PETITIONER: ZIPPERS KARAMCHARI UNION Vs. RESPONDENT: UNION OF INDIA & ORS. DATE OF JUDGMENT: 03/09/1998 BENCH: S. RAJENDRA BABU ACT: HEADNOTE: JUDGMENT:
Judgement
Rajendra Babu J.
I agree with what has been proposed by learned
Brother Kurdukar, J. in the course of his order. However.
considering the nature of the arguments addressed before us,
I wish to add a few words of my own.
Shri Shanti Bhushan contended that the legislative
policy had been declared by the enactment of the Industrial
Development Regulation Act; that under Section 29-B (2B)
thereto reservation had been made for small-scale sector of
certain industries; that reservation was with reference to
certain articles such as ‘Zip fastener’; that when the
manufacture of ‘Zip fastener’ was reserved for small-scale
sector, there could not have been any dilution of such
reservation or amending that notification; that carving out
an exception therato would only result in destruction of the
reservation in favour of small-scale industry; that when
‘Zip fastener’ as an article had been reserved for
manufacture of small-scale industries, the same article
could not have been allowed to be manufactured by other
industries by whatever process adopted – integrated or
otherwise; that when there has been reservation in favour of
small scale sector, the large scale sector industries are
allowed to take over any part of that activity will hamper
and may ultimately even devour the small-scale industries;
that when reservation is made to articles by the legislature
the Executive could not have tinkered with the expression
thereto so as to create a loophole by which large-scale
industries can anhilitate the small-scale industries. On
behalf of the respondents, Shri C.S. Vaidyanathan, learned
Additional Solicitor General and Shri F.S.Nairman, Senior
Advocate apart from pointing out the decision of the Bombay
and Delhi High Courts submitted that the Notification
impugned herein was in conformity with the provisions of the
Act and no interference is called for.
The Central Government can exercise the powers under
Section 29-B (2B) of the Act to determine the nature of any
article or class of articles that may be reserved for
production by any small-scale industrial undertaking and to
determine the same, must constitute an Advisory Committee
consisting of such persons as have the necessary expertise
to give advise on such matters. In the leading judgment, my
learned Brother has set out the details of the constitution
of Advisory Committee and the advice tendered by it to the
Government before issuing Notification impugned herein. If
that Committee was of the opinion that any article or class
of articles must be taken out of the category of small-scale
industrial undertakings, certainly, the same could be done
and such exercise of power will not be ultra vires the said
provision. However, the thrust of argument of Shri Shanti
Bhushan is that such determination could be with reference
to only nature or class of any article that could be
reserved for production of small-scale industry and,
therefore, there cannot be classification on the basis of
the size of the industry or the process adopted to produce
such articles. In other words, if such a course is adopted
by taking out any category of article or class of articles
from the scope of small-scale industries, it is obvious that
there cannot be a competition between small-scale industry
and large scale industry thereby the small-scale industry
would be routed out of the market.
In matters of trade and commerce or economic policy.
the wisdom of the Government must be respected and courts
cannot lightly interfere with the same unless such policy is
contrary to the provisions of the constitution or any law or
such policy itself is wholly arbitrary. In the present
case, the two categories of articles considered in the
Notification are ‘Zip fasteners’ manufactured by small-scale
industries and ‘Zip fasteners’ manufactured by large scale
industries in integrated units. In order to improve the
quality of ‘Zip fasteners’ must be allowed to be
manufactured by integrated units which would certainly fall
within the category of large scale industries as the
investment has to be heavy in such cases. Articles
manufactured by other industrial units. Such categorisation
of goods depending upon the process adopted is well-known in
fiscal statutes and is not unknown commercially. If same
principle is extended in categorisation of articles for the
purpose of production of quality goods and in quality if the
two types of articles are different, those manufactured by
adopting the integrated process and the other by ordinary
process, certainly the two articles will fall into separate
categories and thus, satisfy the provisions of Section 29-B
(2B).
Therefore, there is no substance in the argument
addressed by Shri Shanti Bhushan that the classification
into ‘Zip fasteners’ manufatured by integrated units is
violative of the provisions of the Act and that contention
deserves to be rejected. I rest with the expression on this
aspect of the matter.
New Delhi,…………….J
September 3, 1998.(S.Rajendra Babu)