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The Tea Trading Corporation of India Vs. Pashok Tea Company Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. Tender No. 1003-1004 and 1034 of 1979
Judge
Reported inAIR1980Cal282,85CWN8
ActsTea Act, 1953 - Section 16E
AppellantThe Tea Trading Corporation of India
RespondentPashok Tea Company Ltd. and ors.
DispositionAppeal dismissed
Excerpt:
- banerjee, j.1. these appeals are directed against an order passed by the hon'ble single judge making the rule absolute obtained by pashok tea company limited. the case made out by the petitioner pashok tea company ltd., is that on 12th october, 1976 two letters were received by the petitioner, each dated the 13th october, 1976, one in respect of the pashok tea estate and the other in respect of looksan tea estate addressed to the company by the tea trading corporation of india ltd. the said two letters are identical in nature except as to the name of the tea garden and the contents of the letters concerning the pashok tea estate are as follows:--'by an order dated 11th october, 1976 published in the gazette of india extraordinary dated llth october, 1976 the government of india has.....
Judgment:

Banerjee, J.

1. These appeals are directed against an order passed by the Hon'ble Single Judge making the rule absolute obtained by Pashok Tea Company Limited. The case made out by the petitioner Pashok Tea Company Ltd., is that on 12th October, 1976 two letters were received by the petitioner, each dated the 13th October, 1976, one in respect of the Pashok Tea Estate and the other in respect of Looksan Tea Estate addressed to the Company by the Tea Trading Corporation of India Ltd. The said two letters are identical in nature except as to the name of the Tea Garden and the contents of the letters concerning the Pashok Tea Estate are as follows:--

'By an order dated 11th October, 1976 published in the Gazette of India Extraordinary dated llth October, 1976 the Government of India has authorised the Tea Trading Corporation of India Ltd., of 225-E, Acharya Jagadish Chandra BOMRoad, Calcutta-20 being the authorised person to take over the management of the above unit on the terms and conditions referred to in the above order'. The said order is in the following terms:--

'Whereas the Central Government is satisfied from the documentary and other evidence in its possession that the persons in charge of the tea unit known as Pashok Tea Estate P. O. Pashok District Darjeeling (hereinafter referred to as the suit Unit) owned by M/s. Pashok Tea Company Limited, 10, Pollock Street, Calcutta, have by the creation of in-cumbrances on the assets of the said unit have brought about a situation which is likely to affect the production of tea manufactured or produced by the said unit and that immediate action is necessary to prevent such a situation. Now, therefore, in exercise of the powers conferred by Clause (a) of Sub-section (1) of Section 16E of the Tea Act, 1953 (2 of 1953) the Central Government hereby authorised the Tea Trading Corporation of India Limited, 225E, Acharya Jagadish Chandra Bose Road, Calcutta-20 (hereinafter referred to as the authorised person) to take over the management of the whole of the said unit subject to the following terms and conditions, namely :

(i) The authorised person shall comply with all the directions issued from time to time by the Central Government.

(ii) the authorised person shall hold office for a period of five years from the date of publication of this order in the official Gazette :

(iii) the Central Government may terminate the appointment of the authorised person earlier if it considers necessary to do so.

This order shall have effect for a period of five years commencing from the date of its publication in the official Gazette,

A copy of the said letters as also a copy of the letter relating to the Looksan Tea Estate are annexed hereto and including in Annexure 'A' hereof, ft is clear from the said order that the power was exercised by the President under Section 16E of the Tea Act, 1953, Section 16E along with the other sections were introduced into the Tea Act by (Amendment) Act, 1976. The petitioner contended that the impugned order purporting to take over the management of the said Tea Estate of the Company have been sought to be passed on the allegation that the Company by creation of incumbrances on the assets of the Tea Estate have brought about a situation which is likely to affect the production of tea manufactured or produced by the said Tea Estates and that immediate action was necessary to prevent such a situation. The petitioner states that in any case the condition precedent for passing the order has not been complied with. It is alleged that the said order was passed in abuse of power, mala fide and no reasonable person on the materials on record could have passed the said impugned orders. It is stated that the only incumbrances that were created in respect of the said two tea Estates were the equitable mortgage of the said two tea estates by deposit of title deeds and hypothecation of the tea gardens lor the season 1973-74 created in favour of the Oriental Bank of Commerce Ltd., as security for overdrafts which the company had with the said Bank. It is stated further that such overdrafts facilities were taken from the said Bank by the Company in the year 1968 which were renewed from time to time, the last agreement for overdraft being made in February 1973. The equitable mortgages were created in respect of the Pashok Tea Estate and in respect of the Looksan Tea Estate on or about 28th February, 1973, and the hypothecation of the tea crop for the season 1973-74 was also made by the agreement dated the 28th February, 1973 under which the overdraft facilities of Rs. 43 lakhs were given by the said Bank. It is stated that apart from the said overdraft facilities, no other credit facilities from any Bank or financial institution were taken. It is further stated that such facilities were taken in the usual course of business and such facilities are normally taken by every trading company including companies owning tea garden on similar mortgages and hypothecation. All such overdrafts facilities were granted by the said Bank up to 31st March, 1974 and in or about September, 1974, the said Bankfiled a suit in the Court of the Subordinate Judge at Darjeeling, being O. C. Suit No, 48 of 1974 against the company and its guarantees for a decree of Rupees 35,71,047.91 p. as the alleged outstanding dues in the overdraft account and for enforcement of the said equitable mortgages. The said suit was also for enforcement of another mortgage created by one of the guarantors of the said overdraft, being a Director of the Company. Written statement has been filed in the said suit at Darjeeling by the company denying liabilities as in fact the Company has no liability to the Bank, Sometime in 1972, at the instance of the said Bank, the management of the Tea Garden had been handed over to J. Thomas & Co. Ltd., and the Tea Consultancy and Plantation Services (India) Private Ltd., for proper management of the Tea Estates and liquidation of the dues of the Bank with the sale proceeds of the tea. The said agents of the Bank totally mismanaged the affairs of the tea gardens and incurred heavy losses and the company is entitled to be reimbursed for such losses and ia entitled to set off the same against the dues if any, of the Bank. Various disputes and differences exist with regard to the alleged liability of the company to the Bank which the company is denying and several proceedings are pending in the District Court of Darjeeling and in the Original Side of the High Court. It is alleged that the Company had not created any incumbrances on the assets of the said tea gardens far less any reckless incumbrances on such assets. The said impugned order could not have been passed by any person properly instructed. It is stated that after J. Thomas & Co. Pvt. Ltd., failed to vitalise the Tea Estate, the petitioner took back the management of the garden and with the sale proceeds of the tea garden and from their own resources they are continuing the management and there has been an increase of the production of tea at the tea gardens during the year ending as follows :--

Year endingProduction in Kg.

31st Dec. 1974 Looksan3,44,813 KgsPashok 77,159 Kgs.31st Dec. 1975 Looksan3,46,468 Kgs.Pashok 83,095 Kgs.30th Sept. 1976 Looksan3,41,896 Kgs.Pashok 1,20,963 Kgs.

It is further stated that the financial condition of the Company is sound. The Company has published balance sheets up to the year ended on 31st Mar., 1973. The financial position of the Companyas on 30th September, 1976, will appear from the Pro forma statement of Income and expenditure as on that date showing a sum of Rs. 22,63,436.10.p. as balance surplus amount. It is furtherstated that it was incumbent upon the Central Government to give a hearing to the petitioner before issuing the impugned orders and the said impugned orders have been passed in breach of the principles of natural justice, equity and fair play and the same are illegal, inoperative, void and/or nullity. On the basis of these facts, it is stated that the order under Section 16E of the Tea Act, 1953 as amended by 1976, cannot be sustained and must be quashed,

2. In the affidavit-in-opposition filed by the respondent, it is stated, inter alia, that the management of the said two tea Estates, namely, Looksan Tea Estate and Pashok Tea Estate, were taken over under an order of the Central Government made under Section 16E (1) (a) of the said Act by Notified Order dated the 11th October, 1976, and from the said date the management had been vested with the Tea Trading Corporation of India Ltd., a Government of India undertaking. On and from October 11, 1976, all the powers and functions of the petitioner No. 1 and its Board of Directors in respect of or over the said two Tea Units were vested in the said Tea Trading Corporation of India Ltd., and therefore the petitioner became disentitled in law to initiate or commence any legal proceeding like the present writ proceeding in respect of the said two tea estates or tea units. It is further stated that the petitioner No. 2 ceased to be a Director of the petitioner No. 1 and as such has no right whatsoever in law either to make the present writ petition or verify it on behalf of the petitioner No. 1, It is stated further that the order passed by the Central Government was in accordance with law. After the Central Government carefully considering the records, documents and reports concerning the said two tea units formed a bona fide opinion that the conditions necessary for the exercise of powers under Section 16E of the Tea (Amendment) Act, 1976 were actually in existence and that in the interest of the general public and for preventing fall in production and manufacture of Tea and ruin of the said two Tea Units it was necessary to take immediate action to take over the management of the said two tea units. It is denied that there were no materials or evidence on which the Central Government could be satisfied in relation to the said two Tea Units of the Company that the person-in-charge of the same had by creation ofthe incumbrances on the assets of the said Tea Units brought about a situation which was likely to affect the production of Tea, manufactured or produced by the said Tea Units, It is also stated that the said order was in accordance with law.

3. Before we deal with the question raised in this appeal, it is convenient for us to set out Sections 16B, 16C, 16D and 16E of the Act which are as follows :--

'16B. (1) Where the Central Government is of opinion in respect of a tea undertaking or a tea unit that --

(a) the tea undertaking or, as the case may be, the tea unit, has made losses in three out of five years immediately preceding the year in which such opinion is formed; or

(b) the average yield of the tea undertaking, or, as the case may be, the tea unit, during three years out of five years immediately preceding the year in which such opinion is formed, has been lower than the district average yield by twenty-five per cent, or more or

(c) the persons owning the tea undertaking, or, as the case may be, the tea unit, have habitually made default in the payment of wages, or provident fund dues of workers and other employees, or rent of the land, or duties of excise, or such other dues as they are under an obligation to pay under any law for the time being in force; or

(d) the tea undertaking, or, as the case may be, the tea unit, is being managed in a manner highly detrimental to the tea industry or to public interests, the Central Government may make, or cause to be made, a full and complete investigation into the affairs of the tea undertaking or, as the case may be, the tea unit, by such person or body of persons as it may appoint for the purpose.

(2) Where a company owning a tea undertaking is being wound up by or under the supervision of the Court and the business of such company is not being continued, the Central Government may, if it is of opinion that it is necessary, in the interests of the general public, and, in particular, in the interest of production, supply or distribution of tea, to investigate into the possibility of running or restarting the tea undertaking, make an application to the Court, praying for permission to make, or cause to be made, an investigation into such possibility by such person or body of persons as that Government may appoint for the purpose; and, where such an application is made, the Court shall, notwithstanding anything contained in the Companies Act, 1956, or in any other law for the time being in force, grant the permission prayed for.

(3) The person or body of persons appointed make any investigation under Sub-section (1), or, as the case may be, Sub-section (2), shall have the same powers as are specified in Section 18 of the Industries (Development and Regulation) Act, 1951.

16C. (1) If, after making or causing to be made any such investigation as is referred to in Sub-section (1) of Section 16B, the Central Government is satisfied that action under this section is desirable, it may issue such directions to the tea undertaking or tea unit concerned, as may be appropriate in the circumstances, forall or any of the following purposes, namely :--

(a) regulating the production of tea by the tea undertaking or, as the case may be, tea unit and fixing the standards of production;

(b) requiring the tea undertaking or, as the case may be, tea unit to take such steps as the Central Government considers necessary to stimulate the production, manufacture or plantation, of tea;

(c) prohibiting the tea undertaking or, as the case may be, tea unit from resorting to any act or practice whichmight reduce its production, capacity or economic value;

(d) controlling the prices, or regulating the distribution, of tea produced or manufactured by the tea undertaking or,as the case may be, tea unit.

(2) Where a case relating to any tea undertaking or tea unit is under investigation, the Central Government may issue, at any time, any direction of the nature referred to in Sub-section (1) to the tea undertaking or the tea unit concerned and any such direction shall have effect until it is varied or revoked by the Central Government.

16D. (1) If the Central Government is of opinion that -

(a) a tea undertaking or tea unit, to which directions have been issued in pursuance of Section 16C, has failed to comply with such directions, or the tea undertaking, or, as the case may be, the tea unit, has made losses in three out of five years immediately preceding the year in which such opinion is formed; or

(b) the average yield of the tea undertaking, or, as the case may be, the tea unit, during three years out of five years immediately preceding the year in which such opinion is formed, has been lower than the district average yield by twenty-five per cent, or more or

(c) the persons owning the tea undertaking, or, as the case may be, the tea unit, have habitually made default in the payment of wages, or provident fund dues, of workers and other employees, or rent of the land, or duties of excise, or in the payment of such other dues as are obligatory under any law for the time being in force; or

(d) the undertaking, or, as the case may be, the tea unit, is being managed in a manner highly detrimental to the tea industry or to public interest, the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the tea undertaking or tea unit, as the case may be, or to exercise in respect of the whole or any part of the tea undertaking or, as the case may be tea unit, such functions of control as may be specified in the order.

(2) Any notified order issued under Sub-section (1) shall have effect for such period, not exceeding five years, as may be specified in the order :

Provided that if the Central Government is of opinion that it is expedient in the public interest that any such notified order should continue to have effect after the expiry of the period of five years aforesaid it may from time to time issue directions for such continuance for such period not exceeding one year at a time, as may be specified in the direction, so, however, that the total period of such continuance (after the expiry of the said period of five years) does not exceed two years; and where any such direction is issued, a copy thereof shall be laid, as soon as may be, before both Houses of Parliament. (3) Any notified order issued under Sub-section (1) shall have the same effect as if it were an order made under Sub-section (1) of Section 18A of the Industries (Development and Regulation) Act, 1951, and the provisions of Section 18B of that Act shall apply accordingly.

(4) Notwithstanding anything contained in any law for the time being in force, no person, who ceases to hold anyoffice by reason of the provisions contained in Clause (a), or whose contract of management is terminated by reason of the provisions contained in Clause (b), of Section 18B of the Industries (Development and Regulation) Act, 1951, as applicable to a tea undertaking or tea unit by virtue of the provisions of Sub-section (3), shall be entitled to any compensation for the loss of office or for the premature termination of his con-tract of management :

Provided that nothing contained in this section shall affect the right of any such person to recover from the tea undertaking or the tea unit, as the case may be, monies recoverable otherwise than by way of such compensation. 16E. (1) Without prejudice to any other provision of this Act, if, from the documentary or other evidence in its possession, the Central Government is satisfied, in relation to a tea undertaking or tea unit, that -

(a) the persons in charge of such tea undertaking or tea unit have, by reckless investments or creation or incumbrances on the assets of the tea undertaking or tea unit, or by diversion of funds, brought about a situation which is likely to affect the production of tea, manufactured or produced by the tea undertaking or tea unit, and that immediate action is necessary to prevent such a situation; or

(b) it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the Company owning the tea undertaking or tea unit or for any other reason) and such closure is prejudicial to the concerned tea undertaking or tea unit and that the financial condition of the company owning the tea undertaking or tea unit and the plant and machinery of such tea undertaking or tea unit are such that it is possible to restart the tea undertaking or tea unit and such restart-Ing is necessary in the interests of the general public'it may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the tea undertaking or tea unit or in exercise in respect of the whole or any part of the tea undertaking or tea unit such functions of control as may be specified in the order.

(2) On the issue of a notified order under Sub-section (1) in respect at a tea undertaking or tea unit, --

(a) the provisions of Sub-sections (2), (3) and (4) of Section 16D, and the provisions of Section 16G, shall apply to a notified order made under Sub-section (1) as they apply to a notified order made under Sub-section (1) of Section 16D; and

(b) the provisions of Sub-sections (3) and (4) of Section 18AA of the Industries (Development and Regulation) Act, 1951, shall apply to the tea undertaking or tea unit, as the case may be, to the same extent as they apply to an industrial undertaking'.

Under Section 16B it has been provided that the Central Government is given power, if the Central Government is of the opinion, to cause investigation to be made in relation to the Tea Undertaking or Tea Unit, After the investigation is made by a person appointed under Section 16B (3), the Central Government may issue such direction under Section 16C as provided in the said section. After the investigation it is also provided under Section 16D that if the Central Government is of the opinion on any grounds stated in Section 16B and 16C of the Act, it may by order authorise any person or body of persons to take over the management of the undertaking for such period not exceeding 5 years. Under Section 16N of the Act it has been stated that until any rule is made in relation to any matter referred to in this Chapter, that is, Chapter 11A of the Act, the rules made by the Central Government under the Industries (Development and Regulation) Act, 1951, in relation to such matter shall, as far as may be, apply to the extent they are not repugnant to any provision of this Act or any rule made thereunder and references in such rules to the provisions of that Act shall be construed accordingly it appears, therefore, that when a question of representation and the question of natural justice are to be followed as is to be followed, in the matter of Section 16D, the representation of the aggrieved person must be considered before the report is made under Section 16B of the Act. In Section 16E of the Act however the power to take over the Tea Undertaking has been given to the Central Government if the Central Government is satisfied from the documentary and other evidence in its possession in relation to a tea undertaking that the persons-in-charge of such tea undertaking or tea unit have (1) by reckless investments or (2) creation of incumbrances on the assets of the tea undertaking or tea unit, or (3) by diversion of funds, brought about a situation which is likely to affect the production of tea, manufactured or produced by the tea undertaking or tea unit, and (4) that immediate action is necessary to prevent such a situation, the Central Government may take over the management of the undertaking on issue of a notified order under Sub-section (1). In that view of the matter, we now consider that arguments advanced by Mr. Somen Bose and Mr. D. N, Das appearing for the appellant

4. Mr. D. N. Das appearing for the appellant contended mainly that the condition precedent for the exercise of power under Section 16E (1) (a) is present and there cannot be any doubt that if the condition precedent to the exercise of power by the Central Government is non-existent, then the order cannot be sustained. Therefore we are going into this fact which comes to the light on the affidavit filed in the Court of the Hon'ble single Judge as also an application filed before us to see whether the condition precedent for the exercise of power under Section 16E of the Tea Act had been present and the same was duly considered. If it has been followed, the appeal by the appellant must succeed and if not the appeal must fail. It appears to us on the question of law as agitated, that while taking over the management of the tea undertaking under Section 16E of the Tea Act, the Central Government was satisfied from the documentary or other evidence in its possession that the person in charge of such tea undertaking or tea unit have, by reckless investments or creation of incumbrances on the assets of the tea undertaking or tea unit, or by diversion of funds, brought about a situation which was likely to affect the production of tea, manufactured or produced by the tea undertaking or tea unit and that immediate action was necessary to prevent such a situation. From reading the said section it is clear that the reckless investments on the assets or creation of incumbrances etc. or diversion of funds by the management of the Tea Undertaking must be such which may (be) likely to affect the production of tea, manufactured or produced by the tea undertaking or tea unit and that immediate action must also be necessary to prevent such situation being brought I about. In out opinion, all these elements must be present before the Central Govt. is satisfied on the basis of the documentary and other evidence that the tea undertaking is being managed in such a way by reckless investments etc. on the assets of the tea undertaking that unless immediate action is taken a situation may be brought about which affects the tea production. Before us at the time of hearing an application was made by the Central Government for taking into consideration of the matter which was not placed before the Hon'ble single Judge. In view of the fact, it appears to us that the learned Judge had no opportunity to look into the records when the Hon'ble Judge considered the matter because at that stage it is stated that the Government though did not file the application but withheld the records for consideration by the Hon'ble single Judge. While dealing with the matter, we have not seen this application but all the records have been filed before us which go to show the facts and documents upon which the Tea Estates were taken over. It appears to us that the affidavits and the present documents are at variance with the affidavit filed before the Hon'ble single Judge.

5. Now we consider the arguments advanced by Mr, D. N. Das appearing for the Union of India and Mr. Somen Bose appearing for the Tea Trading Corporation. It is argued by Mr. Bose that there must be casual relation between the incumbrances etc. which may likely to affect the production and that immediate action is therefore necessary. Unless this can be satisfied, no order can be made under Section 16E of the Tea Act.

6. Mr. Somen Bose on behalf of the Tea Trading Corporation contended that the learned single Judge was wrong in holding that in taking the decision under Section 16E of the Tea Act, the Central Government cannot consider the matters, namely, creation of incumbrances which was brought long before the Tea (Amendment) Act, 1976. On the premises, Mr. Gupta appearing for the respondent could not contend otherwise. We are of the opinion that the finding of the Hon'ble Judge that only incumbrances created after the Tea Act, 1976 came into force can be the basis of the satisfaction cannot be upheld. On the other hand, from reading Section 16E, it is clear to us that for the purpose of satisfaction of the Central Governmentunder Section 16E, the situation of the tea garden regarding the reckless investment or creation of incumbrances on the assets of the tea undertaking or tea unit or by diversion of funds, even before the Act came into force can be considered by the Central Government if the Central Government is otherwise satisfied on this fact.

7. Next question argued by Mr. Bose is that the satisfaction of the Central Government under Section 16E must be on the ground as stated under Section 16E (1) (a) and secondly the Central Government must also be satisfied that it has brought about a situation which is likely to affect the tea production etc. and that immediate action is necessary to prevent such situation. It appears that in so far as the said section is concerned the Central Government must be satisfied on the basis of the documentary and other evidence in possession of the Central Government about (a) reckless investment or (b) creation of incumbrances on the assets of the tea undertaking or tea unit or (c) diversion of funds. If the Central Government is satisfied, the Order cannot be made unless the Central Government is further satisfied that unless immediate action is taken to prevent such situation brought about on those grounds which may bring about a fall of production of tea, manufactured Or produced by the tea undertaking or tea unit. In the case reported in : [1975]2SCR330 it has been held by the Supreme Court that once the Government is satisfied on the relevant materials according to Section 16E of the Act it is argued that the exercise of power is not open to the judicial scrutiny.

8. Mr. Gupta on behalf of the respondent contended that about the question of law as stated, there is no dispute and cannot be disputed but on the face of the record, it is argued that no reasonable man can be satisfied about the existence of the pre-condition for the exercise of power under Section 16E of the Act. It must be made clear that once, if it is possible for the Court on consideration of the materials placed before the Court to come to a finding that the condition precedent for the exercise of power has been satisfied, then of course non-mention of the different pro-visions regarding satisfaction cannot nullify the order. If, however, the purpose is challenged, the Government concerned must place before the Court materials on which satisfaction was based. In the present case, materials were placed before us and it is now for us to see whether on these materials the Central Government could be satisfied or in the other words, whether the condition precedent for the exercise of power existed when the power was exercised. Before we go into the other question, it is convenient for us to point out that the Hon'ble single Judge proceeded on the scrutiny that the word 'reckless' qualifies both the words 'reckless investment' or the words 'creation of incumbrances' on the assets of the tea undertaking or tea unit. From the order sheet which is now annexed as supplementary affidavit, it appears to us that the Central Government considered the case of the respondent and was of the opinion that the incumbrances of the assets of the tea units was reckless or in other words, the Central Government also was of the view that the creation of incumbrances on the assets brought about a situation which is likely to affect the production of tea. The word 'reckless' qualifies reckless (investment) as also the words 'creation of incumbrances'. From the order sheet which was placed before us by way of supplementary affidavit, it appears that on the basis of the evidence by the Tea Board, the Government was satisfied that the persons-in-charge of this estate have by reckless creation of incumbrances on the assets of the tea estates brought about a situation which is not only likely to affect the tea production but also create unrest amongst the labour force and as such immediate action is necessary to prevent further deterioration of the situation. It appears that this Note was made and passed through different section officers and went right up to the highest authorities. Then again, it also appears that the Commerce Minister approved the draft order which went to the Law Minister and was revised. But thereafter it does not appear that any authorities of the Central Government have considered the said revised draft order. Be that as it may, from the supplementary affidavit filed by the Deputy Secretary, Ministry of Commerce and Civil Supplies, Government of India, regarding taking over of Looksan TeaEstates, it is to be found that the Tea Estates has 373 hectares area under tea. It was further found that the garden average on the whole has been yielding consistently well below the District average and as such the conditions of the estates from the point of view of its productivity and factory are amendable to revival and early restoration to normalcy. On the question of financial condition of the estate, it came to the conclusion that the incumbrances are highly disproportionate to the fixed assets of the garden. It must be stated that none of the parties contended that the tea garden can be run under the usual loan or the hypothecation of tea stocks with the financial institution. It is admittedly true that the particular tea garden has a financial dealing with the Oriental Bank of Commerce Ltd. and they did not and could not pay off the dues of the Bank on which a suit is now pending. At one stage, the management of the garden was made over to the Agent of the Bank in order to pay off the loan of the Bank. It appears after running the said garden, through the Agent, the garden was made over to the proprietors, Number of cases were pending against the estates. It further appears that under Section 16E of the Tea Act the order was made. From the order sheet, which is produced before us, it is quite clear that the materials which are at all not relevant for the purpose of taking over of tea undertaking or tea unit were considered by the Central Government before the order is made. The relevant portion of the extraneous matter considered by the Central Government be-fore the order is made according to us is that the Government considered the District average during the period 1972-74. The Government further considered the effect of unrest in the labour force in the garden. These two considerations are, according to us, not germane for the purpose of making the order under Section 16E of the Tea Act. It must be stated that the Government considered the District average which is not, in our opinion, relevant consideration for the purpose of coming to the decision under Section 16E of the Tea Act. On the other hand, it is quite possible that this factor may be relevant consideration for the purpose of Sections 16B, 16C and 16D of the Act. In case coming under Section 16D of the Act it is incumbent for the authority to consider the representation as contained in Rule 5 Industries (Dev & Ray)Act. But for action under Section 16E of the Act the Central Govt. exercises emergency power where according to the Central Govt. immediate action is necessary. In the background question of giving opportunity of representation may frustrate the exercise of the power itself. In our view therefore in exercise of power under Section 16E of the Act, giving opportunity of representation does not arise. But that is more reason why if the exercise of power under Section 16E and the matter comes up for the scrutiny of Courts of Law the Central Government must satisfy that they have exercised the power after the conditions precedent for such exercise of powers are satisfied.

9. Mr Bose on behalf of the appellant and Mr. Das on behalf of the Union of India contended that the words 'reckless investment' and 'creation of incumbrances' on the assets of the tea estates mean any incumbrances that prevents any action. In support of this contention reliance was placed on the cases reported in AIR 1957 Bom 119. It is argued that any incumbrances which is likely to affect the production of tea for the purpose of Section 16E of the Act is immaterial. It is argued that the Central Government considered the production of tea from their own record. It will be clear from what the petitioners stated in their petition about the production of tea. It is also supported by the reports as stated and as annexed to the supplementary affidavit, Here also it will be found that the Central Government proceeded with the average yield and District average. According to Mr, Gupta, this is an extraneous consideration for the purpose of taking an action under Section 16E of the Tea Act. In our opinion, the arguments advanced by the appellant's Advocates Mr. Bose and Mr. D. N. Das that the basis of the satisfaction under Section 16E of the Act is to be found in the notings of the Central Government which was filed before us by the supplementary affidavit but not produced before the Hon'able single Judge. We are of the opinion on consideration of the file that even in the nothings, the matters are extraneous to Section 16E of the Act, that is, consideration of District average, consideration of the labour unrest and consideration of the certificate proceedings pending or filed regarding the payment of provident funds, wages, etc., were considered. It appearsfurther that before the order was made, some reports are available from the Tea Board in respect of the number of Tea Estates including the Tea Estate with which we are considered in this matter. In our opinion, the consideration of the District average from 1972-74, and liability regarding payment of wages, bonus and gratuity etc., are not germane according to us for the purpose of making the order under Section 16E of the Tea Act. In that view of the matter, in our opinion, the impugned order cannot be sustained, inasmuch as, in satisfying that immediate action is necessary to prevent a situation which is likely to fall the production of tea, the Central Government took into consideration the matter which is not germane for such order being passed,

10. Mr Gupta on behalf of the respondent contended that the payment of provident fund etc., does not come within the meaning of the word 'incumbrances'. Mr. Gupta referred to the case reported in : [1977]3SCR525 , and argued that incumbrances regarding the payment of wages, provident fund etc., which was considered by the Central Government for making an order under Section 16E is not a relevant consideration in so far as Section 16E is concerned. These matters are relevant considerations when orders under Sections 16B, 16C and 16D of the Tea Act are contemplated. In that view of the matter, it is argued by Mr. Gupta that the dues regarding the payment of provident fund, wages and gratuity etc. cannot come within the meaning of the word 'incumbrances'. Even if these alleged dues are there, they are not germane for the purpose of consideration of taking an action under Section 16E of the Act. To that argument of Mr. Gupta, Mr. Bose as well as Mr. Das contended that there are certain incumbrances on the properties as the provident fund etc., are charged on the properties itself. Mr. Bose relied upon the case reported in : [1960]3SCR578 , and contended that such charge on on the estate amounts to reckless incumbrances. Assuming Mr. Bose is correct, in our opinion, in view of the wording of Sections 16B, 16C, and 16D and Section 16E of the Act, it is clear for the purpose of making an order under Section 16E of the Tea Act, these matters are not relevant at all. Further we we of the opinion that Section 16E of the Tea Act does not provide for any opportunity being given to the petitioner.

This argument to the contrary by Mr. Gupta cannot be accepted to be correct. In our opinion, in so far as the question of natural justice is concerned, Section 16E provides that if the Central Govt. is satisfied about the condition precedent for the. exercise of power and that immediate action is necessary to prevent such a situation. The principle of natural justice in the way that representation by other petitioners will frustrate the action itself, and for prevention of such situation, the Government has been given power under Section 16E of the Act to act immediately. In our view, the natural justice regarding representation by the respondent in the context of the different sections of the Tea Act, as amended, is not applicable in the matter coming under Section 16E of the Act. But there cannot be any doubt that before the order is passed, the condition precedent for passing of the order must be satisfied on the materials or documents in possession of the Government. We have already stated that we are satisfied that the Central Government considered the matters in exercise of the emergency powers which are not at all germane consideration of the purpose of act. Mr. Das relied upon the report of the Tea Board regarding the particular Tea Estates. From the report itself it appears that the Tea Board considered the provident fund, excise duties, Land rent etc., for coming into the consideration before passing the order impugned. It must be stated that before the order is upheld there must be a finding that the order was passed by the Central Government being satisfied from the documentary and other evidence in their possession. Reliance was placed by Mr. Gupta in the case reported in : [1978]2SCR272 , for that purpose. We have already held that the Central Government came to a finding about the materials on records which are not germane and the order cannot be sustained.

11. We, therefore, dismiss the appeal. There will be no order as to costs.

12. Operation of this order is stayed for two months from date. Direction is given to the Office to give the certified copies of this order to the respondents as soon as practicable on their making an application for the same.

13. There will be no order on the application.

14. Leave under Article 133(1) (a) and (b) read with Article 134(A) of the Constitution is granted because the question involved in this case has not been decided by the Supreme Court and in our opinion this is a matter of general public importance which should be decided by the Supreme Court.

15. In view of our findings all the appeals are dismissed,

16. There will be no order as to costs.

17. In respect of appeal being F. M. A. T. No. 1003 of 1979 on the preliminary point the petitioner having filed an application earlier which was pending when the present application on which the Rule was issued was filed the application on which subsequent Rules were issued are not maintainable. In our opinion, as that application was not disposed of on merits and since withdrawn when this application was filed the ground of challenging the issuance of the Rule on the preliminary point cannot succeed and must, therefore, stand dismissed. The writ as herein granted is in respect of two appeals being F. M. A. Ts. Nos. 1004 and 1034 of 1979, (CR 4368W of 1977) which were disposed of on merits.

B.C. Ray, J.

18. I agree.


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