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CA/6923/2011 45/ 45 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL
APPLICATION - FOR INTERIM RELIEF No. 6923 of 2011
In
SPECIAL
CIVIL APPLICATION No. 33 of 2011
For
Approval and Signature:
HON'BLE
SMT. JUSTICE ABHILASHA KUMARI
=====================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=====================================================
LYKA
LABS LTD - Petitioner(s)
Versus
UNION
OF INDIA - THROUGH SECRETARY & 2 - Respondent(s)
=====================================================
Appearance :
Mr.K.S.Nanavati,
learned Senior Advocate with Mr.Kunal Nanavati, learned advocate for
NANAVATI ASSOCIATES for Petitioner
MR HRIDAY BUCH,learned Central
Government Standing Counsel for Respondents Nos.1 and
2
Mr.J.K.Shah,learned Assistant Government Pleader for Respondent
No.3
=====================================================
CORAM
:
HON'BLE
SMT. JUSTICE ABHILASHA KUMARI
Date
: 08/07/2011
ORAL
JUDGMENT
1. Rule.
Mr.Hriday Buch, learned Central Government
Standing Counsel waives service of notice of Rule for respondents
Nos.1 and 2. Mr. J.K.Shah, learned Assistant Government Pleader
waives service of notice of Rule for respondent No.3. On the facts
and in the circumstances of the case, the application is being heard
and decided finally.
2. This
application has been filed by the applicant, Original-petitioner in
the writ petition, for grant of an interim mandatory injunction,
pending the final hearing and decision of the petition. The prayers
made in the application are as follows:
“(a) the
Mamlatdar, Ankleshwar and the Collector, Bharuch, be ordered and
directed forthwith to de-seal the petitioner’s factory situated at
4801/B and 4802/A, GIDC. Industrial Estate, Ankleshwar 393002 and to
permit the petitioner to continue to
operate the same;
(b) the
respondents, their agents, servants and subordinates be restrained
from interfering in any manner with the continued operation of the
factory of the petitioner situated at 4801/B and 4802/A, GIDC.
Industrial Estate, Ankleshwar 393002;
(c) ad-interim
relief in terms of prayers (a) and (b) above be granted; and
(d) Pass
such further and other interim and ad-interim orders, directions and
reliefs as may be thought fit appropriate by this Hon’ble Court in
the facts and circumstances of the case.”
3. The
applicant is Lyka Labs Ltd., a Company registered under the
provisions of the Companies Act, 1956. The brief facts that are
relevant for the decision of the application, are as follows:
3.1 According
to the applicant, it manufactures 250 formulations, including
various life-saving drugs. Relevant to the present application and
the petition is the Flucort range of formulations (Medicines
manufactured from a bulk drug), manufactured by it, from an imported
drug known as Fluocinolone Acetonide (FA for short). FA is a
Corticosteroid, which exerts its action
topically on the site of application, and is used in the manufacture
of dermatological formulations. The said bulk drug has not been
classified as a life-saving bulk drug.
3.2 In
exercise of powers conferred by the provisions of the Essential
Commodities Act, 1955, (“The Act” for short), and for the
purpose of controlling the prices of Drugs, the Government of India
has issued Drugs (Prices Control) Orders, (“DPCO” for
short); amongst others, DPCO 1970, (repealed on 31st
March 1979), DPCO 1979, (repealed on 26th
August 1987), and DPCO 1987, (repealed on 7th
January 1995). According to the applicant FA was not listed as one
of the seven price controlled Corticosteroids enumerated in the
Second Schedule at Serial Number XIX, under the Therapeutic Category
“Corticosteroids” in the DPCO 1979, therefore, the
applicant did not apply for price fixation of the Flucort Range of
formulations and continued to sell them at the rates prevailing at
that time, as fixed by the Government of India under DPCO 1970. By
order dated 20th
June 1984, the Government of India, in exercise of powers conferred
by sub-paragraph 1 of paragraph 13 of
DPCO 1979, fixed the prices of the formulations as specified in
column 7 thereof, as the revised retail prices exclusive of local
tax. The applicant, vide communication dated 7th
July 1984, addressed to the first respondent, asserted that FA was
not a bulk drug specified in the Second Schedule of the DPCO 1979,
hence the said respondent did not possess the power or authority
to fix the retail price of its formulations. The applicant also
conveyed that they would continue to market the formulations as
per the price prevailing on 1st
April 1979, when the DPCO 1979 came into effect. The applicant sent
another communication dated 7th
December 1984, reiterating its earlier contentions and sought a
review under the DPCO 1979. Some communication ensued between the
applicant and the first respondent, vide which the applicant was
asked to furnish details regarding the manufacture, production and
overcharging of the said formulations. By order dated 10th
July 1990, the first respondent informed the applicant that, based
upon the data made available by the applicant, an amount of
Rs.678.73 lakhs has been calculated as being due from the applicant
under paragraph 7(2) of DPCO 1979, in respect
of the bulk drug FA. In response, the applicant again reiterated the
contentions raised by it earlier, by letter dated 20th
July 1990. Ultimately, a demand of over rupees 18 crores, inclusive
of rupees 12 crores as interest, came to be made from the applicant,
by order dated 14th
September 2005, in respect of the period from 1st
April 1979 to 25th
August 1987, in exercise of powers under paragraph 7(2) of DPCO
1979. The applicant had earlier filed a writ petition, being SCA No.
10354 of 2010, challenging the above stated demand. By order dated
14th
July 2010, the Court directed the applicant to prefer a
representation to the first respondent, who was directed to consider
and decide the same in accordance with law, by passing a reasoned
order. The representation of the applicant dated 14th
July 2010, has been rejected by order dated 10th
November 2010, which order has, inter alia, been challenged in the
petition (SCA No.33 of 2011). It may be noted that the petition,
after extensive hearing, has been directed to be enlisted for final
hearing on 20th
July 2011, by order dated 24th
June 2011, of this Court. No interim relief has been granted to the
applicant in the said petition. The present
application has been affirmed on 27th
June 2011. According to the applicant, it became necessary to
urgently file the application and pray for restoration of the status
quo ante as, on the morning of 25th
June 2011, the third respondent, Mamlatdar, Ankleshwar, sealed the
factory of the applicant, despite protests from the representatives
of the applicant.
4. In
the above background, Mr. K.S Nanavati, learned Senior Advocate, has
made elaborate submissions orally, and has submitted written
submissions, as well. The gist of these submissions, in essence, is
as follows :
(a) The
act of sealing the Factory and dispossessing the Company is, on the
face of it, without authority of law, oppressive, and arbitrary,
with a view to causing harm to the applicant. The said action is
lacking in bonafides and is in breach of Articles 19(1)(g) and 300A
of the Constitution of India.
In
support of the above submission, reliance has been placed upon
Express Newspapers Pvt.Ltd. v. Union of India, (1986) 1 SCC
133 (Para 76).
(b) The
authorities have failed to appreciate that as a consequence, three
hundred workers have been rendered jobless and goods worth more than
Rupees 40 crores, belonging to the applicant and other Companies, are
lying in the Factory at various stages of production, which would be
damaged.
(c) Section
150(b) and Section 153 of the Bombay Land Revenue Code, 1879 (“The
Code” for short) do not empower the authorities to take
forcible possession and lock the Factory. The power of forfeiture of
the occupancy under Section 150(b) does not empower the authorities
to close down the industry and deprive the applicant of its property.
The power of forfeiture has to be exercised in terms of Section 153.
The proviso to Section 153 is mandatory, and the power of forfeiture
cannot be exercised unless the conditions stipulated in clauses (a)
and (b) of the proviso to Section 153 are satisfied. These conditions
have not been satisfied because no action as prescribed by Sections
165 and 166, has been taken.
(d) It
is a settled principle of law that deprivation of property can only
take place if there is a specific provision that so permits, and in
the present case there is no such specific provision empowering
respondent No.3 to seal the Factory. The action of the respondents in
dispossessing the applicant has been taken in disregard of the
requirements of the rule of law.
In
support of the above contentions reliance has been placed upon
(1) Bishan Das v. State of Punjab, AIR 1961 SC 1570
(Paras 11 to 14) and (2) Meghmala v. G.Narasimha Reddy,
(2010) 8 SCC 383 (Paras 46 to
49).
(e) The
action of the first respondent in raising the demand and sealing the
Factory of the applicant is ex facie unreasonable and lacking in
bonafides. The said demand was made on 10-07-1990. The applicant
approached the Bombay High Court by filing Writ Petition No.2250 of
1990 and, initially, protection was granted to it on 06-08-1990. The
said petition was later
withdrawn with a view to approaching the Drug
Pricing Liability Review Committee(“DPLRC” for short)
constituted by the Central Government. While allowing withdrawal the
Court made it clear that it was open to the Department to enforce the
recovery. However, no action was taken by the respondents. The
proceedings before the DPLRC continued from 1996 to 2004 and the
Report was supplied on 17-07-2006. The Mamlatdar, thereafter, issued
notices dated 17-12-2005, 16-01-2006, 26-09-2008 and 25-05-2010 under
the Bombay Land Revenue Code,1879.
(f) The
petition filed by the applicant is pending final decision. It was
taken up for final hearing on 23-24/06/2011, and has been adjourned
to 20-07-2011. Apprehending that some coercive measures would be
taken, the applicant served letter dated 23-06-2011 upon the third
respondent. Despite the same, the said respondent, with the help of
the police, threw out the workers and employees of the applicant and
sealed the Factory, even when chemically volatile goods were in the
process of various stages of reaction. This action of respondent No.3
is illegal and arbitrary as the matter was in the process of being
heard by the Court. Sealing and dispossession of the Factory was
not necessary for undertaking the procedure of forfeiture of
occupancy under Section 150(b) read with Section 153 of the Bombay
Land Revenue Code. The said action is unprecedented, and has been
taken with extreme prejudice, knowing fully well that it will result
into heavy loses of the material lying in the Factory, belonging not
only to the applicant but to other Companies; therefore, status-quo
ante deserves to be restored, by issuing an interim mandatory
injunction.
In
support of this submission, reliance has been placed upon Dorab
Cawasji Warden v. Coomi Sorab Warden, (1990) 2 SCC 117.
(g) The
entire controversy revolves around the issue whether the provisions
of DPCO 1979 were applicable to the bulk drug FA, from which the
applicant is manufacturing the Formulation known as Flucort. The
applicant is in a position to demonstrate that the bulk drug FA has
not been specified either in Schedule I or Schedule II of DPCO 1979,
and, therefore, is not covered by DPCO 1979, especially
paragraph 7 thereof. The
price of the formulation,
Flucort, was not determined under Paragraphs 10 to 13 of DPCO,1979
and the “allowed price” of the bulk drug was not
informed to the applicant. The Central Government never fixed the
price of bulk drug FA,therefore, no liability can arise under DPCO,
1979.
(h) Though
the applicant submitted its representation and was heard by the first
DPLRC, it was not granted an opportunity of hearing before the Second
DPLRC made its report, on the basis of which the order of demand
has been issued.
(i) Without
admitting any liability, the principle amount could have been claimed
only in respect of the period subsequent to 26-06-1984, being the
date on which the price of Flucort was fixed and notified,
therefore, the liability, though disputed, would have to be
recalculated.
(j)
In any case, under paragraph 7 of DPCO 1979, the authorities have
discretion to proceed under paragraph 7(2)(a) or paragraph 7(2)(b) if
they comes to the conclusion that the Manufacturer was able to
procure the bulk drug at a price lower than the “allowed price”
of the bulk drug. The Central Government has chosen to exercise
powers under paragraph 7(2)(b) by fixing the price of the
Formulation, by notification dated 20-06-1984. Thereafter, it is not
open to direct recovery under paragraph 7(2)(a) from the year 1979.
Even otherwise, after the repeal of DPCO 1979, no action under Clause
4 of DPCO 1987 was permissible as no amount had “accrued on
account of any action” under DPCO 1979 and action was taken for
the first time on 10-7-1990.
(k)
That the applicant is not in a position to liquidate its property in
view of the Undertaking given to the Bombay High Court, which is
still subsisting. The applicant has also made a representation dated
02-07-2011 which contains a proposal to make payment of
Rs.5,73,49,357/- within the time schedule specified therein.
5. The
applicant has a good prima facie case, and is likely to succeed. The
balance of convenience is also in favour of the applicant. No harm or
prejudice would have resulted to the respondents had the applicant
been permitted to continue operating the Factory. The applicant
would suffer irreparable loss and injury if status-quo ante is not
restored, therefore, the interest of justice would demand that the
prayers made in the application be granted.
6. The
application has been strongly resisted by Mr.Hriday Buch, learned
Central Government Standing Counsel, on behalf of the first
respondent. The submissions made by him are summarised as under:
(a) The
grant of relief as prayed for in the application would amount to
finally allowing the Writ Petition at the interim stage. The
applicant has already prayed for the same relief in the Writ
Petition by amending the prayers, therefore, the very same relief, in
the nature of interim relief, may not be granted.
(b) During
the hearing of the main petition on 22-23/6/2011, the stand of the
first respondent was very clear and unambiguous. It was submitted, in
no uncertain terms, that the interim relief granted by the High Court
of Bombay vide order dated 16-12-1996, would not apply to the
applicant because the liability had arisen during the subsistence of
DPCO 1979 which is prior in point of time. The applicant has failed
to comply with the same by not depositing the “unintended
benefit” accrued in the Drug Prices Equalisation Account
(“DPEA” for short). At the time of hearing of the
petition the learned counsel for the applicant did not press for
grant of interim relief, and his statement has been recorded in
order dated 24-06-2011. The applicant has been served with notice
dated 08-06-2011, issued by the third respondent, intimating that
the Factory would be sealed if the demand is not met. It was in the
knowledge of the applicant that the Factory could be sealed even at
the time of hearing the petition on 23-24/06/2011.The applicant had
prior notice of the sealing but did not challenge the notice dated
08-06-2011 before the appropriate forum. It would not now be open to
the applicant to pray for similar relief, which was not consciously
pressed at that point of time.
(c) Initially,
vide order dated 06-08-1990 of the High Court of Bombay, protection
was granted to the applicant, which continued for many years. The
Division Bench of the High Court of Bombay, while permitting
withdrawal of the petition filed by the applicant, has vacated the
interim relief and has permitted the respondents to recover the
amount, by following necessary procedure. As the demand is a very old
one, and the total amount due from the applicant is almost nineteen
crores, the respondents are within their rights in effecting recovery
of the said amount, as prescribed by law. The Factory of the
applicant has been closed/sealed pursuant to the procedure followed
for recovery of the demand. Hence, it is not open to the applicant to
challenge the same before this court, more particularly as the
applicant has not preferred any Appeal or Revision, as contemplated
in Chapter XIII of the Bombay Land Revenue Code, against any of the
orders/notices issued by the Mamlatdar.
(d) The
contention of the applicant that respondent No.1 has no power to
dispossess and lock the Factory is erroneous, and per se contrary to
the provisions of law. The demand has been raised by the first
respondent under the DPCO 1979, read with various provisions of
subsequent DPCOs. Further, the DPCO is enacted by the Central
Government in exercise of powers conferred upon it under Section 3 of
the Essential Commodities Act.1955 (“The Act” for short).
In view of the provisions of Section 7A of the Act, power is vested
in the Central Government to recover the amount as arrears of land
revenue, as per procedure prescribed under the provisions of the
Bombay Land Revenue Code. As per the Scheme of the Bombay Land
Revenue Code, arrears of land revenue shall be a paramount charge
which can be recovered from the land or anything attached or fastened
to the land by forfeiting the same and, thereafter, save the same
until the levy is satisfied. Further, an arrear of land revenue may
be recovered by various processes and sale of immovable properties.
The procedure has been initiated in the year 2005 and has culminated
in sealing of the Factory, as the applicant has not paid the amount
due from it, in spite of several notices being served.
(e)
The contention that the procedure, as contemplated under Section 165
of the Bombay Land Revenue Code is not followed is erroneous and
misleading. In fact, the said provision provides for the procedure
for effecting sale of the property and issuance of a Notification.
The record of the petition clearly establishes that a Notice, as
contemplated under Section 152 of the Bombay Land Revenue Code, was
served upon the applicant as far back as on 17-12-2005. A bare
reading of the said notice clearly reveals that if the amount
mentioned therein is not paid on, or before, 23-01-2006, procedure
for forfeiture and sale shall be carried out. Again, on 26-09-2008, a
similar Notice was issued. The same has not been produced on the
record of the petition but has been referred to in other documents
annexed to the petition. On 16-07-2008 and 01-01-2009, the Collector,
Bharuch has informed the Mamlatdar, Ankleshwar, to effectively and
expeditiously effect the recovery proceedings from the applicant.
The Mamlatdar was, therefore, specifically authorized to do the
needful. Further, Notices as contemplated under Section 154 of the
Bombay Land Revenue Code were issued on 09-02-2009 and on 05-09-2009,
which is evident from the record of the petition. A similar notice
was issued on 24-05-2010. Again on 09-03-2010 and 05-07-2010, notices
as contemplated under Section 200 of the Bombay Land Revenue Code
have been issued wherein it has specifically been mentioned that if
the amount mentioned therein is not paid, the authority shall enter
into the premises, forfeit the same and carry out the distraint sale.
Lastly, on 08-06-2011 the applicant was specifically informed that
the Factory is required to be sealed during the process of
forfeiture and distraint sale. The applicant was, therefore, aware
about the impending action. It is in furtherance of the procedure
initiated for recovery of arrears of land Revenue that the Factory
premises of the applicant have been locked/sealed However, the
authorities had specifically permitted cold storage and other
important areas of the Factory premises to continue. The same have
not been disturbed in the interest of the stock stored by the
applicant.
(f) As
per the Major Law Lexicon by P.Ramanath Iyer, 4th
Edition, 2010, forfeiture has several meanings, one of which is that
“forfeiture is the divesture of specific property without
compensation in consequent of some default or act forbidden by law”
and “the compulsory surrender of property for fault to comply
with a contract of law”. The word “forfeiture”
means the fact of losing or becoming liable to deprivation of goods,
in consequence of a crime, offence or breach of engagement. The word
“forfeiture” is used in the sense of deprivation of
losing of rights or extinction of rights. Thus, during
the process of recovery of the demand, wide powers of forfeiture and
distraint sale are conferred upon the authorities under the Code, to
recover as an arrear of land revenue; therefore, it is completely
incorrect to say that there is no power to seal/lock the Factory of
the applicant.
(g) The
Bombay Land Revenue Code is a complete Code with regard to the
arrears of land revenue and confers wide powers of forfeiture and
distraint sale. By no stretch of imagination can it be said that the
said power does not include the power to lock/seal and/or attach the
land. If such a contention, as raised by the applicant, is accepted,
the same would render the whole procedure laid down in the Bombay
Land Revenue Code, redundant and unworkable.
(h) The
decisions relied upon by the learned advocate for the applicant would
not apply to the present case, especially when the action of the
authorities is permitted by law, and such action has been taken by
following the procedure and process prescribed by law.
(i) The
applicant has not shown any willingness to deposit even the principle
amount of Rs.678.73 lakhs in order to show its bonafides, against its
liability of more than nineteen crores. Therefore, no discretionary
relief may be granted in favour of the applicant, much less interim
mandatory relief.
(j) The
first respondent has no objection to opening the seal/lock applied to
the Factory of the applicant if the applicant makes the deposit of
the liability, which the applicant is not ready to do.
(k) The
applicant has completely failed to show that there is a prima facie
case in its favour for grant of interim relief, much less mandatory
interim relief. The action of forfeiture and dispossessing are yet
to follow and the action of sealing has taken place after about 21
years therefore, the balance of convenience does not be in favour of
the applicant.
(l) The
issue, today, is not whether to open the lock but whether the
applicant was liable to pay the amount that is demanded from it. If
the applicant pays the amount and thereafter succeeds in the
petition, the said amount with 15% interest, shall be refunded to the
applicant; therefore, there is no question of irreparable loss being
faced by the applicant. Further,in view of the provisions of
sub-section (4) of Section 7-A of the Act, the applicant is not
likely to suffer any irreparable loss.
(m) Mr.Hriday
Buch, learned Central Government Standing Counsel, has relied upon
Union of India v. Cynamide India Ltd., AIR 1987 SC 1802 in
order to contend that price fixation is not the function nor the
forte of the Court and that Legislative action, plenary or
subordinate, is not subject to rules of natural justice. It is
submitted that in the present case, the applicant has been heard by
the DPLRC and its representations have been considered. Notices have
been issued to the applicant regarding the recovery proceedings,
therefore, it cannot be said that it was not aware regarding the
procedure adopted under the Bombay Land Revenue Code.
(n) Referring
to Mukesh Kishanpuria v. State of West Bengal, 2010(2) GLH 200 it
is contended by Mr.Hriday Buch that the contention raised by the
learned Senior Advocate for the applicant that there is no power
under the Bombay Land Revenue Code to attach the Factory of the
applicant, is not correct as it has been held by the Supreme Court in
the said judgment that, when wider powers have been conferred,
narrower powers are automatically vested in the authority and the
court that has the power to grant regular bail also has the power to
grant interim bail, pending final decision of the bail application.
(o) Reference
has also been made to Corporation Bank v. Saraswati Abharansala,
(2009) 1 SCC 540 and a submission is advanced that a Statute
should not be considered in a manner which would defeat its object
and the principle of purposive construction should be followed to
find out the object of the Act. It is contended that to hold that
there are no powers of attachment under the provisions of the Bombay
Land Revenue Code would amount to defeating the very object of the
Statute.
(p) Distinguishing
the case of Dorab Cawasji Warden v. Coomi Sorab Warden (Supra),
relied upon by the learned Senior Advocate for the applicant for
grant of mandatory interim injunction, it is submitted that it was a
case where the parties had over-reached the process of law wherein
the Supreme Court thought it fit, in the peculiar facts of the case,
to grant relief of mandatory interim injunction. It is contended by
Mr.Buch that the factual scenario in the present case is totally
different and the demand made upon the applicant is sought to be
recovered for the past 21 years, for which proceedings have been
initiated, therefore, the principles of law enunciated in Dorab
Cawasji Warden v. Coomi Sorab Warden (Supra), would have no
application in the present case.
(q) The
learned Central Government Standing Counsel, has also relied upon the
principles of law enunciated in judgment dated 13-05-2010, rendered
in Letters Patent Appeal No.1166 of 2008, arising out of Civil
Application No.11373 of 2008, regarding grant of interim relief.
7. Upon
the strength of the above arguments it is urged that no relief as
prayed for, be granted to the applicant and the application be
dismissed, with costs.
8. In
rejoinder, Mr.K.S.Nanavati, learned Senior Advocate has largely
reiterated the submissions made by him earlier, and has brought to
the notice of this Court certain orders passed by the Bombay High
Court and the Supreme Court in other proceedings where interim relief
has been granted to the petitioners therein. The same have been
perused by the Court and not found to be applicable to the facts
obtaining in the present case.
9. Mr.J.K.Shah,
learned Assistant Government Pleader appearing for the third
respondent has submitted that the said respondent is acting as an
Agent of the first respondent, for effecting recovery of the arrears
of land revenue under the provisions
of
the Bombay Land Revenue Code. It is submitted that on 08-06-2011, a
notice has been issued by the Mamlatdar to the applicant, intimating
that the Factory of the applicant would be sealed. The said notice
could have been challenged by the applicant under the provisions of
Section 211 of the Bombay Land Revenue Code read with Rule 108 (6).
However, this has not been done. The Mamlatdar has been authorised
by the Collector to exercise power for effecting recovery, in
accordance with the procedure prescribed under the Bombay Land
Revenue Code. The third respondent has complied with all the
provisions of the Bombay Land Revenue Code and a proposal has been
sent in respect of the procedure to be carried out under the
provisions of Sections 165 and 166. Chapter XII of the Bombay Land
Revenue Code confers wide powers, including the power to effect
recovery as arrears of land Revenue. The action of the 3rd
respondent in sealing the Factory of the applicant has been taken in
full compliance with the provisions of the Bombay Land Revenue Code.
In
support of the above contentions, reliance has been placed upon the
following decisions:
(1) A.M.Choksi
v. S.V.S.Bank Ltd., 1998(1) GLR 154
(2) R.S.Joshi
v.Ajit Mills Ltd., (1977)(4) SCC 98
(3) Commissioner
of Income Tax v. Hindustan Bulk Carriers, (2003)3 SCC 57
(4) Chhotalal
V.Kakkad v. State of Gujarat, 1973 GLR 279
(5) Union
of India v. Alok Kumar, (2010)5 SCC 349
10. I
have heard learned counsel for the respective parties at length and
in great detail, perused the averments made in the application and
documents on record, and considered the rival submissions advanced
at the Bar.
11. At
the outset, it is necessary to make it clear that this application
has been filed pending the final adjudication of the main petition,
wherein similar prayers have been made. The specific prayer in the
application is for grant of interim mandatory relief by restoring the
status-quo ante, directing the respondents to remove the seals
applied on the Factory of the applicant and permit the applicant to
continue the process of manufacture.
12. The
main ground of challenge to the action of sealing the Factory is to
the effect that the provisions of Section 150(b) and 153 of the
Bombay Land Revenue Code do not empower the authorities to take
forcible possession and lock the Factory. According to the learned
Senior Advocate, the proviso to Section 153 is mandatory and can only
be exercised if the conditions stipulated in clause (a) and (b) of
the proviso are adhered to, namely, by following the procedure
envisaged under Section 165 and 166 of the Bombay Land Revenue Code.
According to the learned Senior Advocate, there is no provision in
the Bombay Land Revenue Code that empowers the respondents to seal
the Factory. The petition has been permitted to be amended to include
a necessary ground and a prayer for issuance of a mandatory order
to this effect.
13. The
submission regarding whether the respondents have power under the
Bombay Land Revenue Code to seal the Factory and whether such power
has been legally exercised, is also in issue in the Writ Petition.
To render any finding upon such issues at this stage, would amount to
pre-judging the petition. Similarly, the legality and validity of
the demand of the principle amount of Rupees 678.73 lakhs which has
escalated to about nineteen crores with interest, is also the subject
matter of adjudication in the petition. Being conscious of the above
facts, it would not be appropriate, at this stage, to enter into the
merits of the case, insofar as the core issues involved in the
petition are concerned. The prayers made in the application will,
therefore, be considered in accordance with the established
parameters for grant of interim relief and mandatory interim relief,
in the background of the legal and factual position obtaining in
the case.
14. In
the case of Dorab Cawasji Warden v. Coomi Sorab Warden (Supra),
the factual matrix was entirely different to the one existing in the
present case. In that case,land was purchased by the parents of the
appellant and the appellant as joint owners, and a building was
constructed thereupon. By a Registered Deed of declaration, it was
declared that the appellant had an undivided share in the property as
joint tenant and that the declarants had a right to sever the joint
tenancy at any time. After the death of the mother of the appellant,
the appellant and his father agreed to hold the property as
tenants-in-common instead of joint tenants, each having an equal
undivided share therein so as to be able to dispose of his undivided
share. The appellant’s father transferred his undivided half share in
the property in favour of another son, on his attaining majority.
The appellant and his brother came to hold equal undivided one half
share each as tenants-in-common in respect of the said property. The
brother of the appellant was living with his father and the
appellant, and it was only after his marriage that the two brothers
occupied different portions of the house with separate kitchens. The
appellant’s brother died intestate leaving behind his widow and two
minor sons (Respondents Nos.1 to 3). The sons sold their undivided
half share in the property to respondent No.4 and his wife. The
purchasers took possession of the property pursuant to the Sale Deed.
The appellant filed a Suit, praying for a perpetual injunction
restraining respondents Nos.1 to 3 from parting with possession of
the property and/or inducting any third party into it and from
restraining the purchasers from entering into it or taking
possession. The trial Court granted an interim mandatory injunction
restraining respondent No.4 from remaining in possession or enjoying
the suit property. In appeal, the High Court set aside the order
granting injunction. Since the purchasers had occupied the disputed
portion, the question for consideration was whether the appellant was
entitled to injunction in a mandatory form, directing the purchasers
to vacate the premises. There was a clause in the Agreement to sell,
to the effect that pending the completion of the sale if any Suit is
filed by the appellant against the vendors and an injunction is
obtained restraining the vendors from selling the property, then the
vendors shall have the option to keep the sale in abeyance and/or
cancel and rescind the Agreement. In the above factual matrix, the
Supreme Court thought it just and necessary that a direction should
go to the respondents to undo what they had done with knowledge of
the appellant’s rights to compel the purchaser or to deny joint
possession.
15. In
the present case, the demand of Rs.5,73,49,357 has been made upon the
applicant on 17-07-1990. As per paragraph 7(2)(a) of DPCO 1979, the
applicant could have deposited the amount into the Drugs Prices
Equalisation Account. Had the applicant deposited the amount, and in
the event of its success in the litigation, the respondents would
have been bound to refund the said amount, with 15% interest. As the
demand made by the first respondent was not met by the applicant,
proceedings under the provisions of the Bombay Land Revenue Code, to
recover the amount as arrears of land revenue were initiated by
issuing notice under Section 152, on 17-12-2005. It is clearly
mentioned in the said notice that if the amount is not paid before
23-01-2006, procedure for forfeiture and sale shall be carried out.
Thereafter, another notice has been issued on 26-09-2008. On
16-07-2008 and 01-01-2009, the Collector, Bharuch has informed the
Mamlatdar, Ankleshwar to effectively and expeditiously carry out the
the recovery proceedings from the applicant. Notices under the
provisions of Section 154 of the Bombay Land Revenue Code were issued
on 09-01-2009 and on 05-09-2009. Another notice was issued on
24-05-2010. Again, on 09-03-2010 and 05-07-2010, notices under
Section 200 of the Bombay Land Revenue Code have been issued, wherein
it has been specifically mentioned that if the amount mentioned is
not paid, the authority shall enter into the premises and forfeit and
carry out the distraint sale. Thereafter, on 08-06-2011, the
applicant has been specifically informed that the Factory is required
to be sealed during the process of forfeiture and distraint sale. By
issuing the above-mentioned notices and following the procedure
envisaged under the provisions of the Bombay Land Revenue Code, stage
by stage, the applicant has been informed that the Factory is likely
to be sealed. This fact is very much within the knowledge of the
applicant. None of the said notices have been challenged by the
applicant before the appropriate forum available under the Bombay
Land Revenue Code. As a consequence of the notice dated 08-06-2011,
the Factory of the applicant has been sealed. In this factual
background, the submission of the learned Senior Advocate that the
Factory has been sealed all of a sudden with the help of Police
personnel, does not inspire confidence. The notice dated 08-06-2010
has not been placed on record by the applicant, though it is admitted
during the course of hearing. A copy of the same has been produced by
the learned Assistant Government Pleader. A perusal thereof makes it
clear that the applicant has been informed in clear terms that if it
fails to pay the amount demanded, the Factory would be sealed. The
applicant was aware of the impending sealing of the Factory even at
the time of hearing of the petition on 23-24/06-2011.
16. It
would be fruitful, at this stage, to refer to certain judgments of
the Supreme Court wherein the principles of law regarding grant of
interim relief have been enunciated.
17. In
the case of Assistant Collector of Central Excise v. Dunlop India
Ltd., AIR 1985 SC 330, relying on the earlier decisions of the
Supreme Court in Titaghur Paper Mills Co.Ltd.v. State of Orissa,
AIR 1983 SC 603 and Union of India v. Oswal Woollen Mills
Ltd., AIR 1984 SC 1264, the Supreme Court held as under:
“5.
We repeat and deprecate the practice of granting interim order which
practically give the principal relief sought in the petition for no
better reason than that a prima facie case has been made out,
without being concerned about the balance of convenience, the
public interest and a host of other relevant
considerations. Regarding the practice of some clever litigants
of resorting to filing writ petitions in far-away courts having
doubtful jurisdiction, we had this to observe:
“……
Having regard to the fact that the registered office of the Company
is at Ludhiana and the principal respondents against whom the
primary relief is sought are at New Delhi, one would have expected
the writ petition to be filed either in the High Court of Punjab and
Haryana or in the Delhi High Court. The writ petitioners however,
have chosen the Calcutta High Court as the forum perhaps because one
of the interlocutory reliefs which is sought is in respect of a
consignment of beef tallow which has arrived at the Calcutta Port. An
inevitable result of the filing of writ petitions elsewhere than at
the place where the concerned offices and the relevant records are
located is to delay prompt return and contest. We do not desire to
probe further into the question whether the writ petition was
filed by design or accident in the Calcutta High Court when the
office of the Company is in the State of Punjab and all the
principal respondents are in Delhi. But we do feel disturbed that
such writ petitions are often deliberately filed in distant High
Courts, as part of a manoeuvre in a legal battle, so as to render
it difficult for the officials at Delhi to move applications to
vacate stay where it becomes necessary to file such
applications”.
In
Union of India v. Jain Shudha Banaspati Ltd.(supra), Chandrachud,
CJ., A.P. Sen, R. N. Misra, JJ. allowed an appeal against an
interim order making the following observations:
“After
hearing learned counsel for the rival parties, we are of the opinion
that the interim order passed by the High Court on November 29, 1983
is not warranted since it virtually grants to the respondents a
substantial part of the relief claimed by them in their writ
petition. Accordingly, we set aside the said order”.
We
have come across cases where the collection of public revenue has
been seriously jeopardised and budgets of Governments and Local
Authorities affirmatively prejudiced to the point of precariousness
consequent upon interim orders made by courts. In fact,
instances have come to our knowledge where Governments have been
forced to explore further sources for raising revenue, sources which
they would rather well leave alone in the public interest, because
of the stays granted by courts. We have come across cases where an
entire Service is left in a stay of flutter and unrest because of
interim orders passed by courts, leaving the work they are supposed
to do in a state of suspended animation. We have come across cases
where buses and lorries are being run under orders of court though
they were either denied permits or their permits had been cancelled
or suspended by Transport Authorities. We have come across cases
where liquor shops are being run under interim orders of court. We
have come across cases where the collection of monthly rentals
payable by Excise Contractors has been stayed with the result that
at the and of the year the contractor has paid nothing but made his
profits from the shop and walked out. We have come across cases where
dealers in food grains and essential commodities have been allowed to
take back the stocks seized from them as if to permit them to
continue to indulge in the very practices which were to be
prevented by the seizure. We have come across cases where land reform
and important welfare legislations have been stayed by courts.
Incalculable harm has been done by such interim orders. All this is
not to say that interim orders may never be made against public
authorities. There are, of course, cases which demand that interim
orders should be made in the interests of justice. Where gross
violations of the law and injustices are perpetrated or are about to
be perpetrated, it is the bounden duty of the court to intervene
and give appropriate interim relief. In cases where denial of interim
relief may lead to public mischief, grave irreparable private
injury or shake a citizen’s faith in the impartiality of public
administration, a Court may well be justified in granting interim
relief against public authority. But since the law presumes that
public authorities function properly and bonafide with due regard
to the public interest, a court must be circumspect in granting
interim orders of far reaching dimensions or orders causing
administrative, burdensome inconvenience or orders preventing
collection of public revenue for no better reason than that the
parties have come to the Court alleging prejudice, inconvenience
or harm and that a prima facie case has been shown. There can be and
there are no hard and fast rules. But prudence, discretion and
circumspection are called for. There are several other vital
considerations apart from the existence of a prima facie case. There
is the question of balance of convenience. There is the question of
irreparable injury. There is the question of the public interest.
There are many such factors worthy of consideration. We often wonder
why in the case (of) indirect taxation where the burden has already
been passed on to the consumer, any interim relief should at all be
given to the manufacturer, dealer and the like.”
(emphasis
supplied)
18. The
above principles of law enunciated by the Supreme Court are extremely
apt and squarely apply to the facts of the present case. From the
entire factual background of the case and a scrutiny of the
provisions of law applicable, including those of the Bombay Land
Revenue Code, prima facie, no such grave violation of law, as
alleged is apparent, so as to warrant the grant of mandatory interim
relief to the applicant. The amount under demand, inclusive of
interest has now reached the enormous figure of about nineteen
crores. The initial demand has been made on 10-07-1990, and
proceedings for recovery of the demand as arrears of land revenue
have been intimated on 17-12-2005, culminating in the sealing of the
Factory of the applicant, pursuant to the notice dated 08-06-2011.
19. It
is pertinent to note that ever since the year 1990, the applicant has
not paid even a single rupee towards the demand, pending litigation,
leave alone a substantial sum or even the principle amount. During
the course of hearing of the application, the applicant showed its
inability to pay even the principle amount upfront and it was
submitted that it has sent its own proposal to the first respondent.
The Court is not concerned with such a proposal. The fact remains,
that against the total demand of about Rupees nineteen crores, not
even a single rupee has been paid by the applicant. It was open to
the applicant to have deposited the amount in the DPEA as provided
in Paragraph 7(2)(a) of DPCO 1979. If the applicant is successful
in the petition, the amount would have been refunded to it with 15%
interest. Having consciously chosen not to deposit the amount or pay
the demand, the applicant can have no grouse if proceedings for
recovery under the provisions of the Bombay Land Revenue Code are
initiated. At no stage has the applicant challenged those proceedings
before the appropriate forum. Even the notice dated 08-06-2011
remains unchallenged, though there are remedies available under the
Bombay Land Revenue Code itself.
20. It
is, therefore, clear that the applicant was very well aware, all
throughout, of the consequences that would follow if the demanded
amount is not paid. The pendency of litigation in a court of law or
filing of the petition, in which no interim relief has been granted
would not, of itself, justify the non-payment of the huge and
long-outstanding demand. The applicant was informed on 08-06-2011
that the Factory would be closed in the process of recovery as
arrears of land revenue. If, today, 300 workers have been rendered
jobless, as emphasised by the learned Senior Advocate, it is the
applicant alone that is responsible for creating such a situation.
The respondents have nothing to do with the workers directly and any
grievance that the workers may have can only be directed against the
applicant. Similarly, if there are goods of other Companies in the
factory, it was open to the applicant to remove or return them, in
view of the fact that it had been informed by notice dated
08-06-2011, that the Factory would be sealed. It is not open to the
applicant at this stage, to take shelter behind the plea of the
workers being rendered jobless, or goods of other Companies being
damaged. No equity can be claimed on these counts by the applicant.
The situation that has emerged is a result of the adamance of the
applicant in refusing to pay a substantial portion of the demanded
amount, during the pendency of the litigation.
21. In
the above context, if mandatory interim relief as sought for by the
applicant is granted, it would virtually amount to allowing the
writ petition and negating the demand made by the respondents, by
rendering at naught, the entire proceedings under the provisions of
the Bombay Land Revenue Code.
22. As
already made clear earlier, this Court would prefer not to enter into
the merits of the case or adjudicate upon issues that have been
raised in the petition. For this reason, certain specific contentions
raised by the learned counsel for the parties and judgments cited by
them, are not being specifically dealt with.
23. Normally,
the factors that should exist while considering an application for
grant of interim relief are, existence of a prima facie case,
balance of convenience and irreparable loss to the party, if such
relief is not granted. It may be noted that in matters of public
revenue, the Court has to be extremely cautious while granting such
relief. Much would depend on the facts of each case.
24. In
Assistant Collector of Central Excise v. Dunlop India Ltd.
(Supra), the Supreme Court has held as below:
“7.
xxxxxxx Even assuming that the company had established a prima facie
case, about which we do not express any opinion, we do not think
that it was sufficient justification for granting the interim orders
as was done by the High Court. There was no question of any
balance of convenience being in favour of the respondent-Company.
The balance of convenience was certainly in favour of the Government
of India. Governments are not run on mere Bank Guarantees. We
notice that very often some courts act as if furnishing a Bank
Guarantee would meet the ends of justice. No governmental business or
for that matter no business of any kind can be run on mere Bank
Guarantees. Liquid cash is necessary for the running of a Government
as indeed any other enterprise. We consider that where matters of
public revenue are concerned, it is of utmost importance to realise
that interim orders ought not to be granted merely because a prima
facie case has been shown. More is required. The balance of
convenience must be clearly in favour of the making of an interim
order and there should not be the slightest indication of a
likelihood of prejudice to the public interest. We are very
sorry to remark that these considerations have not been borne in
mind by the High Court and interim order of this magnitude had been
granted for the mere asking. The appeal is allowed with
costs.” (emphasis supplied)
25. Applying
the above-quoted principles of law to the facts of the present
case, in the considered view of this Court, the applicant does not
succeed in establishing a prime facie case. Similarly, the balance of
convenience does not tilt in its favour. In view of the fact that the
applicant can deposit the demanded amount even today, which can be
refunded to it with interest at the rate of 15% in case it succeeds
in the petition, it cannot be said that the applicant would suffer
an irreparable loss.
26. Another
aspect that cannot be ignored is that the demand is a very old one,
having been made as far back as in the year 1990. The proceedings
under the Bombay Land Revenue Code have been initiated in the year
2005. The total demand from the applicant, inclusive of interest, is
almost Rupees nineteen crores which is, by no means, a small amount.
More important, it is public money that is due to the first
respondent, unless otherwise ruled by a Court of law. Considering
the above aspects which also include the amount of public interest as
well, no prima facie case can be said to exist in favour of the
applicant in order to grant mandatory interim relief and restore the
status-quo ante.
27. As
a consequence of the above discussion, there does not exist any legal
or valid ground to grant the prayers made in the application.
28. As
a culmination of the above discussion and for reasons stated
hereinabove, no case is made out for grant of interim relief, much
less mandatory interim relief, in favour of the applicant.
29. The
application is, therefore, dismissed. Rule is discharged. There shall
be no orders as to costs.
(Smt.Abhilasha Kumari,J)
arg
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