the Bihar State Sugar Corporation Limited who have been entrusted to manage the affairs of the said Motipur Sugar Factory and/or the said Company are also residents of Bihar. The publication of the said order under Section 18AA has been made in the Gazette of India which is published from New Delhi. In the aforesaid circumstances, by no stretch of imagination it can be held that any part of the cause of action has arisen within the jurisdiction of this Court. Mr. Bose has contended, whether the order has been properly passed or not or whether the management is being unproperly or not cannot be investigated by this Court because this Court inherently lacks the jurisdiction to go into such questions. If the petitioners choose to make proper application before the appropriate Court having jurisdiction in the matter, such Court may take into consideration the contentions to be raised by the petitioners. Mr. Bose has, therefore, submitted that it will be futile exercise on the part of this Court to consider the respective contentions of the parties on merit and to come to a decision on merits.

5. Mr. Banerjee, the learned Counsel appearing for the Bihar State Sugar Corporation Limited, has also supported Mr. Bose on the said contention about the maintainability of the writ petition before this Court and it has also been contended by Mr. Banerjee that the Memo containing the order of taking over charge of the said Motipur Sugar Factory since issued by the Joint Secretary Mr. R. N. Chopra was not issued to the petitioner at the Calcutta address by the Central Govt. but the Chair-man-cum-Managing Director of the Bihar State Sugar Corporation Limited issued a Memo informing about such decision of taking over management at the Calcutta address of the Managing Director and such communication was made by way of abundant caution for ensuring that all con-cerned should get sufficient notice about the said order passed under Section 18AA. But simply because such memo was issued at Calcutta address and/or a copy of the Gazette was sent to Calcutta where the Managing Director or some other Directors had also residence service of a copy of such order in addition to usual mode of service in the factory site at Bihar cannot constitute a part of cause of action arising in Calcutta so that this Court will have jurisdiction to entertain the writ petition.

6. In answer to the said preliminary objection, Mr. Gupta, the learned Counsel appearing for the petitioner, has contended that the order under Section 18AA cannot be given effect to until the same it published in the Official Gazette namely the Gazette of India. Such Gazette of India is available throughout India and admittedly a Gazette copy was sent at the Calcutta address of the Managing Director and other Directors of the said Motipur Sugar Factory Limited. It is the positive case of the petitioners that on the basis of such notice received at Calcutta address, the petitioner company and/or its Managing Director and other Directors had come to know about the said impugned order passed under Section 18AA of the Industries (Development and Regulation) Act, 1951. In the aforesaid circumstances, it cannot be contended that no part of the cause of action had arisen within the jurisdiction of this Court. Mr. Gupta has also contended that it has been specifically contended by the petitioners in the writ petition that there is also a Sales Office in Calcutta and the business of the Company is also carried out in Calcutta. In view of taking over management illgally by the said purported order under Section 18AA of the Industries (Development and Regulation) Act, the petitioner Company also and/or its Directors and Shareholders at Calcutta are suffering loss also at Calcutta. Hence, this Court must have jurisdiction to entertain the writ petition. In support of this contention, an unreported judgment of this Court made in Civil Rule No. 5957 (W) of 1968 (Rohtas Industries Ltd. v. Union of India) has been cited by the learned Counsel for the petitioner with notice to the learned Counsel for the respondents. In the said case, the question of maintainability of the writ petition be fore this Court was raised on behalf of the respondents in the said writ petition. The subject matter of challenge in the writ petition was an order of investigation made bythe Central Government under Section 15(a)(i) and (b) of the Industries (Development and Regulations) Act, 1951. The said order concerned the factory in Dalmia Nagar in South Bihar. It was alleged by the respondents in the said case that no part of the cause of action or relief claimed in the petition had arisen within the territorial limits of the State of West Bengal and none of the respondents had also resided within the State of West Bengal and no records relating to the subject matter of the petition were within the State. It appears that in support of the said decision, a decision of the Allahabad High Court reported in : AIR1969All105 was also cited on behalf of the respondents and also a decision of this Court reported in (1967) 71 Cal WN 592 was cited in Support of the contention that the writ petition was not mainainable before his Court. It appears that a reference was also made to the decision of the Supreme Court made in the case of Khajoor Singh v. Union of. India reported in : [1961]2SCR828 . The learned Judge in the said Civil Rule No. 5957 (W) of 1968 has held that where the cause of action in its entirety or part of it arises within the jurisdiction this Court, a writ or order can be issued by this Court even though the Government or the officer functioned outside the territorial limit of this Court. As in the said case, the impugned notice was admittedly served on the petitioner's Managing Agent at 11, Clive Row, Calcutta, in addition to service of the said notification at the petitioner's registered office in Bihar, it has been held by the learned Judge in the said writ proceeding that a part of the cause of action had arisen within the jurisdiction of this Court. The learned Judge has not accepted the contention of the respondents that service on the Managing Agent at Calcutta is immaterial in view of the fact that the notification was served at the petitioner's registered office in Bihar and the Gazette Notification was published in New Delhi. The learned Judge has held that the Gazette of Central Government is published not only in New Delhi but throughout the territories of India and therefore publication of the Notification in the Gazette of India which is circulated also within the jurisdiction of this Court will be enough for holding that the part of the cause of action has arisen within the jurisdiction of this Court because the Statute does not require that the Notification should be published in the Gazette of India and such publication will he a mode of communi-cation to the party. Mr. Gupta has contended that the facts of the instant case are identical to the facts of the case taken into consideration by this Court in Civil Rule No. 5957 (W) of 1968. He has contended that it has not been provided in the Statute that publication of the Gazette will be the only mode of communication to the concerned parties. It has been provided for in the Statute that the order passed under Section 18AA can only be given effect to after the same is published in the Official Gazette, namely, the Gazette of India. Although the Gazette of India is published from Delhi, the said Gazette is meant for the entire Union of India including the State of West Bengal. Accordingly, it must be held that the part of the cause of action has arisen within the territorial limits of the State of West Bengal more so, when admittedly a copy of the order has been sent to the Calcutta Office of the said petitioner company which, according to the petitioner company, is also the head office. Mr, Gupta has also referred to a decision of this Court made in the case of Serajuddin and Co. v. State of Orissa, reported, in : AIR1971Cal414 . It has been held in the said decision that where an order as to grant and revocation of a mining lease was served within the territorial jurisdiction of the High Court and the part of cause of action had arisen within that jurisdiction the said High Court will have jurisdiction to entertain the writ petition.

7. In answer to the said contentions raised by Mr. Gupta, the learned Counsel for the respondents have relied on an un-reported Bench decision of this Court made in F.M.A. No. 662 of 1982 (Union of India v. Orient Paper and Industries Ltd.). In the said case, the writ petitioners challenged the propriety of fixation of retention price of white printing papers at Rs. 4,200/- per metric tonne. The said order of retention price was passed under the Paper (Control) Order. 1979 and such fixation under the Control Order was made by. the Central Government. The question about the maintainability of the writ petition before this Court for challenging the said retention price by the writ petitioners came up for consideration before the Appeal Court in the said F. M. A. No. 662 of 1982 arising out of an order for interim directions passed in the writ proceeding. It was contended that the registered offices of the writ petitioners and their Mills were situated in different Stales other than the State ofWest Bengal and there was no averment that sale of levy paper was made in the State of West Bengal. There was also no averment that any stock of white printing paper belonging to the writ petitioner was maintained in the State of West Bengal. The Appeal Court has held in the said decision that the only averment that the Sales Office is also in Calcutta will not confer any jurisdiction to entertain the writ petition because no part of the cause of action had arisen within the State of West Bengal. Mr. Bose has also cited another bench decision of the Allahabad High Court made in Civil Writ No. 3241 of 1974 (M/s. Champaran Sugar Co. Ltd. v. Union of India). The said judgment was delivered by the Division Bench of the Allahabad High Court on 3rd August, 1982. The said writ petition was presented by M/s. Champaran Sugar Company Ltd. which had its registered office at Kanpur and the fixation of levy sugar price by the Central Government in exercise of powers confer-red by Section 3 of the Essential Commodities Act was challenged by the said Champaran Sugar Company Ltd. and its Executive Director Sri S. N. Gundu Rao. The factory of the said M/s. Champaran Sugar Company Ltd. is situated at Barrah within the State of Bihar. The Division Beneh of the Allahabad High Court has held that the writ petition is not maintainable at Allahabad High Court because the petitioners' factory is situated at Barrah in Bihar and the price fixation order is in respect of sugar manufactured by the said factory at Barrah. The only ground on which the petitioners tried to justify the writ petition in the Allahabad High Court is that the registered office of the factory being in Kanpur, the petition is maintainable within the jurisdiction of this Court. Their Lordships at Allahabad High Court have held that the expression 'cause of action' has not been defined in the Constitution. For understanding the import of the said expression, reference should be made to the Code of Civil Procedure and the principles laid down by the authorities of different High Courts. It has been held that after the amendment of the Article 226 of the Constitution, relief can be had from the High Court within whose jurisdiction the cause of action arises irrespective of the fact that the authority against whom the writ is issued is situated Outside its territorial limits. It has been further held that the residence of the plain-tiff at a particular place does not conferjurisdiction if he is not a party to the cause of action. In a writ petition, every fact which would be necessary for a party to prove, if, traversed, in order to support his right to the judgment of the Court, constitutes the cause of action. As the entire cause of action in the said case accrued in Bihar, the Sugar Factory being situated there and the price fixed by Central Orders having affected the same in Bihar, the writ petition is not maintainable.

8. Mr. Gupta. the learned Counsel appearing for the petitioner has, however, submitted that the decision of this Court made in F. M. A. No. 662 of 1982 in the real sense supports the case of the petitioners. The Appeal Court in the said case has held that this Court has no jurisdiction to entertain the writ petition because there was no averment that sale of white, paper was made in the State of West Bengal and any stock of white paper was kept in West Bengal. But in the instant case, the petitioners have contended that they have also a Sales Office at Calcutta where from such sale is effected, Mr. Gupta has also contended that the decision of the Allahabad High Court in Champaran Sugar Company's case, since relied on by Mr. Bose can also be distinguished. In the said case, there was no occasion for the Allahabad, High Court to consider the legal import of publication of Gazette of India for giving effect to the impugned order. He has also contended that in the facts of the said case, the Allahabad High Court has come to the decision that no part of the cause of action arose within the territorial jurisdiction of the State of Uttar Pradesh. It was precisely on such finding that the Division Bench of Allahabad High Court has held that the said High Court has no jurisdiction to entertain the writ petition. He has, therefore, contended that in the facts and circumstances of this case, this Court should hold that the writ petition is maintainable before this Court for a challenge of the said purported order under Section 18AA of the Industries (Development and Regulation) Act, 1951 and consequential Acts and Orders passed by the respondents.

9. After giving my anxious consideration to the respective contentions raised by the learned Counsel for the parties it appears to me that the registered office of the petitioner company is in Bihar and the said Motipur Sugar Factory is in Bihar. By the Impugned order, the management of the said factory has been taken power by therespondents in Bihar. The order under Section 18AA has also been passed by the Central Government at Delhi and the Gazette of India is also published from New Delhi. It is true that the order under Section 18AA becomes effective after the publication in the Gazette of India but there is no manner of doubt that despite the requirement of publication of the Order under Section 18AA of the Act in the Gazette of India and despite the fact that sale of such Gazette is made in different parts of India, such publication of the Gazette with circulation all over India does not constitute the said order as an order also passed in other parts of India. In my view, the publication in the Official Gazette may be a requirement of the Statute for giving effect to the said order but the same does not alter the character of the order passed in New 'Delhi. A company may have various branches in different parts of India wherefrom some business transaction may be effected concerning the said company but the existence of such branch offices in different parts of India will not be the decisive and governing factor for conferring jurisdiction. In the facts of the case, there is no manner of doubt that the management of Motipur Sugar Factory in Bihar was sought to be taken over pursuant to an order passed under Section 18AA and other consequential orders passed threafter. All such orders were passed outside the territorial jurisdiction of this Court. Simply because a copy of the order has been forwarded by the Bihar State Sugar Corporation Limited to the Managing Director or other Directors at Calcutta, it cannot be held that a part of the cause of action has arisen in Calcutta and as such this Court has jurisdiction to entertain the writ petition. In the aforesaid circumstances, there is no necessity to consider the various contentions raised by the petitioners inter alia to the effect that there was no justification for passing the said order under Section 18AA and the said order was passed on non-application of mind to the relevant facts and by taking into consideration extraneous matters and/ or the Gazette publication had not been made on the date mentioned in the Gazette and hence the order was null and void and/ or the management was being run inefficiently and negligently thereby creating serious detriment to the petitioner company and its share-holders and/or further extension of such management after the expiry of initial period of two years without giving anyopportunity of being heard to the company and/or its Managing Director or Directors, is wholly illegal and without jurisdiction. In the result, this Rule fails and is discharged but there with be no order as to costs. All interim orders and/or directions stand vacated. By way of abundant caution it is made clear that this Court has not considered the merits of the case but has disposed of the writ petition on the preliminary objection that the writ petition is not maintainable before this Court. On the prayer of the learned Counsel of the petitioners, the operation of this order is stayed for a period of four weeks from today.


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