Borduria Timber Products Pvt. Ltd. and others v. State of Arunachal Pradesh and others
1998-12-24
B.N.SINGH NEELAM
body1998
DigiLaw.ai
Judgement This Civil Rule Petition has been filed by M/s. Barduria Timber Products Private Limited being represented by its Director Shri Shankarlall Ajitsaria u/Art. 226 of the Constitution of India with a prayer for issuance of a writ in the nature of Certiorari and/or Mandamus with a direction to the Respondents Nos. 1 to 4 as not in any way to dispose of the raw materials, finished goods, plant and machinery of the petitioner-company for which there was invitation of tenders so published and hence to that effect there is also a prayer for quashing such tender notices, copies of which are filed marked as Annexures-12 and 13 which are dated 20-1-98 and 27-1-98. As regards the taking over of the factory and its assets including finished and semi-finished goods and other consumable goods with that of the building etc. from the petitioner on the basis of the decision so arrived at by the Apex Court in two Writ Petitions, i.e. WP(C) No. 202 of 1995 and WP(C) No. 171 of 1996 also reported in (1998) 2 SCC 59 : ( AIR 1998 SC 769 ), the petitioner has no objection to this part but it is the case of the petitioner that the agreement so entered into between the Respondent No. 4 and the present petitioner was made effective from 27-7-93 on clear understanding particularly under Clause 4.22 that the finished and semi-finished products belonging to the lessee petitioner along with the plant and machineries etc. would stand as lien for the uncovered dues accruing, if any, be it for rental, royalty, levies, charges, taxes, cess, demand etc. and the lessor as per the agreement was only entitled? to take over the same and to keep in lien and not in any way to dispose of the same and that being the position, the tender notices issued for selling the finished and semi-finished products belonging to the lessee be thus quashed.
and the lessor as per the agreement was only entitled? to take over the same and to keep in lien and not in any way to dispose of the same and that being the position, the tender notices issued for selling the finished and semi-finished products belonging to the lessee be thus quashed. The plant/machineries of the lessee under use as per the petitioners case be also not used without the present petitioners consent and that since the matter relating to claim and counter claim between the petitioner and Respondent No. 4 is referred to the arbitrator, a direction be given so that the matter be decided by the Arbitrator at an early date and by filing additional affidavit on 20-12-98 the petitioner has also agreed to give his consent to Respondents Nos. 3 and 4 as to use the plant of the lessee for a short period for which terms and conditions finally to be decided in the arbitration so that the labourers and employees may not be hand to mouth. Nocte Timber Company Mazdoor Sangha is impleaded as a party when miscellaneous petition was so filed and figures as Respondent No. 5. The petitioner has also challenged the arbitration clause to the effect that His Excellency the Governor of Arunachal Pradesh was made as Principal Trustee of the Board with a power to supersede and sit over judgment the award of the arbitrator. A challenge to such clause as per the petitioner is maintainable as laid down in (1995) 5 SCC 482 : AIR 1995 SC 1811 , Life Insurance Corporation of India v. Consumers Education and Research Centre and it will not be a (sic) merely on the ground that the petitioner company had unilaterally signed the agreement containing this arbitration clause as well and had not objected to the same. 2. In short, the history of the case giving rise to this civil rule is that the Respondent No. 4 M/s. Nocte Timber Company Limited owned a plywood unit which was running losses and to recoup the same, the plywood unit was leased out on the basis of the tender so invited and the present petitioners tender was accepted, agreement was entered into between the parties initially for three years which was extended for a term of another three years and the petitioner has to pay a fixed yearly rental of Rs.
282 lakhs to the lessor. According to the petitioner, which is also accepted by the Respondent No. 4, the petitioner installed plant and machineries belonging to the petitioner which was hypothecated to Respondent No. 4 Company by a deed of hypothecation dated 2-9-97 (Annexure-2). To cut short the matter, vide two reported cases, namely, (1997) 10 SCC 775 (T. N. Godavarman Thirumulkpad v. Union of India and (1998) 2 SCC 59 : ( AIR 1998 SC 769 the Apex Court decided the matter and because of the constitution of high power committee and when it imposed a penalty upon the company in such circumstances the agreement, if any, is revoked and the deed of agreement entered into between the petitioner and Respondent No. 4 got cancelled but the said part is not challenged by the petitioner. The petitioner is aggrieved by the tender notice marked as Annexures 14 and 15 by which the Respondents Nos. 1 to 4 wanted to sell and dispose of the goods, finished and semi-finished, admittedly belonging to the petitioner lessee. This will not be out of place to mention that when this writ petition was filed while issuing notice of motion on 30-4-98 this Court was pleased as to restrain Respondent No. 4 from disposing of the plant, machineries, raw materials, finished and semi-finished goods and as well as other assets of the petitioner lying within the factory premises. This interim relief so granted without hearing the other side was conclusively heard on 8-5-98 by this Court when a detailed order was passed and this Court was pleased as to direct continuance of that restrainment put on Respondent No. 4 by initial stay order dated 6-5-98 adding certain conditions therein which need not be repeated. However, on behalf of the Respondents petitions were filed for vacating the stay to which rejoinders were also filed but lastly the matter is taken up as to dispose of the whole matter which is so heard at length. 3. Mr. R. Gogoi, the learned counsel is representing the petitioner whereas Mrs. N. Saikia, the learned counsel appears on behalf of Respondents Nos. 1 and 2. Mr. S. Sarma, the learned counsel appears on behalf of Respondents Nos. 3 and 4 and Mr.
3. Mr. R. Gogoi, the learned counsel is representing the petitioner whereas Mrs. N. Saikia, the learned counsel appears on behalf of Respondents Nos. 1 and 2. Mr. S. Sarma, the learned counsel appears on behalf of Respondents Nos. 3 and 4 and Mr. A. Dasgupta, the learned counsel appears on behalf of Respondent No. 5, who got impleaded as a party on the Miscellaneous Petition so filed and Respondent No. 5 is no one else but M/s. Nocte Timber Companys Mazdoor Sangha. Learned counsel for all the parties are heard at length. 4. On behalf of the petitioner Mr. R. Gogoi, in all fairness, has submitted that the scope of this writ petition under consideration is extremely short and limited. In support of the detailed averments made in this writ petition, it is pointed out that the petitioner is in no way aggrieved for taking over the factory by Respondent No. 4 in the light of the Apex Courts decision and cancellation of the agreement because of the penalty being imposed by the high power committee so constituted but Respondent No. 4, it is pointed out, in no way was entitled to dispose of the allied products of the petitioner lying in the factory premises and was also not entitled to use the plant and machineries belonging to the petitioner installed in the factory premises for effective operation. The claim and counter claim so put by the parties are not, as submitted by Mr. Gogoi, the subject matter for consideration but it is the action of the Respondent No. 4 in attempting to sell the raw materials, finished and semi-finished goods etc. of the company lying in the factory premises, which utmost can well be kept in lien but in no way can be disposed of in the hands of Respondents Nos. 1 to 4. By referring to the Apex Courts judgment in the aforesaid two writ petitions, it is also pointed out that nowhere such direction is so given and if any such direction is given that is relating to the seized timber but in the instant case the same does not apply. It is also submitted by Mr.
1 to 4. By referring to the Apex Courts judgment in the aforesaid two writ petitions, it is also pointed out that nowhere such direction is so given and if any such direction is given that is relating to the seized timber but in the instant case the same does not apply. It is also submitted by Mr. Gogoi that both the parties have nominated their arbitrators in accordance with the arbitration clause contained in the lease agreement and the arbitrator thus will enter into the reference and settle the dispute between the parties for which a prayer is made for a direction to be given for taking up the matter expeditiously by the arbitrators so that the parties may not suffer. Mr. Gogoi has also pointed out that this writ petition filed u/Art. 226 of the Constitution is very much maintainable because the arbitration clause between the parties is another aspect of the matter which is in connection with the dispute arising between the parties but this situation is created in a special circumstance when penalty was so imposed by the high power committee, the agreement being revoked in the background of the Apex Court order and the parties having claims and counter claims and the materials inside the factory premises utmost in such circumstances are to be kept within the control of the lessor as lien with a restrain to be put as not to dispose of the same in any way. It is also pointed out that the petitioner in the instant case was also not in a position to move the matter before the Principal Civil Court which is the Court of the original jurisdiction of the district u/S. 9 of the Arbitration Act for grant of interim injunction because in Arunachal Pradesh the Principle Civil Court would be the Court of the Deputy Commissioner who is also one of the trustees and such power was vested upon the Civil Court also because of not being in a position to delegate the power to other Court the petitioner had no alternative but to take the shelter of the provisions of Art. 226 of the Constitution of India by filing this writ application. 5.
5. In the additional affidavit filed on 2-12-98 the petitioner has come with a proposal, as submitted, on purely humanitarian consideration particularly prompted by the interest of the labour force that the petitioner gives his consent making the Respondents Nos. 3 and 4 to be entitled to use the plant and machineries belonging to the petitioner company lying in the factory premises for a period of 45 days from the date of the judgment of this Court to be passed when this civil rule petition is disposed of throwing the responsibility and liability on the arbitrators to decide the terms and conditions under which the Respondents Nos. 3 and 4 will be entitled to use the plant and machineries belonging to the petitioner-company making it a preliminary issue. In the proposal put in the additional affidavit filed on 2-12-98 there is also averment that the use of the parts and machineries of the petitioner by Respondents Nos. 3 and 4 may be extended from 45 days by the arbitrators if it need be. When this additional affidavit was so filed on behalf of the petitioner Mrs. N. Saikia representing the Respondents Nos. 1 and 2 was also present who had also agreed to such proposal particularly when the employees/workers of the factory are rendered jobless for months together particularly in the light of the interim orders so passed initially on 6-5-98 and 8-5-98. 6. On behalf of the Respondents Nos. 1 and 4 being represented by Mrs. N. Saikia and Mr. S. Sarma, the learned counsel, an argument on similar line is advanced. Firstly, it is pointed out that the notices so issued, which are under challenge, inviting tenders for disposing of the raw-materials etc. of the petitioner kept inside the factory premises there was a particular date inviting tenders and since that has elapsed the tender notices have become infructuous and no further step is being taken inviting fresh tender. As regards the plant and machineries of the company it is pointed out that the same is hypothecated to the lessor Respondent No. 4 by deed dated 2-9-97.
As regards the plant and machineries of the company it is pointed out that the same is hypothecated to the lessor Respondent No. 4 by deed dated 2-9-97. It is pointed out that due to the interim order so passed more than 300 workers/employees are rendered jobless which is elaborated in the petition so coming from the Mazdoor Sangha of Nocte Timber Company Limited (Respondent No. 5) and it is a national loss because of the factory not being in operation. The factory, it is submitted, can well be made ready to run with the machineries hypothecated to the Respondent. It has also been argued on behalf of the Respondents Nos. 1-4 that for contractual obligation the petitioner would not have invoked the powers u/Art. 226 of the Constitution of India and that way the present writ application is not maintainable. Mr. A. Dasgupta, the learned counsel for Respondent No. 5 has also put forward the case of the mazdoors/employees, who are, as submitted, sitting idle and are in great financial strain because of the non-functioning of the factory for which the prayer is that the factory at least be allowed to function so that the poor workers may have their bread and butter. Mr. S. Sarma, the learned counsel representing the Respondents Nos. 3 and 4 has submitted that the writ jurisdiction of the High Court is not intended to facilitate avoidance of obligation voluntarily incurred and in support of his this contention Mr. Sarma has referred to a reported case AIR 1981 SC 479 (Smt. Rukhmini Bai Gupta v. Collector of Jabalpur). On behalf of the Respondents, it is further pointed out that for a contractual obligation the provisions of Article 226 of the Constitution of India cannot be invoked. A reference is made to a reported case AIR 1975 SC 1121 : AIR 1975 Tax LR 1569, Harsankar v. Deputy Excise and Taxation Commissioner. On behalf of the Respondents two more reported cases are referred AIR 1976 SC 386 (D.L.F. Housing Construction Private Limited v. Delhi Municipal Corporation and (1994) 5 SCC 398 : AIR 1995 SC 409 , Union of India v. Graphic Industries. In the background of these two reported cases cited, Mr.
On behalf of the Respondents two more reported cases are referred AIR 1976 SC 386 (D.L.F. Housing Construction Private Limited v. Delhi Municipal Corporation and (1994) 5 SCC 398 : AIR 1995 SC 409 , Union of India v. Graphic Industries. In the background of these two reported cases cited, Mr. Sarma, the learned counsel appearing on behalf of Respondent No. 4, has particularly drawn attention that while complicated questions of law and facts are involved, no relief u/Art. 226 of the Constitution of India can be granted and that in a field covered by contractual right and obligation extraordinary jurisdiction of the High Court u/Art. 226 of the Constitution cannot be invoked rather the person aggrieved be directed to seek remedies in some other forum and to take recourse to arbitration if visualised by the agreement entered into between the parties. 7. Controverting the argument so made on behalf of the Respondents challenging the maintainability of this Civil Rule petition, on behalf of the petitioner also some of the reported cases are banked upon as referred to in course of argument so advanced by the learned counsel Mr. R. Gogoi, representing the petitioner which are (1995) 5 SCC 482 : ( AIR 1995 SC 1811 ), Life Insurance Corporation of India v. Consumers Education and Research Centre; (1997) 1 SCC 156 : AIR 1997 SC 993 , State of Madhya Pradesh v. M. V. Vyavsaya; (1995) 1 GLR 203 (Manager, Borsaparg Tea Estate v. Addl. Deputy Commissioner, Golaghat and AIR 1971 SC 33 , Hirday Narain v. I.T. Officer, Bareilly. By referring to these cases in nut shell the learned counsel representing the petitioner has tried to impress upon that the action of State instrumentality or public authority must be fair and reasonable and in consonance with the constitutional conscience if an act is done contrary to that the same is very much amenable to writ jurisdiction. It is also submitted that true it is that the power u/Art. 226 of the Constitution is not akin to appellate power but supervisory power can very well be exercised if such order is passed not in accordance with the procedure and is against the principle of natural justice. Mr.
It is also submitted that true it is that the power u/Art. 226 of the Constitution is not akin to appellate power but supervisory power can very well be exercised if such order is passed not in accordance with the procedure and is against the principle of natural justice. Mr. Gogoi, the learned counsel for the petitioner has also submitted that even the existence of alternative remedy will not debar the Court in exercising jurisdiction under Article 226 of the Constitution and in support of his this contention he has banked upon the reported case (1995) 1 GLR 203 and AIR 1971 SC 33 (supra). Hence it is argued on behalf of the petitioner that in the background of the facts and circumstances it can very well be said that the present petition so filed is maintainable and redressal so sought for can very well be granted. 8. After hearing the learned counsel for the petitioner, also the learned counsel representing Respondents 1 and 2, Respondents 3 and 4 and Respondent No. 5, I find that it has rightly been submitted by the learned counsel for the petitioner that the scope of this writ application under consideration is very much limited. It has got nothing to do with revocation order so passed cancelling the agreement on the basis of the penalty imposed by the high power committee so constituted. It has also nothing to do with the claims or counter claims so put by the petitioner and Respondent No. 4 which is a matter to be decided by the arbitrators. The only point for consideration is that in the background of the situation when the agreement stood cancelled in the background of the Apex Court orders because of the penalty imposed by the high power committee and the situation arising not so foreign at the time of the agreement entered into between the parties on 27-7-93, what will happen to those raw-materials and the semi products of the petitioner lying in the factory primises and as to whether Respondent No. 4 was in any way entitled to dispose of the same?
By the plain reading of the Apex Court orders under reference there is no such specific direction to the lessor except in cases of seized timber as to dispose of the same which according to the petitioner can only be kept as lien by the lessor Respondent No. 4 till the disposal of the matter in the hands of the arbitrators deciding claims and counter claims. In my considered opinion, the argument so advanced by the learned counsel representing the petitioner has got much of strength when in this situation so arising this Court can very well interfere exercising powers u/Art. 226 of the Constitution. As regards the prayer so made by the petitioner with regard to his Excellency the Governor who is made the Principal Trustee who is also vested with the powers to supersede and sit in judgment over the award of the arbitrators, in my considered opinion, the relief so sought for by deleting this clause cannot be given by this Court when the agreement was so signed between the parties long back on 27-7-93 putting this clause and which was never objected to particularly by the petitioner lessee till the penalty so imposed by the high power committee constituted by the Apex Court. Taking that view, this part of relief so sought for is not considered. 9. Keeping in view the facts and circumstances of the case detailed above also keeping in mind the offer so coming from the petitioners side in his additional affidavit so filed on 2-12-98 which was so presented by the learned counsel Mr. Gogoi in presence of the Respondents lawyer Mrs. N. Saikia, this Civil Rule Petition stands disposed of with the following directions :- Respondents Nos. 1-4 are hereby restrained from disposing of any raw-materials, finished or semi-finished goods lying in the factory belonging to the petitioner which be only kept in lien till the disposal of the claim and counter-claim put by the parties already in the hands of the arbitrators when those are referred for settlement and giving award. Because of the proposal also coming forth from the petitioners side in the additional affidavit filed on 2-12-98 the petitioner has to maintain a healthy atmosphere consenting use of the plant and machineries belonging to the petitioner by the Respondents 3 and 4 as proposed for 45 days.
Because of the proposal also coming forth from the petitioners side in the additional affidavit filed on 2-12-98 the petitioner has to maintain a healthy atmosphere consenting use of the plant and machineries belonging to the petitioner by the Respondents 3 and 4 as proposed for 45 days. In that light, it is hereby directed that the same be utilised as per the proposal given for 45 days from the date the factory starts with the help of the plant and machineries belonging to the petitioner also and the arbitrators will decide the terms and conditions under which the Respondents 3 and 4 will be entitled to use such plant and machineries belonging to the petitioner preferably as a preliminary issue also having a right as to extend the date of such use for further period seeing the urgency of the matter and also taking a humanitarian view the mazdoors/employees working in the factory may not suffer and there may not be national loss keeping it closed. Since the matter has already been referred to the arbitrators for settlement of the claims and counter-claims etc., the said proceeding preferably be completed in their hands within a period of 4 (four) months from the date of this judgment. 10. The writ application stands accordingly disposed of and the stay order so passed by this Court particularly by passing the detailed orders dtd. 8-5-98 also stands altered/modified to that extent. Parties to bear their own costs. Order accordingly.