{"id":104788,"date":"2010-11-19T00:00:00","date_gmt":"2010-11-18T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/bily-vs-union-on-19-november-2010"},"modified":"2018-08-10T23:22:22","modified_gmt":"2018-08-10T17:52:22","slug":"bily-vs-union-on-19-november-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/bily-vs-union-on-19-november-2010","title":{"rendered":"Bily vs Union on 19 November, 2010"},"content":{"rendered":"<div class=\"docsource_main\">Gujarat High Court<\/div>\n<div class=\"doc_title\">Bily vs Union on 19 November, 2010<\/div>\n<div class=\"doc_author\">Author: Akil Kureshi,&amp;Nbsp;<\/div>\n<pre>   Gujarat High Court Case Information System \n\n  \n  \n    \n\n \n \n    \t      \n         \n\t    \n\t\t   Print\n\t\t\t\t          \n\n  \n\n\n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t\n\n\n \n\n\n\t \n\nSCA\/12949\/2000\t 7\/ 7\tJUDGMENT \n \n \n\n\t\n\n \n\nIN\nTHE HIGH COURT OF GUJARAT AT AHMEDABAD\n \n\n \n\n\n \n\nSPECIAL\nCIVIL APPLICATION No. 12949 of 2000\n \n\nWith\n\n\n \n\nSPECIAL\nCIVIL APPLICATION No. 16763 of 2003\n \n\n \n \nFor\nApproval and Signature:  \n \nHONOURABLE\nMR.JUSTICE AKIL KURESHI\n \n \n=========================================================\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n1\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tReporters of Local Papers may be allowed to see the judgment ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n2\n\t\t\n\t\t \n\t\t\t \n\nTo be\n\t\t\treferred to the Reporter or not ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n3\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\ttheir Lordships wish to see the fair copy of the judgment ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n4\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tthis case involves a substantial question of law as to the\n\t\t\tinterpretation of the constitution of India, 1950 or any order\n\t\t\tmade thereunder ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n5\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tit is to be circulated to the civil judge ?\n\t\t\n\t\n\n \n\n \n=========================================================\n\n \n\nBILY\nCHEMICALS LTD - Petitioner(s)\n \n\nVersus\n \n\nUNION\nOF INDIA &amp; 5 - Respondent(s)\n \n\n=========================================================\n \nAppearance\n: \nMR\nAR THACKER(SCA NO,12949\/2000) MR JR NANAVATI(SCA NO.16763\/2003)for\nPetitioner(s) : 1, \nMR PS CHAMPANERI for Respondent(s) : 1 - 3. \nMS\nML SHAH, AGP for Respondent(s) : 4, \nNOTICE SERVED for\nRespondent(s) : 5, \nRULE SERVED for Respondent(s) :\n6, \n=========================================================\n\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\nCORAM\n\t\t\t: \n\t\t\t\n\t\t\n\t\t \n\t\t\t \n\nHONOURABLE\n\t\t\tMR.JUSTICE AKIL KURESHI\n\t\t\n\t\n\n \n\n \n \n\n\n \n\nDate\n: 19,22\/11\/2010 \n\n \n\n \n \nORAL\nJUDGMENT<\/pre>\n<p>Petitions<br \/>\n\tinvolve similar question of facts and law, they therefore have been<br \/>\n\theard together and are disposed of by this common order.\n<\/p>\n<p>Facts<br \/>\n\tas emerging in Special Civil Application  No.12949\/2000 can be<br \/>\n\tnoticed. The petitioner is a company involved in the activity of<br \/>\n\tmanufacturing salt as its operations in Jamnagar District, of State<br \/>\n\tof Gujarat. Previously the factory for manufacturing salt was owned<br \/>\n\tand operated by Saurashtra Cement &amp; Chemical Industries Ltd.<br \/>\n\tPremises of the factory were obtained on lease from the State<br \/>\n\tGovernment. Such lease was transferred by M\/s. Saurashtra Cement &amp;<br \/>\n\tChemical Industries Ltd. in favour of the M\/s. Ballarpur Industries<br \/>\n\tltd.  in the year 1972 with permission of the State Government.<br \/>\n\tEventually M\/s. Ballarpur Industries Ltd. transferred its rights<br \/>\n\twith respect to the said unit including the leasehold rights on the<br \/>\n\tland in question in favour of the petitioner on or around 11.7.2000.<br \/>\n\tLease agreement and license which the petitioner inherited from its<br \/>\n\tprevious unit both contained certain clauses to control salt<br \/>\n\tmanufacturing activities. License under which the petitioner<br \/>\n\toperated contained an additional clause which reads as under :\n<\/p>\n<p>&#8220;That<br \/>\n\tthe production from the salt works will be utilised only for captive<br \/>\n\tconsumption in their plants at Jagadhari, Ballarpur (Maharashtra) an<br \/>\n\tBinage (Karnataka) for the manufacture of Caustic Soda and will not<br \/>\n\tbe made available for sale in the country or for exports without the<br \/>\n\texpress prior approval of the Salt Commissioner <\/p>\n<p>Corresponding<br \/>\n\tprovision was also made in the agreement of lease. Relevant clause<br \/>\n\twhereof reads as follows :\n<\/p>\n<p>&#8220;(10)<br \/>\n\t The lessee shall be required to take prior permission of lessor<br \/>\n\tbefore making any change in future and the unit of the lessee shall<br \/>\n\tfunction according to the lawful instructions issued by the<br \/>\n\tGovernment from time to time.\n<\/p>\n<p><span class=\"hidden_text\">(11)<\/span><\/p>\n<p>\tThe lessee shall be liable to comply with all the terms &amp;<br \/>\n\tconditions of the lease annexed as Annexure&#8217;A&#8217; and shall be liable<br \/>\n\tfor all liabilities of confirming party.\n<\/p>\n<p><span class=\"hidden_text\">(12)<\/span><\/p>\n<p>\t The Salt Commissioner has informed that this unit is a captive unit<br \/>\n\tfor which conditions of captive units shall be binding on you as per<br \/>\n\tlicense conditions.&#8221;\n<\/p>\n<p>Combined<br \/>\n\treading of the above provisions would reveal that as per the terms<br \/>\n\tof the license as well as lease agreement between the parties, the<br \/>\n\tpetitioner was permitted to produce salt on the condition that same<br \/>\n\twill be utilised only for captive consumption in their plant and<br \/>\n\twill not be made available for sale in the Country or for exports<br \/>\n\twithout prior approval of the Salt Commissioner.  By virtue of<br \/>\n\tclauses (10) to (12) in the lease agreement and additional condition<br \/>\n\tof the license, petitioner was confined to consume salt for its<br \/>\n\tcaptive consumption and was prohibited from selling salt in the<br \/>\n\tCountry or outside without prior permission. It is however, not in<br \/>\n\tdispute that license for manufacturing of salt was governed under<br \/>\n\tRule 102 of the Central Excise Rules, 1944. In particular, Rule 102<br \/>\n\tprovide that manufacturing of salt is prohibited except under a<br \/>\n\tlicense. Such rule therefore, requires an intending party to<br \/>\n\texcavate sale to obtain necessary license for the same from the<br \/>\n\tcompetent authority. Rule 103 pertains to license to be granted by<br \/>\n\tthe Collector. Subsequent rules made provisions relating to<br \/>\n\tcontrolling such license for excavation of salt. It is not in<br \/>\n\tdispute that with effect from 23.7.1996 entire Chapter VI  from Rule<br \/>\n\t102 to Rule 138 of the Salt Rules has been deleted. With effect from<br \/>\n\tthe said date therefore, according to the petitioner, there is no<br \/>\n\tfurther need to obtain any license for manufacturing of salt. In<br \/>\n\tother words, by deletion of said chapter, manufacturing of salt has<br \/>\n\tbeen de-licensed. Despite such a fact, respondents insisted that the<br \/>\n\tpetitioners continued to be governed by such conditions of license<br \/>\n\tas incorporated in the lease agreement between the petitioner<br \/>\n\tindustries and the State Government.\n<\/p>\n<p>This<br \/>\n\tis manifested in impugned communication dated 31.8.1999 from the<br \/>\n\tDeputy Salt Commissioner, Ahmedabad to the petitioner company in<br \/>\n\twhich it is stated as under :\n<\/p>\n<p>&#8220;As<br \/>\n\tper your original application dated 27.01.1962 wherein your company<br \/>\n\tM\/s Saurashtra Cement had requested for opening salt works and for<br \/>\n\tcaptive use. This intention of your parent company was made more<br \/>\n\texplicit in the licence granted to you. As such we feel that company<br \/>\n\tas a matter of right cannot remove salt to other industries. You<br \/>\n\tshould take prior permission of Salt Commissioner, Jaipur for such<br \/>\n\tremovals. These orders are only in respect of Singah Units. Separate<br \/>\n\tinstructions are being issued for your Khavda(Kutch) Unit.&#8221;\n<\/p>\n<p>Insofar<br \/>\n\tas Special Civil Application  No.16763\/2003  is concerned, facts are<br \/>\n\tsimilar except that in addition to the stand of the respondents, the<br \/>\n\tpetitioner company continued to be governed by such restrictions,<br \/>\n\trespondents also issued a show cause notice dated 28.10.2003 stating<br \/>\n\tthat petitioner has been granted license on the condition that such<br \/>\n\tsalt is of captive consumption alone or for export outside the<br \/>\n\tCountry.  All surplus therefore, should be sold to other industries<br \/>\n\tonly with permission of the Salt Commissioner. It is further stated<br \/>\n\tthat though the petitioner is not granted any permission in the year<br \/>\n\t2003 to sell salt in excess of its quota in the open market or any<br \/>\n\tother industry, company has breached said conditions and sold the<br \/>\n\tsalt in open market without any permission from the Salt<br \/>\n\tCommissioner. Company was therefore, called upon to explain why<br \/>\n\tpermanent registration granted to its refinery not be cancelled for<br \/>\n\tsuch violation of the conditions. In effect therefore, the said<br \/>\n\tpetitioner challenges the stand of the respondents in enforcing the<br \/>\n\tconditions which according to the petitioner has become obsolete and<br \/>\n\talso challenged the show cause notice issued by the Salt<br \/>\n\tCommissioner why registration of the refinery of the petitioner<br \/>\n\tcompany not be cancelled.\n<\/p>\n<p>Appearing<br \/>\n\tfor the respective petitioners Shri A.R. Thacker  and Shri J.R.<br \/>\n\tNanavati contended that previously restrictions were imposed by the<br \/>\n\tSalt Commissioner in view of Rules 102 to Rule 138 of the Salt<br \/>\n\tRules. In the year 1996, such rules were deleted. With deletion of<br \/>\n\tthe entire chapter, it was not open for the Salt Commissioner to<br \/>\n\timpose any of the conditions for license since requirement of<br \/>\n\tlicense itself was done away.\n<\/p>\n<p>On<br \/>\n\tthe other hand, learned counsel Shri Champaneri appearing for the<br \/>\n\tUnion of India contended that loose salt is not permitted to be sold<br \/>\n\tin certain States. It was therefore, necessary for respondent<br \/>\n\tauthorities to verify the movement of salt and therefore, certain<br \/>\n\trestrictions were necessary to be imposed.\n<\/p>\n<p>Having<br \/>\n\theard learned counsel for the parties and having perused the<br \/>\n\tdocuments on record, it clearly emerges that prior to year 1996 for<br \/>\n\tmanufacture, excavation, collection or removal of salt, necessary<br \/>\n\tlicense was prohibited except, under a license issued under the<br \/>\n\tcompetent authority under Rule 102 of the Central Excise Rules 1944<br \/>\n\tcontained in Chapter VI which pertains to salt. Other provisions of<br \/>\n\tthe said Chapter upto Rule 138 pertain to granting of such license,<br \/>\n\tconditions thereof and other incidental powers of the authorities.<br \/>\n\tUndisputedly, w.e.f. 23.7.1996 entire chapter VI of the Central<br \/>\n\tExcise Rules, 1944 has been repealed. With deletion of the said<br \/>\n\tChapter, therefore, salt came to be de-licensed. There was<br \/>\n\ttherefore, no further requirement of obtaining license for<br \/>\n\tmanufacturing of salt. It is not the case of the respondents that<br \/>\n\tsuch provisions contained in Chapter VI of the Central Excise Rules<br \/>\n\t1944 were substituted by any other statutory enactment. In absence<br \/>\n\tof any control or power to regulate manufacturing of salt, and<br \/>\n\tresultantly in absence of any requirement to obtain license for such<br \/>\n\tmanufacture, in my opinion respondents cannot, after the said date<br \/>\n\ti.e. 23.7.1996, enforce any of the conditions of license. Condition<br \/>\n\tthat salt manufactured by the petitioners will be only for captive<br \/>\n\tconsumption or that same shall not be sold in the open market<br \/>\n\twithout permission of the Salt Commissioner, therefore, no longer<br \/>\n\twould be operative. Corresponding conditions imposed by the State<br \/>\n\tGovernment in the lease agreement between the petitioner companies<br \/>\n\tand State would also lose its significance. It is not the case of<br \/>\n\tthe State Authority that such conditions were necessary<br \/>\n\tindependently of the terms of license. It is a matter of no doubt<br \/>\n\tthat the corresponding conditions contained in the lease agreement<br \/>\n\tbetween the petitioner company and the State Authority were only by<br \/>\n\tway of incorporation from the terms  of the license granted to the<br \/>\n\tpetitioners by the Salt Commissioner.  When license itself lost its<br \/>\n\tsignificance and when conditions contained in license as held<br \/>\n\there-in-above, ceased to operate, it was not open for the Salt<br \/>\n\tCommissioner to bring back such condition by back door by insisting<br \/>\n\ton compliance of such terms contained in the agreement entered into<br \/>\n\tbetween the petitioner companies and the State Government.\n<\/p>\n<p>In<br \/>\n\tthe result, both petitions are  required to be allowed. In Special<br \/>\n\tCivil Application  No.12949\/2000, impugned communication dated<br \/>\n\t31.8.1999 is quashed. In Special Civil Application no.16763\/2003,<br \/>\n\timpugned show cause notice dated 28.10.2003  is quashed.\n<\/p>\n<p>It<br \/>\n\tis however, clarified that if there is any restriction of sale of<br \/>\n\tsalt in loose condition in any of the State, it is always open for<br \/>\n\tthe respondents to have such restrictions implemented. This is<br \/>\n\thowever, quite different from suggesting that petitioners can be bow<br \/>\n\tdown by previous conditions of license of using the salt for captive<br \/>\n\tconsumption which license has become redundant with repeal of<br \/>\n\tChapter VI of the Central Excise Rules, 1944.\n<\/p>\n<p>With<br \/>\n\tabove observations and directions, the petitions are disposed of.<br \/>\n\tRule made absolute in above terms.\n<\/p>\n<p>(Akil<br \/>\nKureshi,J.)<\/p>\n<p>(raghu)<\/p>\n<p>\t\t   \u00a0\u00a0\u00a0<\/p>\n<p>\t\t   Top<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gujarat High Court Bily vs Union on 19 November, 2010 Author: Akil Kureshi,&amp;Nbsp; Gujarat High Court Case Information System Print SCA\/12949\/2000 7\/ 7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 12949 of 2000 With SPECIAL CIVIL APPLICATION No. 16763 of 2003 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-104788","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bily vs Union on 19 November, 2010 - Free Judgements of Supreme Court &amp; 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