Varalakshmi Chemind Pvt. Ltd. v. The Commissioner of Prohibition and Excise, Madras and others
1992-08-03
A.R.LAKSHMANAN
body1992
DigiLaw.ai
Judgment : The petitioner abovenamed has filed the main writ petition to issue a writ of certiorari by calling for the records from the 1st respondent culminated in Proceedings Rc.No.D2/12184/91-15, dated 24. 1992 and quash the same. While admitting the writ petition, this Court in W.M.P.No.9519 of 1992 issued interim directions to the 1st respondent to allot 50,000 litres of rectified spirit without any further delay to the petitioner company to have the trial run of their plant and machinery become operational by June, 1992, as ordered by the Government in Letter No.6979/P and E III/91-2, dated 16. 1991, pending disposal of the writ petition. The petitioner has filed W.M.P.No.11856 of 1992 to clarify the order dated 5. 1992 in W.M.P.No.9519 of 1992 and this Court on 26. 1992 clarified the same. The respondents have filed W.M.P.Nos.15082 and 15083 of 1992 to vacate the interim direction and also the clarification issued by this Court in W.M.P.Nos.9519 and 11856 of 1992. 2. I have heard Mr.S.Govind Swaminathan, learned Senior Counsel for the petitioner and Mr. M.A.Sadanand, learned Government Pleader for the respondents. 3. The petitioner company was incorporated in the year 1982. The object of the company is to produce, manufacture, purchase, sell and generally to deal with ethyl alcohol, ether solvent, ether anesthetic grade and other alcohol based chemicals. The manufacture of the above ether anesthetic products is mainly based on industrial alcohol, commonly known as rectified spirit available in the State distilleries in large surplus more than the use and consumption in the State. Since industrial alcohol is regulated by the Tamil Nadu Rectified Spirit Rules, 1959, necessary allotments of the same as raw material have to be made by the Government to the industrial concerns that manufacture products based on industrial alcohol. The petitioner company applied to the State Government for allotment of industrial alcohol and the Government after due consideration, issued G.O.Ms.No.87, P and E (III) Department, dated 2. 1982, permitting the request of the petitioner-company to establish an alcohol based industry in the North Arcot District. The Government has allotted 12 million litres of alcohol per annum to the petitioner company for the manufacture of ether anesthetic products. The only condition imposed in the order was the availability of the alcohol in each year in the State. The petitioner company took steps to put up the plant and machinery at a cost of Rs.1 crore.
The Government has allotted 12 million litres of alcohol per annum to the petitioner company for the manufacture of ether anesthetic products. The only condition imposed in the order was the availability of the alcohol in each year in the State. The petitioner company took steps to put up the plant and machinery at a cost of Rs.1 crore. The Indian Bank has also sanctioned a term loan of Rs.15 lakhs. The petitioner also secured other loans in the local market and has put up the plant and machinery at a cost of Rs.1.25 crores. According to the petitioner, the plant is now ready for trial and to commence production. .4. On 1. 1990, the 1st respondent issued a notice to the petitioner informing that the Government in G.O.Ms.No.87, P and E (III) Department, dated 2. 1982 had ordered committing to supply 12 million litres of rectified spirit and even after lapse of eight years, the petitioner had not commenced production and that therefore, the petitioner company should show cause to the Government why the allotment of rectified spirit ordered by the Government should not be withdrawn. On receipt of the above notice, the petitioner submitted to the 3rd respondent that they had put up the plant and machinery and because of administrative delay in getting the electricity and clearance of pollution control, the early commencement of production had become delayed, and considering the steps taken by the petitioner, the Government should withdraw the notice issued by the 1st respondent. The Government after due consideration of the above representation, by letter No.6979/P& E (III) Department, dated 16. 1991 informed the petitioner that the request of the petitioner has been considered and that Government grants time till June, 1992, to commence production, and if production is not commenced by the end of June, 1992, the allotment issued by the Government in G.O.Ms.No.87, P and E (III) Department, dated 2. 1982, would be cancelled. According to the petitioner, all the governmental agencies have completed their formalities and the petitioner company is ready to operate the plant and commence production. The petitioner also on 112. 1991 informed the Industries Commissioner and Director of Industries and Commerce, Madras, that their plant is ready for operation and the Department could depute its officers for inspection.
According to the petitioner, all the governmental agencies have completed their formalities and the petitioner company is ready to operate the plant and commence production. The petitioner also on 112. 1991 informed the Industries Commissioner and Director of Industries and Commerce, Madras, that their plant is ready for operation and the Department could depute its officers for inspection. The Department after due inspection has informed the Government that necessary industrial alcohol can be allotted to the petitioner company to have the trial run. 5. While so, the petitioner company has received the proceedings Rc.No.D2/12184/91-15, dated 24. 1992 of the 1st respondent stating that 50,000 litres of denatured spirit with 5% ether would be allotted to the petitioner company from M/s. E.I.D. Parry (India) Ltd., Nellikuppam, for trial run for five days and the petitioner with the allotted denatured spirit shall have the trial run. The above-proceedings of the 1st respondent is impugned in the present writ petition. The 1st respondent has stated in the impugned proceedings that in view of the decision of the Government G.O.Ms.No.188, P and E (III) Department, dated 30.3.1991, the 50,000 litres of denatured spirit with 5% ether has been allotted to the petitioner company for the trial run of the plant to manufacture solvent ether and theyene ether and other chemicals. .6. According to the petitioner, the decision of the 1st respondent made in the impugned proceedings is not sustainable in law. In November, 1990, the 1st respondent proposed to the Government that instead of rectified spirit, denatured spirit could be allotted to various manufacturers of ether solvent. The Government also convened a meeting of the various users of the rectified spirit and ascertained their views about the change of policy proposed by the 1st respondent to allot denatured spirit instead of rectified spirit. The participants submitted to the Government that such change would adversely affect their production. After due consideration, the Government issued G.O.Ms. No.188 Home, P and E (III) Department, dated 13. 1991 indicating the decision of the Government concerning the proposal of the 1st respondent. The petitioner has designed the plant and machinery to have only the rectified spirit as the raw material to manufacture ether anesthetic products, classified under Indian Pharmocoepia and that the design of the plant and machinery cannot have denatured spirit as the raw material.
1991 indicating the decision of the Government concerning the proposal of the 1st respondent. The petitioner has designed the plant and machinery to have only the rectified spirit as the raw material to manufacture ether anesthetic products, classified under Indian Pharmocoepia and that the design of the plant and machinery cannot have denatured spirit as the raw material. Thus, the petitioner has filed the above writ petition to call for the records of the 1st respondent culminated in the impugned proceedings dated 24. 1992 and quash the same. 7. As stated above, the petitioner has filed W.M.P.No.9519 of 1992 for an interim direction to the 1st respondent to allot 50,000 litres of rectified spirit without any further delay to the petitioner company to have the trial run of their plant and machinery, so that the plant an machinery become operational by June, 1992, as ordered ‘by the Government in their letter dated 16. 1991. S.Govindaswami, J., granted interim direction on 5. 1992. For clarification of the said order, the petitioner has filed W.M.P.No.11856 of 1992. The reason for filing the clarification petition has been clearly explained in paragraph 3 of the affidavit filed in support of that petition. It is stated therein that the respondents have wilfully and want only disobeyed the orders of this Court dated 5. 1992 in W.M.P.No.9519 of 1992. S.Govindaswami, J., on 29,6.1992 has clarified his earlier order dated 5. 1992, as under: “It is a sorry state of affairs to come to know that in spite of this Court passing an order directing the authority to pass orders as expeditiously as possible, the Government has not passed any order for the reason that the Court has not fixed any time limit for effecting compliance. Once a direction is issued, the Government is directed to comply with, and failure to do so will amount to Contempt of Court. However, by way of indulgence, instead of issuing notice of contempt, this Court gives direction to the respondent to effect supply as directed in a period of two weeks from the date of receipt of this order. The directions are expected to be complied with and a report to that effect may be submitted to this Court. Accordingly, the petition is ordered.
The directions are expected to be complied with and a report to that effect may be submitted to this Court. Accordingly, the petition is ordered. It is represented by the learned counsel appearing on behalf of the petitioner that the petitioner should commence the trial run on or before 30.6.1992 and in view of the fact that the respondents have not effected supply of rectified spirit, the petitioner could not commence the trial run on or before 30.6.1992. Time to commence trial run shall be extended by four weeks from the date of supply, and thereafter by four weeks for commercial run. The authority shall either on receipt of the copy of the order from the Court or from the parties effect supply within two weeks therefrom. Accordingly the petition is ordered.” .8. The respondents have filed W.A.No.826of 1992 alleging that the order dated5. 1992 was clarified by the order dated 26. 1992 without giving any opportunity to the State to file the counter or to refute the contentions made by the writ petitioner. The Division Bench consisting of the Hon’ble the Chief Justice and K.Venkataswami, J., by order dated 27. 1992 disposed of the writ appeal by giving the following direction: .“In view of this submission, we dispose of the appeal with a direction to the learned single Judge to hear the parties on the application by the Government Pleader for vacating the interim order if so filed. The impugned order dated 26. 1992 shall remain in abeyance for ten days. Incase the Government Pleader does not take steps in that regard within a period of ten days, the order passed to-day keeping the impugned order in abeyance shall automatically stand vacated. The writ appeal is disposed of accordingly. However, there shall be no order as to costs.” 9. W.M.P.Nos.15083 and 15082 of 1992 were filed by the State to respectively vacate the order dated 5. 1992 in W.M.P.No.9519 of 1992 and the order dated 26. 1992 in W.M.P.No.11856 of 1992. All the above W.M.Ps. came up for hearing before me as directed by the Division Bench in the above writ appeal. .10. Mr.M.A.Sadanand, learned Government Pleader submits that from 22. 1991 to 16. 1991, the petitioner company was not having any assurance or commitment from the Government for the supply of alcohol.
1992 in W.M.P.No.11856 of 1992. All the above W.M.Ps. came up for hearing before me as directed by the Division Bench in the above writ appeal. .10. Mr.M.A.Sadanand, learned Government Pleader submits that from 22. 1991 to 16. 1991, the petitioner company was not having any assurance or commitment from the Government for the supply of alcohol. It was during this period, there was a change of policy by the Government as per G.O.(D) No.188, Home, P and E (III) Department, dated 13. 1991 substituting denatured spirit in lieu of rectified spirit for industrial purpose. The Government have taken the view that in order to prevent the misuse of rectified spirit after eliciting the views of the chemical industries, who have consented to the use of denatured spirit, directed to constitute a Technical Expert Committee to look into the claims of the industries from the point of view of technical difficulty in implementing the scheme. The Government granted extension of time upto 37. 1991 to switch over from rectified spirit to denatured spirit by the concerned industries. The Government’s letter dated 16. 1991 was issued to the petitioner company when the extension of time was in force for switch over from rectified spirit to denatured spirit. Hence, according to Mr.M.A.Sadanand, learned Government Pleader, there was no reference to G.O.(D) No.188, Home, P and E (III) Department, dated 13. 1991. Therefore, according to him, the question of affording opportunity to the petitioner company about the change of policy stated above did not arise. The petitioner company in their letter dated 112. 1991 represented that the project was completed and the plant was ready for production. Therefore, there was an inspection by the Assistant Chemical Engineer of the Directorate of Industries and Commerce. According to his report, the company was completed the erection of plant and machinery but it was yet to get the consent order from the Tamil Nadu Pollution Control Board and the work regarding the effluent treatment was under progress. After examining these reports, by the impugned order dated 24. 1992 of the 1st respondent, the petitioner company was permitted to draw 50,000 litres of denatured spirit (denatured with 5% ether), which is impugned in the writ petition. .11.
After examining these reports, by the impugned order dated 24. 1992 of the 1st respondent, the petitioner company was permitted to draw 50,000 litres of denatured spirit (denatured with 5% ether), which is impugned in the writ petition. .11. It is, therefore, urged by Mr.M.A.Sadanand, learned Government Pleader, that the order of allotment made by the 1st respondent in pursuance to the order of the Government in G.O.(D) No.188, Home, P and E (III) Department, dated 13. 1991, is in order and that the contention of the petitioner that the delay in putting up of the machinery was administrative is far from the truth. By way of answer to the argument put forward by the petitioner’s senior counsel with reference to the petitioner’s representation that the plant is designed only to have rectified spirit as raw material, the learned Government Pleader submits that there was joint inspection by the Joint Commissioner II (Prohibition and Excise), the Joint Director (Chemicals) in charge and the Assistant Chemical Engineer on 6. 1992 and the said committee has jointly reported that the petitioner has erected plant and machinery, and certain minor items of works are to be completed. The learned Government Pleader also invited my attention to the inspecting officers’ report, which has been extracted at page 7 of the counter affidavit. The learned Government Pleader further submits that the apprehension of the petitioner of any accident or mishap because of denatured spirit containing ether is absolutely baseless. He also denies the statement of the petitioner that the supply of denatured spirit will result in closure of the industry. He submits that the rectified spirit can be diverted for the manufacture of spurious alcoholic drinks easily and in order to prevent such misuse, the rectified spirit is denatured and supplied so that it will not be possible for human consumption. By this process, the petitioner company is not in any way prejudiced. 12. Mr.M.A.Sadanand, learned Government Pleader then submits that if the petitioner is aggrieved by the impugned order of the 1st respondent, he should have preferred his claim before the Technical Expert Committee and got his grievance redressed. The petitioner has failed to do so but has straightaway approached this Court and filed the writ petition and thereby it has failed to exhaust the opportunities available before the administrative forums.
The petitioner has failed to do so but has straightaway approached this Court and filed the writ petition and thereby it has failed to exhaust the opportunities available before the administrative forums. On this ground alone, according to the learned Government Pleader, the direction petitions are to be dismissed. The learned Government Pleader further states that there are no sustainable grounds in the writ petition and the impugned order is valid in law and that the petitioner cannot compel the Government to supply rectified spirit contrary to the policy decision taken after due deliberation. The petitioner cannot be aggrieved by the impugned order and hence, if the interim directions given by this Court are not vacated, the interest of the Government will be greatly prejudiced. 13. I have carefully analysed the elaborate arguments advanced by the learned senior counsel for the petitioner and the learned Government Pleader, and I am unable to accept the arguments put forward by the learned Government Pleader, for the following reasons. .14. I am of the firm view that the interim directions were given by my learned Brother Govindaswami, J., only after considering and appreciating the arguments of the learned senior counsel for the petitioner. It is an admitted fact that only after due consideration of the representation of the petitioner, the Secretary to Government, Prohibition and Excise Department, by letter dated 16. 1991 informed the petitioner that the request of the petitioner has been considered and the Government grants time till June, 1992, to commence production, and if production is not commenced by the end of June, 1992, the allotment of 12 million litres of industrial alcohol made by the Government in G.O.Ms.No.87. P and E(III) Department, dated 2. 1982, would be cancelled. It is not in dispute that all the governmental agencies have completed their formalities and the petitioner company is ready to operate the plant and commence production. It is also a matter of record that only after due inspection, the Department has informed the Government that necessary industrial alcohol can be allotted to the petitioner company to have the trial run.
It is also a matter of record that only after due inspection, the Department has informed the Government that necessary industrial alcohol can be allotted to the petitioner company to have the trial run. But, the petitioner company to its dismay has received the impugned proceedings of the 1st respondent stating that 50,000 litres of denatured spirit with 5% ether denaturant would be allotted to the petitioner company from E.I.D. Parry (India) Ltd., Nellikuppam, for trial run for five days and the Assistant Commissioner (Excise), North Arcot and the Joint Director (Chemicals), shall monitor the trial run and report to the Government for further orders. I am of the prima facie view that the impugned proceedings are not tenable in law. 15. It is seen from the impugned proceedings that in view of the decision of the Government in G.O.(D) No.188, P and E III Department, dated 30.3.1991, the 50,000 litres of denatured spirit with 5% ether has been allotted to the petitioner company for trial run of the plant to manufacture solvent ether and ethyene ether and other chemicals. It is pertinent to note that the 1st respondent has failed to note that the Government in their letter dated 15. 1991 issued after G. O.Ms.No.188 P and E III Department dated 13. 1991, has directed the petitioner company to commence the production positively before June, 1992, to enable them to have the allotment of industrial alcohol as per G.O.Ms.No.87, P and E (III) Department, dated 2. 1982. There was no reference to G.O.Ms.No.188 P and E (III) Department, dated 13. 1991 or modification of the allotment of denatured spirit instead of rectified spirit. The 1st respondent, contrary to the orders of the Government, had directed that denatured spirit, with 5% ether alone will be supplied to the petitioner company for trial run. I am of the view, that the above decision of the 1st respondent made in the impugned proceedings is not sustainable in law. The plant, which has been put up by the petitioner company, is designed to have only rectified spirit as the raw material. Such a substitution of raw material in my view, will adversely affect the production, ability, capacity and viability of the plant. 16.
The plant, which has been put up by the petitioner company, is designed to have only rectified spirit as the raw material. Such a substitution of raw material in my view, will adversely affect the production, ability, capacity and viability of the plant. 16. Mr.S.Govind Swaminathan, learned senior counsel for the petitioner, at the time of argument has also referred to certain other proceedings initiated by persons similarly placed as that of the writ petitioner. He referred to the proceedings in W.P.Nos.11614 and 11615 of 1991, which have been filed by other persons, wherein this Court has directed the Government to continue the existing arrangement of supplying only the rectified spirit to the alcohol based industries till the disposal of the writ petitions. He also referred to W.P.No.12585 of 1991 filed by one Kurunji Chemicals, similarly placed like the petitioner company, wherein also this Court has directed the Government to allot rectified spirit since the said plant is designed to have the same as raw material. It is not disputed by the learned Government Pleader that the above referred orders of this Court are still in force and the Government have not so far taken any steps to vacate the interim directions given by this Court in the above matters. 17. The Government have issued G.O.Ms.No.188, Home, P and E (III) Department, dated 13. 1991, indicating the decision of the Government concerning the proposal of the 1st respondent. In this G.O., the Government have specifically ordered in paragraph 3 as under: “The Government also direct the Commissioner of Prohibition and Excise to constitute a technical expert committee to look into the pleas of any industries from the point of technical difficulty in implementing the scheme. If any industry persists in the allocation of rectified spirit alone, it should be only under the stringent formalities.” It is seen from the above G.O., that the Government have clearly indicated that if any. industry persists in the allocation of rectified spirit alone, the same alone could be allotted enforcing [stringent formalities. When the policy decision of the Government is unambiguous, the 1st respondent, without any authority or power, has chosen to order that denatured spirit of 50,000 litres with 5% ether would be allotted to the petitioner for trial run.
industry persists in the allocation of rectified spirit alone, the same alone could be allotted enforcing [stringent formalities. When the policy decision of the Government is unambiguous, the 1st respondent, without any authority or power, has chosen to order that denatured spirit of 50,000 litres with 5% ether would be allotted to the petitioner for trial run. The 1st respondent has also erroneously stated that the policy of the Government was to switch over from rectified spirit to denatured spirit and the same has been ordered in G.O.Ms.No.188, Home, P and E (III) Department, dated 13. 1991 and therefore, 50,000 litres of denatured spirit would be allotted to the petitioner. I am of the view, that the above conclusion of the 1st respondent is contrary to the policy decision of the Government. A mere reading of G.O.(D) No.188, Home, P and E (III) Department, dated 13. 1991 will disclose that the Government have specifically ordered in the said G.O., that if any industry persists for the allocation of rectified spirit, then the same should be allotted imposing stringent conditions. This being the policy decision of the Government, the 1st respondent, in my view, ought to have allotted only rectified spirit to the petitioner company taking into consideration the nature of design of the plant and machinery. 18. The 1st respondent failed to notice a very important (actor viz, that only after G.O. (D) No.188, Home, P and E (III) Department, dated 13. 1991 was issued, the Secretary, P and E Department, issued the letter dated 16. 1991 directing the petitioner to commence production on or before June, 1992, and if they failed to do so, the allotment of 12 million litres of industrial alcohol by the Government as per G.O.Ms.No.87, P and E (III) Department, dated 2. 1982, would be cancelled. When the Government have not imposed any condition and in the letter only allotment of industrial alcohol has been indicated, the 1st respondent has no authority to allot denatured spirit to the petitioner. The 1st respondent, in my view, ought to have ascertained from the petitioner-company about the allotment of denatured spirit instead of rectified spirit. Without affording any opportunity to the petitioner company, the 1st respondent has arbitrarily ordered in the impugned proceedings that denatured spirit of 50,000 litres will be allotted to the petitioner company for trial run.
The 1st respondent, in my view, ought to have ascertained from the petitioner-company about the allotment of denatured spirit instead of rectified spirit. Without affording any opportunity to the petitioner company, the 1st respondent has arbitrarily ordered in the impugned proceedings that denatured spirit of 50,000 litres will be allotted to the petitioner company for trial run. In my opinion, the order of the 1st respondent is erroneous and improper. Hence, the same shall not be given effect to during the pendency of the writ petition. .19. Another important thing which the Government have failed to see is that the Petitioner Company has designed the plant and machinery to have only rectified spirit as the raw material to manufacture ether anesthetic products classified under Indian Pharmacopia. The design of the plant and machinery of the petitioner company cannot have denatured spirit as the raw material. According to the writ petitioner, if denatured spirit with 5% ether is used as the basic raw material, then the design and the storage facilities have to be modified accordingly incurring considerable expenditure. It is also stated that transporting and storing of denatured spirit with 5% ether denaturant is hazardous and is Security risk, and that the present fabricated structures are not fit to store and the plant is not capable to process the denatured spirit. When the present design of the plant and machinery cannot have denatured spirit as the raw material and only with the modification the same can be done, the Government is not entitled to modify its earlier order and insist upon the supply of denatured spirit. I am, therefore, of the view, that the Government is estopped from imposing such unreasonable condition on the petitioner. 20. Balance of convenience is also only in favour of the petitioner. There are nearly 35 workers employed in the company and any denial of rectified spirit would result in closure of the factory, thereby throwing them out of employment. The petitioner has also invested borrowed capital from banks and other authorities. Interests of justice would be amply met only if the earlier directions given by this Court are allowed to continue pending disposal of the writ petition. I am of the view-that my learned Brother S.Govindaswami, J., is right and well within his jurisdiction in issuing such interim directions pending disposal of the writ petition.
Interests of justice would be amply met only if the earlier directions given by this Court are allowed to continue pending disposal of the writ petition. I am of the view-that my learned Brother S.Govindaswami, J., is right and well within his jurisdiction in issuing such interim directions pending disposal of the writ petition. The argument of the learned Government Pleader that this Court has no jurisdiction to pass interim orders without hearing the affected respondents is not tenable in law. I am of the firm view that this Court can issue such interim directions in suitable cases taking into consideration of the various aspects of the case and even without hearing the respondent, if necessary. In my view, this is eminently a fit case for issuing interim directions even without hearing the respondents, since this Court has only directed the respondents to act upon their own earlier commitment. In the instant case, various steps have been taken by the petitioner company only on the assurance and promise made by the Government in unequivocal terms for the allotment of rectified spirit. It is unfortunate that the 1st respondent has issued the impugned proceedings to the petitioner company which has already established the industry at huge cost and is ready to start trial run. .21. Since the matter was argued at length by both the learned counsel, I am compelled to write a detailed and elaborate order even in the W.M.Ps. As already stated, the writ petition was admitted on 5. 1992 and interim direction was given on the same day. The same was clarified on 26. 1992. My learned brother S.Govindaswami, J., has made it very clear that the Government is expected to comply with the directions and failure to do so will amount to contempt of Court. However, my learned Brother, instead of issuing notice of contempt, by way of indulgence, issued directions to the respondents to effect supply in a period of two weeks from the date of receipt of the order dated 26. 1992. My learned Brother has also rightly extended the time to commence the trial run. However, the Government without complying with the clarified order dated 26. 1992, have filed W.M.P.Nos.l5082 and 15083 of 1992 on 27. 1992. I am of the view, that the stand taken by the Government is unrealistic.
1992. My learned Brother has also rightly extended the time to commence the trial run. However, the Government without complying with the clarified order dated 26. 1992, have filed W.M.P.Nos.l5082 and 15083 of 1992 on 27. 1992. I am of the view, that the stand taken by the Government is unrealistic. The Government shall not delay any further in implementing the directions given by this Court on 5. 1992 and clarified on 26. 1992, and comply with the same within two weeks from to-day. 22. For the foregoing reasons, the interim directions given by this Court in W.M.P.Nos.9519 and 11856 of 1992 are made absolute. W.M.P.Nos.9519 and 11856 of 1992 are ordered and W.M.P.Nos.15082 and 15083 of 1992, which are filed by the Government to vacate the interim directions, are dismissed.