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1986 DIGILAW 403 (CAL)

Bhadra Mitra v. State of West Bengal

1986-09-22

CHITTATOSH MOOKERJEE, SUSANTA CHATTERJI

body1986
Judgment : Mookerjee, J.: The appellants claimed to be the present owners of premises No. 18/1, Suren Sarkar Road, P.S. Beliaghata, Calcutta and according to them, the said premises is comprised of 1 bigha 10 cottahs of land and pucca structures, etc. According to them, their predecessors-in-interest by a registered Indenture dated 13th May, 1963 had granted to M/s. Calcutta Electric Lamp Works Ltd., the Respondent No.4 a lease of the said premises for a term of 25 years commencing from 1st January, 1964. The appellants brought Title Suit No. 82 of 1979 in the 8th Court of the Subordinate Judge, Alipore against the Respondent No.4, Company, inter alia, for recovery of khas possession of the aforesaid premises, for recovery of arrears of rent since April, 1973 and for recovery of meane profits. The appellants case in the said suit' was that the Respondent No.4, Company, had committed breaches of the terms of the lease by defaulting in payment of rent etc. and the appellants bad forfeited the lease. The Respondent No.4 filed a written statement contesting the said suit. The said suit still remains undisposed of. On August 30, 1979, in exercise of the power conferred by section 3 of the West Bengal Relief Undertakings (Special Provisions) Act, 1972 (West Bengal Act XIII of 1972) the Government of West Bengal declared M/s. Calcutta Electric Lamp Works Ltd. as a relief undertaking on and from 30th day of August, 1979 upto 29th of August, 1980. The said notification mentioned that the State Government had given guarantee in respect of a loan of Rs. 1,40,000/- that taken by M/s. Calcutta Electric Limp Works Ltd. from the United Bank of India and therefore the said undertaking had become a state industrial undertaking. By a separate notification published on 30th of August, 1974 the Governor of West Bengal under section 4 of the West Bengal XIII of 1972 issued necessary directions in terms of the said provision. By issuing subsequent notifications, the Stare Government had purported to extend from time to time the said declaration under section 3 of the West Bengal Act XIII of 1972 in respect of the Respondent No.4, M/s. Calcutta Electric Lamp Works Ltd. The directions given under section 4 of the said Act have been also accordingly extended. By issuing subsequent notifications, the Stare Government had purported to extend from time to time the said declaration under section 3 of the West Bengal Act XIII of 1972 in respect of the Respondent No.4, M/s. Calcutta Electric Lamp Works Ltd. The directions given under section 4 of the said Act have been also accordingly extended. The last notification extending the benefit of relief under taking to M/s. Calcutta Electric Lamp Works Ltd., is due to expire on 13th December, 1986. 2. The appellants filed a writ application challenging the State Government Notification under section 3 of the West Bengal Act XIII of 1972 declaring the Respondent No.4, Company as a relief undertaking and also the notifications extending under proviso to section 3 the said notification. They have also challenged the State Government notifications under section 4 giving directions, inter alia, that operation of all contract, assurances of property, agreement, etc. applicable to the said undertaking before the date of the notification under section 3 of the Act shall remain suspended including stay of their eviction suit against the undertaking mentioned above. We have mentioned that upon an application made by M/s. Calcutta Electric Lamp Works Ltd. the defendant in Title Suit No. 82 of 1979, the learned Subordinate Judge has already stayed the further proceeding in the said suit. 3. The learned trial Judge summarily rejected the writ application filed by the appellants. They have now filed the present appeal under Clause 15 of the letters patent against summary rejection of their writ application. Notices of this appeal were directly served upon the respondents. The State Government has not filed any affidavit-in-opposition but has produced the original records relating to the declaration of the Respondent No.4, Company as a relief undertaking under West Bengal Act XIII of 1972. 4. Before making a declaration under section 3 of the W.B. Act XIII of 1972, State Government must be satisfied that it is necessary or expedient so to do in public interest with a view to enabling the continued running or restraining of a State industrial undertaking as a measure of preventing or of providing relief against unemployment. It is clear that before the State might issue a notification extending the period specified that such extention was necessary to enable continued running or re-starting of the relief undertaking as a measure of preventing or providing relief against unemployment. 5. It is clear that before the State might issue a notification extending the period specified that such extention was necessary to enable continued running or re-starting of the relief undertaking as a measure of preventing or providing relief against unemployment. 5. Upon perusal of the records of the State Government, we are of the view that without considering the relevant facts relating to the possibility of re-starting of the said undertaking for providing relief against unemployment, the State Government had purported to extend upto 13th December, 1986, the notification under section 3 of the West Bengal Relief Undertaking (Special Provision) Act, 1972 in respect of M/s. Calcutta Electric Lamp Works Ltd. By not applying its mind to the relevant materials, the State Government acted arbitrarily by extending a declaration under section 3 of the West Bengal Act, XIII of 1972 and therefore, the notification extending the period of relief undertaking in respect of Respondent No.4, Company upto 13th December, 1986 ought to be struck down. 6. The official records of the State Government indicate that even prior to the issue of the original notification under section 3 of the West Bengal Act XIII of 1972 dated 13th August, 1979, M/s. Calcutta Electric Lamp Works Ltd. was under closure due to lack of working finance affecting 100 persons. On being approached by the Workers' Union, the State Government intervened in the matter of re-opening and revival of the unit and in order to serve it from litigation from the creditors of the unit. The State Govt. gave a guarantee to the United Bank of India for a sum of Rs. 1,40,000/- a for the loan of equivalent amount to the unit as working capital. It would appear from the records that on the request of M/s. Calcutta Electric Lamp Works Ltd., the State Government from time to time extended the period of relief undertaking in respect of the said Company. The unit, according to the official notes, has started its production on and from 10th May, 1980 by employing a small group of about 27 workers on the ground that the period was too short for producing in terms on commercial basis, the period of the relief undertaking had been extended for a further period of one year upto 30th August, 1980. 7. 7. The records indicate tint in the meantime other suits and proceedings had been started against the Respondent No.4 and a Receiver in respect of the Respondent No.4 had been appointed. The present Receiver is a party to this appeal. The office report dated 22nd August, 1980 indicated that only to enable the Receiver and the management to submit re-construction programme the period of the notification under section 3 of the West Bengal Act XIII of 1972 had been extended for further period of six months, i.e., upto 23th February, 1981. Again, it was the M/s. Calcutta Electric Lamp Works Ltd., which by their letter dated 27th December, 1980 had requested for extending the benefit of relief undertaking for a further period of one year from 1st March, 1981. The basis upon which the extension said sought was also not tenable although the official records showed that the unit had been re-started with 27 persons and production was not on commercial basis, on the alleged ground that employment of 100 persons were involved further extension were given to notifications under section 3 of the Act. Secondly, it was the Company itself which obtained such extension presumably for stay of various legal proceedings against it for recovery of loans and dues. Thus extension from time to time have been given on mechanical basis without any application of mind to the question whether extension of the declaration would really enable the undertaking to continue running or re-starting. 8. Inspite of the guarantee given by the State Government for a sum of Rs. 1,40,000/- to the United Bank of India, the undertaking had stopped production in August, 1982. Since the said date the Company was never re-started. Therefore, on relief was provided against unemployment of the workers previously serving in the unit. As already observed, it was the management of the Company which had been praying and obtaining extension of the notification under section 3 of the West Bengal Act XIII of 1972. Since the said date the Company was never re-started. Therefore, on relief was provided against unemployment of the workers previously serving in the unit. As already observed, it was the management of the Company which had been praying and obtaining extension of the notification under section 3 of the West Bengal Act XIII of 1972. When either the original notification under section 3 or the subsequent extension notifications had failed to prevent or provide relief against unemployment and inspite of such repeated extension the undertaking did not and could not re-start its production we fail to see why upon the request made by the Management of the Company the State Government from time to time had purported to extend the force of the notification under section 3 of the West Bengal Act XIII of 1972. The object of a notification under section 3 of the said Act was in effect to protect the Management of the Company from its creditors Out a declaration under section 3 of the Act can be made in the public interest with a view to enable the continued running or re-starting as a measure of preventing or providing employment. 9. The Deputy Secretary of the State of West Bengal in a noted dated 9th June, 1983 had mentioned that the United Bank of India had been negotiating with a group of entrepreneurs who may take over the said sick unit. The Deputy Secretary had recommended extension in order to see whether any new entrepreneur could be found out but in fact, no entrepreneur had ever come forward. Again, in the office report dated 6th December, 1983 it had been stated that M/s. Calcutta Electric Lamp Works Ltd., itself had approached the Government of the benefit of relief undertaking for a further period of one year. Although the unit had ceased to employ any worker for the object of providing employment for 100 persons, extension notifications under section 3 of the Act was recommended and ultimately made. By the time the Finance Department of Government had agreed to extension for a period of six months from 14th December, 1983, the previous notification had expired without publication of any fresh extension notification. After obtaining Cabinet approval, a notification was published with retrospective effect for extending the benefit of relief undertaking for six months with effect from 14th December, 1983. After obtaining Cabinet approval, a notification was published with retrospective effect for extending the benefit of relief undertaking for six months with effect from 14th December, 1983. In our view the proviso to section 3 of the West Bengal Act XIII of 1972 does not confer upon the State Government to issue extension notifications with retrospective effect. 10. Again we find from the notes in the official file that fresh notification was made for allowing M/s. Calcutta Electric Lamp Works Ltd. to enjoy the benefit of relief undertaking retrospectively with effect from 14th June, 1984 (Vide notes at pages 35 to 39 of the relevant file). 11. In the above manner, from time to time the State Government had issued notifications extending the benefit of relief undertaking to the Respondent No.4, Company and on several occasions such benefits were retrospectively given by issuance of extension notifications after the previous extension notification had already expired. The official records also refer to advertisement published in The Statesman and the Business Standard in December, 1984 inviting new entrepreneurs for re-starting of the unit. But same ultimately did not yield any result. After all attempt to secure a new entrepreneur failed, a co-operative industrial society of employees were purported to be found with the same address as the registered address of the Respondent No.4. The said co-operative industrial society offered to run the unit. A letter dated 13th March, 1986 written by the said society to the United Bank of India filed by the Respondent No.4, Company. It is stated in the said letter that the bank was unable to give consideration to the Society's proposals of the Company's loan burden to the bank amounting to Rs. 20/22 lakhs. The Co-operative Society declined to undertake the said liability and at the same time express eagerness to run the unit. Inspite of recommendations made by the State Government, the United Bank of India did not acceed to the prayer of the Society for sanction of bank finance for re-opening and running of M/s. Calcutta Electric Lamp Works Ltd. For the foregoing reasons, we hold that there was no relevant material to establish that the State Government had been really satisfied that, the period of declaration under section 3 of Act XIII of 1972 ought to be further extended for re-starting of the undertaking as a measure of measure of relief against unemployment. After hearing the appeal in part, we requested Mr. A.N. Banerjee, learned Advocate for the State, to obtain instructions whether the State Government intended to grant further extension after the present extension notification would expire on 13th December, 1986. In case, the Government did not propose to give further extension, really no order would have been necessary in this appeal. Thereafter, Mr. Banerjee put up the following note made in the official file. "In view of the position stated by the Deputy Secretary at page 5, further extension of benefit of relief undertaking would be granted only after seeing the position that there is a chance of revival of the unit within next 2/3 years from 13th of December, 1986." 12. The Deputy Secretary in his said note had mentioned that the Company had been enjoying the benefit but was not functioning. There were a few winding up petitions pending in the High Court. If the protection under the relief declaration is not given, it would go into liquidation immediately. This position will frustate the attempts taken by the Government to induct suitable entrepreneur in order to re-open the unit. This is the main reason for which declaration has been extended. 13. In our view the above attempts to prevent liquidation of the Respondent No. 4 Company was not germane. Official records sufficiently indicate that inspite of attempts made by the Company and the United Bank of India no entrepreneur had come forward to take over the undertaking. The bank did not agree to the proposal suggested by the purported Co-operative Society for running the unit. The only beneficiary of declaring the unit as relief undertaking has been the Management of the Company, the Respondent No.4 because so far they have been shielded from facing suits and proceedings against them. Since August, 1982 the company had remain closed and there was no prospect of providing relief against unemployment to the workers of the factory which was under closure even from before the notification under section 3 of the Act XIII of 1972 dated 30th August, 1979. Since August, 1982 the company had remain closed and there was no prospect of providing relief against unemployment to the workers of the factory which was under closure even from before the notification under section 3 of the Act XIII of 1972 dated 30th August, 1979. Even assuming that at the time of the issue of the first Notification under section 3 of the West Bengal Act XIII of 1972 (i.e. on 29th August, 1979) there were materials for formation of the State Government's opinion that it would be in the public interest to declare the Respondent No.4 as a relief undertaking. The subsequent notifications repeatedly extending the period were issued without really satisfying itself that it would be expedient so to go do in public interest. Because since, 1982 the factory of the Respondent No.4 had remain closed and issue of such notifications could neither prevent nor provide to the earstwhile workers any relief against their unemployment. 14. We have already mentioned that on several occassions such extension notifications under proviso to section 3 of the Act XIII of 1972 were purported to be issued after already the previous notification had expired and the Respondent No.4 had already ceased to be a relief undertaking. It would he sufficient to refer to the last extension Notification No. 10192-IR dated 21st December, 1985 by previous Notification No. 6147-IR dated 2nd September, 1985, the extension period had expired on 13th December, 1985. But by Notification No.10192-IR dated 21st December, 1985 in the exercise of the powers conferred by proviso to section 3 of the West Bengal Act XIII of 1972, the Government of West Bengal purported to extend the further period of one year with effect from 14th December 1985. Section 3 of the West Bengal Act XIII of 1972 does not confer any power upon the State Government to extend with retrospective effect a declaration of a relief undertaking or a Notification extending the period of such declaration. 15. Before the learned trial Judge the original State Government records were not produced. Further, the points noted before us were not all considered by the learned trial Judge. We have given our reasons why the notification extending the declaration of the Respondent No.4, Company as a relief undertaking ought to be struck down. 16. 15. Before the learned trial Judge the original State Government records were not produced. Further, the points noted before us were not all considered by the learned trial Judge. We have given our reasons why the notification extending the declaration of the Respondent No.4, Company as a relief undertaking ought to be struck down. 16. We accordingly allow this appeal, set aside the judgment of the trial Judge and allow the application under Article 226 of the Constitution of India. We declare that the Notification No. 10192-IR dated 21st December, 1985 issued under proviso to section 3 of the West Bengal Relief Undertaking (Special Provisions) Act, 1972 was invalid and we quash the said notification. We command the respondents not to give effect or further effect to the said notification declaring M/s. Calcutta Electric Lamp Works Ltd., the Respondent No.4, as a relief undertaking. The respondents are also commanded at forbear from giving effect or further effect to the said extension notification. There will be no order as to costs. Let the operation of this order be stayed for six weeks. Let the copy of the Notification No. 10192-IR dated 21st December, 1985 be kept as part of the record. Chatterji, J. : I agree.