Skip to content


Gujarat Industrial Development Corporation Vs Chemstar Organics (i) Ltd and 1 - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtGujarat High Court
Decided On
Case NumberLETTERS PATENT APPEAL No. 1243 of 2010 ; SPECIAL CIVIL APPLICATION No. 11144 of 2001 ; LETTERS PATENT APPEAL No. 1513 of 2010 In SPECIAL CIVIL APPLICATION No. 11144 of 2001
Judge
ActsCompanies Act, 1956 - section Article 12, ;Indian Companies Act, 1956.
AppellantGujarat Industrial Development Corporation
RespondentChemstar Organics (i) Ltd and 1
Cases ReferredPraga Tools Corporation vs. C.V. Imanual
Excerpt:
.....is extracted herein below: "i found during my investigation that mohan singh, son of shri sher singh , dharmatma singh, harpal singh, jagdev singh and bhupinder singh, sons of mohan singh, residents of pullanwal, sold one plot of 1 kanal 13 marlas on 09.03.2004 to bharpur sigh, harnek singh, sons of balbir singh, jagjit singh, son of amarjit singh, gurcharan singh, son of hari dass and jagdev singh, son of harpal singh, resident of phulanawal through registered sale deed vasikha no.23895 and the mutation no.10940 duly entered in the name of purchasing party. for deciding the issue, we must first refer to the provisions of section 173 of the cr.p.c. under which the police submits reports after investigation and after further investigation, section 190 of the cr. p.c. under..........to pay an amount of rs.7,65,600/- towards capital contribution. pursuant thereto, the petitioner-company paid the said amount by two cheques for rs.4,50,000/- and rs.3,15,600/-. consequently, the petitioner-company was permitted to discharge 1,50,000 litres of treated effluent per day.7. a new project was conceived to be undertaken by the appellant-corporation, who was the first respondent before the writ court. the said project for new consortium was termed as "effluent disposal project" (hereinafter referred to as 'edp' for short). on 22.03.1996, a meeting was held by the chief project manager of the appellant-corporation evolving the further action plan on edp. as the petitioner-company was also interested in the said project, it was required to pay an amount of rs.7,50,000/-.....
Judgment:
1. As both these appeals arise out of the same common judgment of the learned Single Judge and common question of law is involved, both the appeals were heard together and disposed of by this common judgment.

2. Letters Patent Appeal No.1243 of 2010 has been preferred by the appellant-original first respondent-Gujarat Industrial Development Corporation, Gandhinagar (hereinafter referred to as "the Corporation" for short) and Letters Patent Appeal No.1513 of 2010 has been filed by the original second respondent- Effluent Channel Project Ltd. (hereinafter referred to as "ECP" for short) against the judgment dated 4.2.2010 passed by the learned Single Judge in a writ petition being Special Civil Application No.11144 of 2001. In the said case, the first respondent-original petitioner -Chemstar Organics(I) Ltd., a company registered under the Companies Act, 1956 (hereinafter referred to as "the Company" for short) sought for issuance of a writ in the nature of certiorari and mandamus and/or direction to quash and set aside the decision of the second respondent-Effluent Channel Project Ltd., appropriating Rs.7,34,400/- earlier paid by the first respondent-writ petitioner towards capital contribution for Effluent Disposal Project. The learned Single Judge by impugned judgment held that the respondents have illegally retained an amount of Rs.7,34,400/- with them since 1.8.2000 and, therefore, the Company shall be entitled for interest at the rate of 11% per annum on the said amount. The writ petition was allowed with direction to the appellants jointly to refund an amount of Rs.7,34,400/- with interest at the rate of 11% per annum from 1.8.2000 till the same is realised.

3. The main plea taken by the appellants to assail the judgment is that the writ petition was not maintainable against the second respondent-Effluent Channel Project Ltd. with whom the amount was deposited by the first respondent-original writ petitioner.

4. The case of the first respondent-Company, who was the original petitioner, before the writ Court was that the Company is engaged in the business of manufacturing organic intermediates and fire chemicals. The industrial plants of the Company are situated at Nandesari Industrial Estate and Umaraya Taluka Padra, District Vadodara wherein they have installed their own effluent treatment devices.

5. The second respondent- Effluent Channel Project Ltd. was commissioned in the year 1983 and initially had eight members. In the year 1993, 11 other members expressed their desire to join ECP for their effluent disposal and the original petitioner-Company was one of them. On 17.8.1993, a meeting of the Management Committee of ECP was convened at Dhonera and a decision was taken with regard to admission of the said 11 new members and the contributions which were required to be paid by them.

6. The ECP addressed a letter to the petitioner-Company informing that its request for joining the ECP as a member has been accepted. However, vide communication dated 15.2.1995, the ECP informed the petitioner-Company that its request for joining the ECP at Nandesari, as a new participant, was granted on certain terms and conditions. One of the conditions was that the petitioner-Company has to pay an amount of Rs.7,65,600/- towards capital contribution. Pursuant thereto, the petitioner-Company paid the said amount by two cheques for Rs.4,50,000/- and Rs.3,15,600/-. Consequently, the petitioner-Company was permitted to discharge 1,50,000 litres of treated effluent per day.

7. A new project was conceived to be undertaken by the appellant-Corporation, who was the first respondent before the writ Court. The said project for new consortium was termed as "Effluent Disposal Project" (hereinafter referred to as 'EDP' for short). On 22.03.1996, a meeting was held by the Chief Project Manager of the appellant-Corporation evolving the further action plan on EDP. As the petitioner-Company was also interested in the said project, it was required to pay an amount of Rs.7,50,000/- towards the contribution for disposal of the effluents. Accordingly, two cheques for Rs.4,00,000/- and Rs.3,50,000/- were forwarded by letter dated 8.4.1996 towards its EDP contribution. As the EDP project finally did not materialize, the petitioner-Company by letter dated 9.3.2000 requested the ECP to refund the amount of Rs.7,50,000/- deposited by it towards the EDP. The said amount was required by the petitioner-Company to pay two installments to the ECP towards the maintenance/repair expenses.

8. However, vide letter dated 4.5.2000 the ECP informed the petitioner-Company that since there was a typographical error in the letter dated 15.2.1995, the petitioner-Company was, in fact, required to pay an amount of Rs.15 lakhs towards capital contribution and not Rs.7,65,600/-. Thereafter, vide letter dated 1.6.2000, the petitioner-Company informed the ECP that the amount of Rs.7,50,000/- paid by the petitioner-Company was towards the capital contribution of EDP and requested to refund the said amount.

9. Pursuant thereto, the ECP vide letter dated 25.7.2000 refunded only a sum Rs.15,600/- to the petitioner-Company. The rest of the amount was adjusted. Thereafter, the petitioner-Company through its Advocate sent a legal notice to the ECP asking them to refund an amount of Rs.7,50,000/- with interest. The same having not paid the writ petition was preferred.

10. The stand of the petitioner-Company before the writ Court and also before this Court is that an amount of Rs.7,65,600/- was paid as capital contribution towards ECP, whereas the sum of Rs.7,50,000/- was deposited by the petitioner-Company for EDP.

11. The learned counsel for the petitioner-Company would contend that the amount paid towards one project cannot be adjusted against another and, therefore, the action of the respondent-Corporation of adjusting the amount of Rs.7,50,000/- deposited by the petitioner-Company for EDP towards ECP is arbitrary and contrary to law. Therefore, the learned Single Judge rightly interfered with the communication and allowed the writ petition.

12. Per contra, according to the counsel for the appellant-Corporation, the relief prayed for by the petitioner-Company was in the nature of a money decree and, therefore, this Court ought not to have issued a writ of mandamus for enforcement of a money claim. The appropriate remedy available to the petitioner-Company is to move the competent Civil Court. Hence, the learned Single Judge ought not to have exercised its discretionary power in favour of the petitioner-Company.

13. The learned counsel appearing on behalf of the second respondent-ECP would contend that the second respondent-Company is a private limited company and as the relief is sought for enforcement of a private contractual right against another private person and the dispute being essentially a civil dispute and in absence of any element of public law, no writ of certiorari or any other appropriate writ was maintainable against the second respondent-Company (ECP).

14. The learned counsel for the second respondent also addressed the Court to justify the adjustment as was made, but we are not deliberating on such issue for the grounds mentioned hereunder.

15. It is true that the appellant-Corporation is a "State" within the meaning of Article 12 of the Constitution of India. It is a statutory body controlled/managed by the State Government and implements the policies framed by the State Government from time to time. Therefore, the Corporation was amenable to the writ jurisdiction of the Court. To that extent, the finding of the learned Single Judge cannot be held to be illegal.

16. However, from the record it will be evident that no relief was sought for against the appellant-Corporation. The first respondent-petitioner-Company had not pleaded that any amount was claimed by the Corporation or paid to the Corporation pursuant to any agreement reached between the first respondent-Company and the appellant-Corporation. The main plea as taken by the first respondent-Company, is that in the meeting of the Management Committee of ECP held on 17.8.1993, some of the State Government officials were present. The other plea has been taken that the receipts of deposit were issued from the office of the appellant-Corporation.

17. To determine the question, whether ECP is a wing of the Corporation or a creature of the Corporation, it is necessary to notice the relevant facts, as mentioned hereunder.

18. ECP was not formerly constituted either as a Society registered under the Societies Registration Act or as a Company registered under the Companies Act, 1956. The Managing Committee of ECP was formed in which one of the IAS Officers was Chairman with officials of Indian Petrochemicals Ltd., Indian Oil Corporation Ltd., GSFC as members along with representatives of a number of private companies, as is evident from the 13^th meeting of the Managing Committee of ECP held on 17.8.1993. It was noticed that the Monitoring Committee had recommended a minimum contribution of Rs.15 lakhs for being a participant of ECP. It was decided that apart from the old participants, new participants can be included on the basis of the formula as mentioned therein. The relevant portion of the proceedings of Management Committee dated 17.8.1993 is reproduced hereunder:- "Minutes of the 13^th meeting of the Management Committee of the ECP held on 17/8/93 at ECP, Dhanera The following were present:- 1. Shri N.M. Bijlani, IAS- Chairman 2. Shri R.D. Patel, GSFC- Member 3. Shri S. Das, IPCL- Member 4. Shri S. Kaul, IOC- Representative 5. Shri G.A. Patel, Joint Secretary, Department of Environment Representative 6. Mrs. S.N. Modak, GSFC- Representative 7. Shri K.N. Naik, IPCL- Representative 8. Shri A.V. Kane, GACL- Representative 9. Shri Y.L. Pandya, Nirma Ltd.- Representative 10. Shri C.A. Mehta, Transmental Ltd.- Representative 11. Shri S.K. Daftari, Refoil Earth Pvt. Ltd. Representative 12. Dr. C.B.Upasari, Eureka Organic Ltd.- Representative 13. Shri Ramesh Gami, Benzo Petro- Representative 14. Dipti Dave, Amardeep Dye Stuff Pvt. Ltd.- Representative 15. Shri Vasant K Desai, M/s.TGBL- Representative 16. Shri Kalpesh C Jain, Kabra Colour Pvt. Ltd. Representative 17. Shri Bimalkumar Sethia, Kabra Colour Pvt. Ltd. Representative 18. Shri Arvind Bhatt- Member Secretary The Chairman accorded hearty welcome to the members. Initiating the discussion, he stated that the Monitoring Committee had recommended a minimum contribution of Rs.15 lacs, in case of the industries whose actual Pro-rata contribution as per volume load would be less than Rs.15 lacs, as per the current years rate of Rs.220 lacs/MGD. Suggestions from the new Eleven Participants were solicited. These suggestions were circulated along with the agenda. It may be noted that the normal contribution at the rate of Rs.220 lakhs per M.G.D. will be Rs.22 per gallon i.e. Rs.4.85 per litre. As against this, the new participants have suggested a rate which is much lower than the actual contribution. All the members of the Management Committee stated that this is not acceptable. Even the original participants and large undertakings are facing financial crunch. Though the channel was created only for their use and they have contributed to its full cost, they have agreed to allow new participants to use this facility if they are willing to contribute to its capital and operating cost as per agreed formula. The representatives of the new participants stated that they are award of this and are thankful for the consideration being shown to them by the original participants who have contributed to the cost of the channel and own the same. All that they are requesting is due consideration to the smaller industries who are coming to this area because of this facility. After detailed discussion in the matter the following formula for minimum contribution was unanimously decided: 1. For the present ELEVEN applicants viz. M/s. T.G.B.L., Gujarat Narmada Knit Ware, Kabra Colours, Benzo Petro, Chemister Organics, Nirma Ltd., Amardeep Dyestuff, Transmetal, Innovagrochem, Eureka Organics, Refoil Earth, the minimum contribution will be: (a) Upto 50,000 LPD discharge - Rs. 2.00 lacs (b) -do- But, 50,000 to 1,00,000 LPD - Rs. 5.00 lacs (c) -do- But, 1,00,000 to 2,00,000 LPD - Rs.10.00 lacs 2. For the new applicants, other than this ELEVEN industries, the minimum contribution shall be: (a) Upto 50,000 LPD discharge - Rs.5.00 lacs (b) -do- But, 50,000 to 1,00,000 LPD - Rs.10.00 lacs (c) -do- But, 1,00,000 to 2,00,000 LPD- Rs.15.00 lacs This minimum rate will be applicable upto 31/3/94. It is subject to revision for the industries that apply thereafter."

19. Thereafter, ECP appears to have started functioning and was managed by the Corporation. This will be evident from the letters of ECP dated 17.1.1995 and 16.2.1995 etc.. At that stage, when contributory amount was paid by the participants, the receipts were issued with the stamp of the Corporation, as evident from the receipts granted in favour of the first respondent-Company on 31.3.1995, which were subject to realisation of the cheque amounts. The background of proposed EDP was formulated some time in the year 1995 wherein background history of Effluent Channel Project (ECP) was also reflected. The relevant portion of the proposed Effluent Disposal Project (EDP) for new industries in Baroda area is quoted hereunder:- "PROPOSED EFFLUENT DISPOSAL PROJECT (EDP) FOR NEW INDUSTRIES IN BARODA AREA 1.0 BACKGROUND

The Effluent Channel Project (ECP) at Baroda was commissioned in 1983 to cater to the effluent disposal of eight major industries. During the period from 1983 to 1995, 15 new industries were admitted into the ECP. In the year 1994-95, applications of about 10 industries were considered for admission. Some of them have paid their contribution also. However, they are under strict surveillance and scrutiny of the Assessment Committee with respect to their performance on effluent treatment and results thereof. If the Assessment Committee is not satisfied regarding their capabilities to treat the effluent as per CONSENT conditions of the Gujarat Pollution Control Board, their cases shall have to be reviewed and the membership terminated. Over and above this, there is a group of about 27 industries who have applied for the membership of the ECP. It transpires from the above that there are about 37 industries which may not qualify for admission into the channel. Most of them are small scale industries having limited effluent volume. Since any interruption in the performance of the ECP would adversely affect the performance of large projects like IPCL, GSFC, Gujarat Refinery, GACL etc. it is considered worthwhile to form a small independent group and provide one or two pipeline for them with proper pumping facilities without interfering with the ECP. This could be a new project for new industries, which can be undertaken by the GIDC Project Division on agency basis. This project for the new consortium can be termed EFFLUENT DISPOSAL PROJECT (EDP). GIDC can undertake this along with ECP."

20. It is only in the year 1999, Effluent Channel Project (ECP) was registered as a Company under the Indian Companies Act, 1956.

21. From the aforesaid facts, it will be evident that ECP is a Company, which is independent and managed by its Directors. There is nothing on the record to suggest that the appellant-Corporation has any control over the same after ECP was registered as a Company.

22. The contribution was made by the first respondent-Company, which will be evident from the letter dated 9.3.2000 whereby the first respondent-Company requested the Project Manager of Effluent Channel Project (ECP) to refund the amount of Rs.7,50,000/- with interest, relevant portion of which reads as follows:-

"Our Ref:AD/99-2000/1296 March 9, 2000 The Project Manager Effluent Channel Project 4^th Floor, Commerce Centre Sayajigunj Vadodara 390 005 Subject: Refund of Rs.7,50,000/- Paid against EDP Connection Reference: 1. Letter No.AD/96-97/19 dt.8-1-96 2. Your Receipt no.064617 dt. 9-4-1996 for Rs.7,50,000/- Dear Sir, With reference to the above, we would like to inform you that we had paid a sum of Rs.7,50,000/- (Rupees Seven Lakh Fifty thousand only) toward payment for EDP connection/EDP Project vide following cheques:- Cheque NO. 011691 Date 2-4-9 Amount4,00,000.00 We are enclosing herewith copy of your letter dt.8-4-96 and receipt No.06417 dt. 9-4-96 for your ready reference. We now request you to refund the amount of Rs.7,50,000/- with interest at the earliest as we are facing stringent financial crisis. Thanking you, Yours faithfully For Chemstar Organics (India) Ltd. sd/- (M.J. Patel) Manager (Pers. & Admn.)"

23. Subsequently, the first respondent-Company, on receipt of demand for payment of contribution to ECP, by letter dated 6.4.2000 requested the General Manager, Effluent Channel Project (ECP) to adjust the amount from the amount of Rs.7,50,000/- which was paid by the first respondent-Company against EDP connection. The request was made to arrange refund of balance amount at the earliest. The said letter reads as follows:-

"Our Ref:AD/2000-2001/18 April 6, 2000 The General Manager Effluent Channel Project Ltd. 4^th Floor, Commerce Centre Sayajigunj Vadodara 390 005 Kind Attention: Mr Jitendra Rindani Subject: Pro/rata contribution of Rs.28,750/- towards M&R; for the year 2000-2001. Dear Sir, We have received your fax message vide letter no.ECPL/BRD/A.O./104 dt. 28-3-2000 informing us that in our case, the contribution payable by 25-4-2000 shall be Rs.28,750/- towards M & R for the year 2000-2001. In this connection, we request you to adjust from the amount of Rs.7,50,000/- which was paid by us against EDP connection and arrange to refund balance amount at the earliest.

24. From the facts as discussed above, the following scenario emerges :- (i) Since 1999 ECP having registered as a Company under the Indian Companies Act, 1956, the Corporation had no control over the same; (ii) The amount of Rs.7,50,000/- was paid by the first respondent-Company in favour of ECP towards payment of EDP connection as the first respondent-Company claimed in their letter dated 9.3.2000 and sought refund of the amount from the second respondent-ECP. (iii)The first respondent-Company subsequently requested the ECP to adjust the amount towards the due, as was payable towards its contribution; (iv) From the subsequent letters of ECP and the first respondent-Company, it will be evident that the claim and counter-claim is made between the two companies i.e. the first respondent-original petitioner and the second respondent-ECP, the appellant-Corporation was nowhere in picture. It is only with a view to show maintainability of the writ petition, it appears that the appellant-Corporation was impleaded as a party-respondent so as to ensure that the writ petition is not dismissed on the ground of maintainability.

25. It is a settled law that a writ of certiorari can be issued for correcting errors of jurisdiction. It is also issued when the Court or Tribunal acts illegally in exercise of its jurisdiction. The Court which issues a writ of certiorari acts in exercise of a supervisory, as distinct from an appellate jurisdiction. In this connection, we may refer to the Supreme Court decision inCustodian of Evacuee Property vs. Khan Saheb Abdul Shukoor reported in AIR 1961 SC 1087.

26. A writ of certiorari can be issued only against an order passed by a judicial or quasi-judicial authority. It is not an administrative act, as held by the Supreme Court in Dwarkanath vs. Income-tax Officer reported in AIR 1966 SC 81.

27. In the present case, no order was passed by any judicial or quasi-judicial authority. Therefore, a writ of certiorari was not maintainable against the decision taken by the second respondent Company (ECP).

28. We have already stated that ECP is a Company. The amount was deposited by the first respondent Company with the other Company i.e. ECP. The claim was made for refund of amount only against the second respondent Company (ECP). Therefore, we hold that the writ petition as against the second respondent Company was not maintainable.

29. Having noticed that no agreement was reached between the appellant-Corporation and the first respondent-Company, the first respondent Company having never made any demand of refund from the appellant-Corporation, there is no occasion to issue any writ of mandamus on the Corporation.

30. In the case of National Highways Authority of India vs. Ganga Enterprises reported in (2003) 7 SCC 410, the Supreme Court while discussing the scope of judicial interference with enforcement of a contract, held that a writ petition involving a contractual dispute is not maintainable. In all such cases, the question of maintainability ought to have been considered first. "6. The respondent then filed a writ petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two questions viz.: (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered Question (a) and then chose not to answer Question (b). In our view, the answer to Question (b) is clear. It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in the cases of Kerala SEB v. Kurien E Kalathil [(2000) 6 SCC 293], State of U.P. vs. Bridge & Roof Co. (India) Ltd., [(1996) 6 SCC 22] and Bareilly Development Authority vs Ajai Pal Singh [(1989) 2 SCC 116]. This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ Court was not the proper forum. Mr Dave, however, relied upon the cases of Verigamto Naveen vs. Govt. of A.P. [(2001) 8 SCC 344] and Harminder Singh Arora vs. Union of India [(1986) 3 SCC 247]. These, however, are cases where the writ Court was enforcing a statutory right or duty. These cases do not lay down that a writ Court can interfere in a matter of contract only. Thus on the ground of maintainability the petition should have been dismissed."

31. In the case of Praga Tools Corporation vs. C.V. Imanual reported in AIR 1969 SC 1306, the Supreme Court held that for issuance of a writ of mandamus, there must be a legal right to performance of legal duty. Writ cannot issue to a Company, which is not statutory or having any public duty or responsibility imposed by a statute to restrain Company from enforcing agreement arrived at between Union and the Company.

32. In view of such decisions of the Supreme Court, we also hold that the writ petition in contractual matter in question was not maintainable and in absence of any legal right to performance of legal duty, the learned Single Judge had no jurisdiction to issue a writ of mandamus on the second respondent Company.

33. This apart, we have noticed that money was deposited by the first respondent company in March 1995, whereas writ petition was preferred in the year 2001. The learned Single Judge ought to have noticed that when in such case there could have been a doubt with regard to maintainability of a suit after such a long period, the writ petition could have been entertained which is filed for efficacious remedy and is granted only to person who is vigilant and moves the Court within a reasonable period.

34. The learned Single Judge having failed to notice the aforesaid fact and had no jurisdiction to issue any sort of writ on the private limited company, we hold that impugned judgment and order dated 4.2.2010 passed by the learned Single Judge in Special Civil Application No.11144 of 2001 as illegal and set aside the same.

35. Both the appeals are allowed, but there shall be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //