{"id":259351,"date":"1994-05-12T00:00:00","date_gmt":"1994-05-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/indian-nut-products-vs-union-of-india-on-12-may-1994"},"modified":"2015-05-21T01:28:52","modified_gmt":"2015-05-20T19:58:52","slug":"indian-nut-products-vs-union-of-india-on-12-may-1994","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/indian-nut-products-vs-union-of-india-on-12-may-1994","title":{"rendered":"Indian Nut Products vs Union Of India on 12 May, 1994"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Indian Nut Products vs Union Of India on 12 May, 1994<\/div>\n
Equivalent citations: 1994 SCC (4) 269, JT 1994 (4)\t 66<\/div>\n
Author: S N.P.<\/div>\n
Bench: Singh N.P. (J)<\/div>\n
           PETITIONER:\nINDIAN NUT PRODUCTS\n\n\tVs.\n\nRESPONDENT:\nUNION OF INDIA\n\nDATE OF JUDGMENT12\/05\/1994\n\nBENCH:\nSINGH N.P. (J)\nBENCH:\nSINGH N.P. (J)\nKULDIP SINGH (J)\nSAWANT, P.B.\n\nCITATION:\n 1994 SCC  (4) 269\t  JT 1994 (4)\t 66\n 1994 SCALE  (2)905\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
The Judgment of the Court was delivered by
\nN.P. SINGH, J.-\n<\/p>\n
Writ Petition (C) No. 415 of 1988\n<\/p>\n
1.   This  writ\t petition has been filed on  behalf  of\t the
\npetitioners,   who  are\t owners\t and  occupiers\t of   cashew
\nfactories.   They have questioned the validity of  an  order
\ndated  6-7-1988,  issued  by the Government  of\t Kerala,  in
\nexercise
\n271<\/span>
\nof  the\t powers conferred on it by Section  3(1)(c)  of\t the
\nKerala Cashew Factories (Acquisition) Act, 1974 (hereinafter
\nreferred  to  as  “the\tAct”)  declaring  that\tthe   cashew
\nfactories  of the petitioners mentioned in the\tschedule  of
\nthe said order shall stand transferred to, and vest in,\t the
\ngovernment.\n<\/p>\n
2.   The  object of the Act aforesaid is to  acquire  cashew
\nfactories in the public interest, in order to prevent  large
\nscale unemployment of workers in the cashew industry and  to
\nprovide\t employment to such workers who have  been  rendered
\nunemployed.   Cashew factory has been defined under  Section
\n2(b)  to  mean a factory as defined in\tthe  Factories\tAct<\/a>,
\nwherein\t processing of cashew nuts is being carried  on\t and
\nincludes  the  factory building, the site thereof,  and\t the
\nbuildings,  and lands appurtenant thereto used or  necessary
\nfor,  or  in  connection with the working  of  the  factory.
\nSection 3<\/a> provides :\n<\/p>\n
\t      “Order  of  acquisition.- (1)  The  Government
\n\t      may, if they are satisfied-<\/p><\/blockquote>\n
\t      (a)   that  the occupier of a  cashew  factory
\n\t      does  not\t conform to the\t provisions  of\t law
\n\t      relating\tto safety, conditions of service  or
\n\t      fixation\tand payment of wages to the  workers
\n\t      of the factory; or\n<\/p>\n
\t      (b)   that  raw  cashew  nuts  allotted  to  a
\n\t      cashew  factory by the Cashew  Corporation  of
\n\t      India  are not being processed in the  factory
\n\t      to which allotment has been made or that\tsuch
\n\t      nuts are being transferred to any other cashew
\n\t      factory; or\n<\/p>\n
\t      (c)   that   there   has\tbeen   large   scale
\n\t      unemployment, other than by way of lay off  or
\n\t      retrenchment,  of\t the  workers  of  a  cashew
\n\t      factory,
\nby  order  published  in the Gazette,  declare\tthat  cashew
\nfactory\t shall\tstand  transferred  to,\t and  vest  in,\t the
\nGovernment:\n<\/p>\n
Provided  that before making a declaration under  this\tsub-
\nsection in respect of a cashew factory, the Government shall
\ngive  the  occupier  of the factory and\t the  owner  of\t the
\nfactory,  where\t he is not the occupier, a notice  of  their
\nintention  to  take action under this  sub-section  and\t the
\ngrounds\t therefore and consider the objections that  may  be
\npreferred in pursuance of such notice.\n<\/p>\n
Explanation.-  For  the purposes of  this  sub-section,\t the
\nexpressions  ‘lay  off’ and ‘retrenchment’  shall  have\t the
\nmeanings  respectively assigned to them, in  the  Industrial
\nDisputes Act<\/a>, 1947 (Central Act<\/a> 14 of 1947).
\n(2)  The  notice referred to in the proviso  to\t sub-section
\n(1)  shall also be published in two newspapers published  in
\nthe State of Kerala and such publication shall be deemed  to
\nbe sufficient notice to the occupier, to the owner where  he
\nis  not the occupier and to all other persons interested  in
\nthe cashew factory.\n<\/p>\n
(3)  On\t the making of a declaration under sub-section\t(1),
\nthe  cashew  factory  to  which\t the  declaration   relates,
\ntogether  with\tall machinery, other accessories  and  other
\nmovable properties as were immediately before the  appointed
\nday in the ownership, possession, power or control
\n272<\/span>
\nof the occupier in relation to the factory and all books  of
\naccounts,  registers  and other documents  relating  thereto
\nshall stand transferred to, and vest in, the Government.”
\nThe  other  sections  relate to the  vesting,  inventory  of
\nproperties,  power  of the Government to direct\t vesting  of
\nsuch  cashew  nut factories in the Corporation,\t payment  of
\ncompensation  to the occupier of the cashew factory and\t the
\ncontinuance of employment of the employees after vesting.\n<\/p>\n
3.   It\t appears that in view of the proviso to\t sub-section
\n(1)  of Section 3<\/a> of the Act, the Government gave notice  to
\nthe petitioners in respect of their intention to take action
\nunder  the aforesaid sub-section, directing the\t petitioners
\nto  file  objections,  pursuant to  the\t said  notice.\t The
\nrelevant  part\tof  the said notice dated  20-6-1988  is  as
\nfollows:\n<\/p>\n
\t\t\t\t “NOTICE
\n\t      Notice  under  Rule  3 of\t the  Kerala  Cashew
\n\t      Factories
\n\t       (Acquisition) Rules, 1974.\n<\/p><\/blockquote>\n
\t      WHEREAS  it has been brought to the notice  of
\n\t      the  Government  that  in\t respect  of  cashew
\n\t      factories detailed below, there exist  grounds
\n\t      as  detailed  below, warranting  action  under
\n\t      Section  3(1) of the Kerala  Cashew  Factories
\n\t      (Acquisition)  Act,  1974,  notice  is  hereby
\n\t      given to all concerned of the intention of the
\n\t      Government to take action under the above said
\n\t      section  of the Act.  Interested\tpersons\t are
\n\t      hereby  directed to file their objections,  if
\n\t      any,  before the Government of Kerala  against
\n\t      the  proposed action within seven days of\t the
\n\t      receipt  of this notice or the publication  of
\n\t      this  notice in the newspapers,  whichever  is
\n\t      earlier  or if they so desire,  appear  before
\n\t      the  Special  Officer  for  Cashew   Industry,
\n\t      Quilon  at Quilon at 11 a.m. on  4-7-1988\t and
\n\t      state their objections.  If no objections\t are
\n\t      received\twithin the said period or no  person
\n\t      appears  on the said date it will be  presumed
\n\t      that  there  are\tno  objections\tagainst\t the
\n\t      proposed\taction\tand further  steps  will  be
\n\t      taken……”\n<\/p><\/blockquote>\n
In  the\t said  notice  the  names  of  36  cashew  factories
\nincluding  that of tile petitioners have been mentioned\t and
\nthereafter  the\t grounds on which the factories\t were  being
\nacquired have been stated as follows
\n\t      “GROUNDS
\n\t      It has been reported by the authorised officer
\n\t      that  your  factory is lying closed  and\tthat
\n\t      there  is\t no  possibility  of  it  to   start
\n\t      functioning within a period of ten days or  in
\n\t      the   immediate\tfuture.\t   Government\tare,
\n\t      therefore, of opinion that the said  situation
\n\t      will lead to a large scale unemployment, other
\n\t      than by way of lay off or retrenchment, of the
\n\t      workers of the cashew factory.”\n<\/p>\n
4.   On behalf of the petitioners, objections were filed  to
\nthe  said notice, pointing out, that the first allotment  of
\nraw cashew nut under the scheme of monopoly procurement, was
\nmade  to  them by allotment orders dated  15-4-1988  and  as much at the e
\narliest, the factory could have started around
\n1-5-1988.  It was also pointed out that cashew nut  industry
\nwas essentially a seasonal industry.  With the available raw
\nnuts in Kerala State and the
\n273<\/span>
\nscheme of monopoly procurement of raw nuts in force, if\t all
\nthe  cashew  factories were to take allotment of  raw  nuts,
\nsuch factories would work only for 45 to 60 days in the year
\n1988.\tIt was also pointed out that in the year 1987,\tthey
\nworked for 192 days.  It was asserted that there had been no
\nunemployment  in  their factories and as such there  was  no
\njustification to issue notice in exercise of the power under
\nSection 3(1)(c)<\/a> aforesaid.\n<\/p>\n
5.   On 4-7-1988 which had been fixed as the date of hearing
\nof  the\t objections  to the notices  aforesaid,\t before\t the
\nSpecial\t Officer  for Cashew Industry,\tQuilon,\t a  detailed
\nwritten\t  submission  was  also\t filed\ton  behalf  of\t the
\npetitioners,  pointing out that the notice had been  issued,
\nnot in terms of the requirement of Section 3(1)(c)<\/a>.   Hence,
\non  the\t basis\tof  such notice,  the  power  of  the  State
\nGovernment  to declare that the factories mentioned  therein
\nshall  stand transferred to the State Government, cannot  be
\nexercised.  It was asserted that the issuance of notice\t was
\nnothing\t but a colourable exercise of statutory powers\twith
\noblique motives and the processors felt that the acquisition
\nof factories and driving the owners out of the industry\t was
\na foregone conclusion.\n<\/p>\n
\t      6.    The\t impugned order was issued  on\t6-7-\n<\/p>\n
\t      1988 saying:\n<\/p>\n
\t      “Whereas it has been brought to the notice  of
\n\t      the Government that there has been large scale
\n\t      unemployment, other than by way of lay off  or
\n\t      retrenchment  of\tthe workers  of\t the  cashew
\n\t      factories mentioned in the Schedule below.
\n\t      AND  WHEREAS Government have given  notice  to
\n\t      the owners\/occupiers of the said factories  of
\n\t      the intention of the Government to take action
\n\t      under Section 3 of the Kerala Cashew Factories
\n\t      (Acquisition)  Act,  1974\t (29  of  1974)\t and
\n\t      considered the objections that were  preferred
\n\t      in pursuance of the said notices.\n<\/p>\n
\t      AND  WHEREAS  Government\tare  satisfied\tthat
\n\t      there has been large scale unemployment, other
\n\t      thin by way of lay off or retrenchment, of the
\n\t      workers  of the cashew factories mentioned  in
\n\t      the Schedule below:\n<\/p>\n
\t      Now  therefore,  in  exercise  of\t the  powers
\n\t      conferred by clause (c) of sub-section (1)  of
\n\t      Section  3  of  the  Kerala  Cashew  Factories
\n\t      (Acquisition)  Act,  1974 (29  of\t 1974),\t the
\n\t      Government  of Kerala hereby declare that\t the
\n\t      factories\t mentioned  in\tthe  Schedule  below
\n\t      shall  stand  transferred to and vest  in\t the
\n\t      Government with effect from 6-7-1988.”
\nSection 3<\/a> vests power in the Government, to declare that the
\ncashew\tfactory in question shall stand transferred  to\t and
\nvest in the Government, if the Government is satisfied\tthat
\nany  of\t the  three conditions mentioned in  the  said\tsub-
\nsection\t (1) of Section 3<\/a> exists.  That power has  not\tbeen
\nquestioned  in\tthe present writ application.\tBut  it\t was
\npointed out that the proviso to sub-section (1) of Section 3<\/a>
\nenjoins\t upon Government, before issuing a  declaration,  to
\nfollow\ta  procedure which is imperative  and  mandatory  in
\nnature\ti.e. ‘the Government shall give the occupier of\t the
\nfactory\t and tile owner of the factory, where he is not\t the
\noccupier, a notice of their intention
\n274<\/span>
\nto  take  action  under this  sub-section  and\tthe  grounds
\ntherefor  and consider the objections that may be  preferred
\nin pursuance of such notice’.\n<\/p>\n
(emphasis supplied)\n<\/p>\n
7.  It\tcannot be disputed that in view of  the\t proviso  to
\nsub-section  (\t1),  it\t is incumbent on  the  part  of\t the
\nGovernment   to\t  disclose  the\t ground\t  or   the   grounds
\nspecifically,  in  the\tnotice on the basis  of\t which,\t the
\nGovernment  is\tsatisfied that one of the  three  situations
\nmentioned   in\t sub-section  (1)  of\tSection\t  3<\/a>   exists
\nnecessitating an action under that sub-section.\t The  person
\nto  whom  such notice along with the ground  or\t grounds  is
\nserved,\t is entitled to file objections and  to\t demonstrate
\nand satisfy that in fact no such ground exists for  issuance
\nof an order for the transfer of the factory in question.\n<\/p>\n
8.   It appears that in the notice, there is only  reference
\nto  Section 3(1)<\/a> of the Act, without disclosing whether\t the
\nGovernment was satisfied in respect of the existence of\t any
\nof the situations under clause (a), (b) or (c) thereof.\t  No
\ndetails have been mentioned in the said notice.\t Towards the
\nend  of the said notice, under the heading “Grounds” it\t has
\nbeen stated that the factory was lying closed and that there
\nwas  no\t possibility  of it to start  functioning  within  a
\nperiod of ten days or in the immediate future and  therefore
\nthe  Government was of the opinion that the  said  situation
\n“will  lead to a large scale unemployment…… It need\t not
\nbe impressed that an order under Section 3(1)<\/a> on the  ground
\nspecified in clause (c) of sub-section (1) can be issued  by
\nthe  State  Government\tonly when the  State  Government  is
\nsatisfied  that\t “there has been large\tscale  unemployment,
\nother than by way of lay off or retrenchment, of the workers
\nof  a  cashew fat factory”.  The grounds do not\t even  state
\nthat  there has been any unemployment much less large  scale
\nunemployment.  The grounds simply state that the factory was
\nlying  closed and there was no possibility of  its  starting
\nfunctioning within a period of ten days or in the  immediate
\nfuture,\t which\twill lead to large scale  unemployment.\t  No
\ndetails\t have been mentioned in the said notice as  to\tfrom
\nwhat  date each of the factories was lying closed.   We\t are
\nnot able to appreciate as to how by a common notice all\t the
\n36 cashew factories could be summoned to show cause  without
\ngiving\tparticulars  of\t conditions  existing  in  different
\nfactories.   The learned counsel, who appeared on behalf  of
\nthe  State,  could  not\t point\tout,  as  to  how  different
\noccupiers  or the owners of the factories could\t have  filed
\nobjections to such common notice which did not refer to\t any
\nconditions pertaining to their factories.\n<\/p>\n
9.   There  is no dispute that the cashew nut  factories  do
\nnot  work throughout the year but work for  varying  periods
\ndepending  upon\t the supply of raw nuts etc.   As  such\t the
\nparticulars of the alleged closure of each of the  factories
\nwere  required\tto be furnished to the individual  owner  to
\nmeet  the  case against him.  The object of the\t Act  is  to
\nsafeguard  the\tinterests  of  the  workers  in\t the  cashew
\nfactories  and it is to safeguard their interests  that\t the
\npower  has  been  vested in the State  Government  to  issue
\norders\tfor the transfer of the factories.  The transfer  or
\nvesting\t of the factories has to be in accordance  with\t the
\nprocedure  prescribed  in the Act.  As already\tpointed\t out
\nabove,\tthe proviso to sub-section (1) not only\t requires  a
\nnotice to be given to
\n275<\/span>
\nthe  occupier or the owner of the factory in respect of\t the
\nintention  of the Government to take action under  the\tsaid
\nsub-section,  but  also requires to furnish the\t grounds  on
\nwhich  such action is considered necessary.  In the  present
\ncase,  according to us, the notice does not comply with\t and
\nconform to the requirement of the proviso to sub-section (1)
\nof Section 3<\/a>.\n<\/p>\n
10.  It\t is  well-settled  that if  a  statute\trequires  an
\nauthority   to\texercise  power,  when\tsuch  authority\t  is
\nsatisfied that conditions exist for exercise of that  power,
\nthe satisfaction has to be based on the existence of grounds
\nmentioned  in the statute.  The grounds must be made out  on
\nthe basis of the relevant material.  If the existence of the
\nconditions  required  for  the\texercise  of  the  power  is
\nchallenged, the courts are entitled to examine whether those
\nconditions  existed  when  the order  was  made.   A  person
\naggrieved  by such action can question the  satisfaction  by
\nshowing\t that it was wholly based on irrelevant grounds\t and
\nhence  amounted to no satisfaction at all.  In other  words,
\nthe  existence of the circumstances in question is  open  to
\njudicial review.\n<\/p>\n
11.  It cannot be disputed that serious consequences  follow
\non  the\t basis\tof the order passed  by\t the  Government  on rounds mentio
\nned in clauses (a), (b) and (c).  Hence it  is
\nall  the  more necessary that the Government  furnishes\t the
\nfull particulars on the basis of which the Government claims
\nto  be\tsatisfied that there is a case for taking  over\t the
\nfactory.  As already pointed out above, there is not even an
\nassertion in the notice that there has been any unemployment
\nmuch less large scale unemployment.  The ground simply\tsays
\nthat  the Government was of the opinion that the closure  of
\nthe factory ” will lead to a large scale unemployment”.\t  We
\nare of the view, that in the facts and circumstances of\t the
\npresent case, the notice issued to the petitioners with\t the
\nso-called grounds was not in accordance with the requirement
\nof  the\t provisions of sub-section (1) of Section 3<\/a>  of\t the
\nAct.   The  notices  issued to\tdifferent  petitioners\tare,
\ntherefore,  declared  to  be  null  and\t void.\t  Consequent
\nthereto, the order dated 6-7-1988 is also quashed.\n<\/p>\n
12.  However, it is made clear that it shall be open to\t the
\nGovernment  to\texercise the power conferred on it  by\tsub-
\nsection\t (1) of Section 3<\/a>, whenever it is satisfied  on\t the
\nbasis  of  the\trelevant material, that\t any  of  the  three
\nconditions mentioned therein exists in individual factories,
\nby following the procedure prescribed therein.\n<\/p>\n
13.  In\t order to work out the equities and the\t rights\t and
\nliabilities  which  have  arisen between  the  date  of\t the
\ntransfer  of  the factories and passing of  this  order,  we
\ndirect:\n<\/p>\n
\t      (i)   The possession of the factories shall be
\n\t      handed  over to the respective  owners  within
\n\t      two weeks from the date of this order.  As and
\n\t      when possession is given, an inventory of\t all
\n\t      the materials shall be made.\n<\/p><\/blockquote>\n
\t      (ii)  The daily workers other than the members
\n\t      of  the  staff  engaged by  the  Kerala  State
\n\t      Cashew  Development Corporation Ltd.,  or\t the
\n\t      State Government, as the case may be, shall be
\n\t      retained by the
\n\t      276<\/span>
\n\t      factory  owners  and shall not  be  retrenched
\n\t      except in accordance with law.  So far as\t the
\n\t      members  of the staff are concerned, it  shall
\n\t      not be the obligation of the factory owners to
\n\t      retain  them,  in view of\t the  interim  order
\n\t      passed by this Court on 19-7-1988.\n<\/p><\/blockquote>\n
\t      (iii) The\t petitioners  shall  pay  the\tsame
\n\t      salary and emoluments which were being paid by
\n\t      the State Government while the factories\twere
\n\t      with the State Government.\n<\/p><\/blockquote>\n
\t      (iv)  Any claim for compensation in respect of
\n\t      any  damage or loss caused to  the  machinery,
\n\t      equipments, building etc. during the period of
\n\t      occupation   by\tthe  Kerala   State   Cashew
\n\t      Development   Corporation\t  Ltd.,\t  shall\t  be
\n\t      assessed\t by  the  District  Judge,   Quilon.
\n\t      Similarly, any claim in respect of any  amount
\n\t      for   an\tadditional  construction   made\t  or
\n\t      additional  machinery installed by the  Kerala
\n\t      State  Cashew  Development  Corporation  Ltd.,
\n\t      shall  be\t determined by the  District  Judge,
\n\t      Quilon,  on  proper  application\tbeing  filed
\n\t      before it.\n<\/p><\/blockquote>\n
\t      (v)   The\t Kerala\t State\tCashew\t Development
\n\t      Corporation Ltd., shall be entitled to  remove
\n\t      any  machinery  or materials installed  by  it
\n\t      within   one  week  of  preparation   of\t the
\n\t      inventory; and\n<\/p><\/blockquote>\n
\t      (vi)  Any disciplinary enquiry pending against
\n\t      any  of  the workmen may be continued  by\t the
\n\t      owner of the factory concerned, if he  chooses
\n\t      to do so.\n<\/p><\/blockquote>\n
Subject to the directions given above, the writ petition  is
\nallowed.   But in the facts and circumstances of  the  case,
\nthere shall be no order as to costs. WP (C) Nos. 445 and 490
\nof 1989, 3950-61 of 1982, 429-33 of 1979
\nThe above mentioned writ petitions are disposed of, in terms
\nof the judgment of this Court, in Writ Petition (C) No.\t 415
\nof 1988, delivered today.\n<\/p>\n
279<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Indian Nut Products vs Union Of India on 12 May, 1994 Equivalent citations: 1994 SCC (4) 269, JT 1994 (4) 66 Author: S N.P. Bench: Singh N.P. (J) PETITIONER: INDIAN NUT PRODUCTS Vs. RESPONDENT: UNION OF INDIA DATE OF JUDGMENT12\/05\/1994 BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) KULDIP SINGH (J) […]<\/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":[30],"tags":[],"class_list":["post-259351","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nIndian Nut Products vs Union Of India on 12 May, 1994 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/indian-nut-products-vs-union-of-india-on-12-may-1994\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Indian Nut Products vs Union Of India on 12 May, 1994 - 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