Y. VENKATACHALAM, J. - (1.) FOR the Invoking article 226 of the Constitution of india, the petitioner-mills herein has filed the present writ petition seeking for a writ of certiorarified mandamus to call for the records pertaining to g. O. Ms. No. 304, dated October 12, 1990, issued by the first respondent and the consequential G. O. Ms. No. 97, dated February 25, 1991, and other consequential orders passed pursuant to the above proceedings including the order dated September 1, 1994, and September 21, 1994, of the Commercial Tax officer, Singanallur Assistant Circle, Coimbatore, in Ref. No. 648/91a3 and ref. No. 1657/87-A3, respectively in so far as they relate to conditions made in clause 5 regarding payment schedule of deferred sales tax for the years 1990-91, 1991-92 and 1992-93, and clauses 5 and 7 thereof relating to the appointment of a nominee director to be nominated by the third respondent herein to be a director on the board of management of the first petitioner to the extent they are contrary to or inconsistent with the scheme sanctioned by the Appellate Authority for Industrial and Financial Reconstruction appointed under the Sick Industrial Companies (Special Provisions) Act (Act I of 1986), and to quash the consequential G. O. Ps. No. 97, dated February 25, 1991, issued by the second respondent under section 17a of the Tamil Nadu General Sales Tax act, 1959, as well as Order No. 73254/87/b2, dated November 29, 1990, issued by the third respondent and also the proceedings dated September 1, 1994, and september 21, 1994, issued by the Commercial Tax Officer, Singanallur Assistant circle, Coimbatore, pursuant to the impugned order dated October 12, 1990, and consequently to direct the first and second respondents to give full effect and implement unconditionally the said order dated June 15, 1990, passed by the appellate Authority for Industrial and Financial Reconstruction under the Sick industrial Companies (Special Provisions) Act, 1985 (Act 1 of 1986), and also by reviewing the sales tax concession granted to the petitioner under the said order dated June 15, 1990, by the AAIFR and extending the sales tax deferment benefit to the petitioners for the years 1994-95 and 1995-96, i. e. , up to March 31, 1996. In support of the writ petition, the petitioner herein has filed an affidavit wherein it has narrated all the facts and circumstances that forced it to file the present writ petition and requested this court to allow the writ petition as prayed for. Per contra, on behalf of the respondents a counter-affidavit has been filed rebutting all the material allegations levelled against them one after the other and ultimately they have requested this court to dismiss the writ petition for want of merit.
(2.) HEARD the arguments advanced by learned counsel appearing for the respective parties. I have perused the contents of the affidavit and the counter-affidavit together with all other relevant material documents available on record in the form of typed set of papers. I have also taken into consideration the various points raised by learned counsel appearing for the respective parties during the course of their arguments. In the above facts and circumstances of this case, the only point that arises for consideration is, as to whether there are any valid grounds to allow this writ petition or not. The brief facts of the case of the petitioner as seen from the affidavit are as follows : The petitioner herein owns a spinning mill at Coimbatore , which has been a sick unit since many years. Despite several efforts by the management and a massive plan executed for modernisation and renovation of the machinery, the mill had to be closed on or about August, 1983, and remained closed till August, 1990. In or about 1987, the petitioner was declared a sick industrial company under the Sick Industrial Companies (Special Provisions)Act, 1985 (hereinafter called the "said Act"), within the meaning of section 3 (1) (o) of the said Act after inquiry under section 16 of the said Act. The industrial Development Bank of India was appointed as the operating agency for preparation of a scheme providing for measures in relation to the first petitioner-company under section 17 (3) of the said Act. The IDBI prepared a scheme for revival of the petitioner-company. The said scheme was examined by the Board for Industrial and Financial Reconstruction (the Board) and all parties were heard. By its order dated June 23, 1988, the Board found the scheme unviable and formed an opinion that it was just and equitable to wind up the first petitioner-company and directed communication of the said opinion to this court. Subsequently, the promoters of the first petitioner-company were able to bring in an industrialist, namely, one K. K. Patodia of PBM Polytex ltd. , having vast experience and expertise in the yarn and textile industry to join the first petitioner-company as a co-promoter. The promoter and co-promoter agreed to induct Rs. 50 lakhs each into the first petitioner-company and the said K. K. Patodia also agreed to take care of the first petitioner's sales without charging sales commission during the rehabilitation period resulting in a saving of Rs. 12 lakhs per annum. The workmen of the first petitioner agreed to further sacrifices to secure the reopening of the mills and running of the same as a viable unit. Therefore the first petitioner filed an appeal before the Appellate Authority for Industrial and Financial Reconstruction (the Appellate Authority) under section 25 of the said Act claiming viability of the company in the changed circumstances. The said appeal was admitted by the Appellate Authority on or about August 10, 1988. The first petitioner had envisaged financial assistance from the government, banks and financial institutions as part of any rehabilitation scheme that may be framed when filing the appeal. Before the Appellate authority, several proposals were made for revival/rehabilitation of the first petitioner-company. After consideration of the various proposals, recommendations and suggestions, the Appellate Authority ultimately by its order dated August 18, 1989, adopted a draft scheme prepared by the IDBI, the operating agency. The said draft scheme provided, inter alia, for financial assistance by way of reliefs or concessions from the first respondent under section 19 (1) of the Act. The said draft scheme provided for the following reliefs/concessions from the first respondent : (i) to grant deferment of sales tax for three years from 1990-91, to 1992-93. The deferred sales tax will be free of interest and repayable after the rehabilitation period of ten years, i. e. , after March, 2000 A. D. ; (ii) To exempt the unit from power cut for three years. (Note : The Government of Tamil Nadu is to review the concessions under (i) and (ii) above and extend these for two more years); (iii) To declare the unit a relief undertaking for five years; (iv) To reconnect the unit's power supply upon reopening without insisting on deposit of minimum demand charges for the closure period; (v) To waive minimum demand charges on electricity during the closure period; (vi) To waive the penalty of Rs. 2. 79 lakhs towards defaults in payment of sales tax; (vii) To allow the company to repay the dues towards property tax to Rs. 3. 5 lakhs in 36 monthly instalments during the years 1991-92 to 1993-94. The said draft scheme was circulated to the first respondent for its consent under section 19 (2) of the said Act. Out of the reliefs/concessions on its part provided for in the draft scheme, the first respondent agreed to give exemption of power cut and deferment of sales tax for a period of three years subject to review of extending the time for a period of another two years after the expiry of three years. The first respondent accordingly gave and communicated its unconditional consent to the aforesaid two reliefs/concessions of the Appellate Authority. After obtaining the above consent of the first respondent as aforesaid the Appellate Authority by its order dated June 15, 1990, sanctioned the scheme under section 19 (3) of the said Act. By its G. O. Ms. No. 304, dated October 12, 1990, the first respondent purportedly in pursuance of the aforesaid order sanctioning the scheme, granted the reliefs/concessions, namely, power cut exemption and deferment of sales tax for a period of three years. The said order, however provided for repayment of the sales tax dues commencing from the fourth year, (i. e. , 1993-94), instead of the year 2000 A. D. as provided for in the sanctioned scheme and also the following conditions which are unwarranted and in fact opposed to the sanctioned scheme, namely : (a) appointment of a nominee of the director of handlooms and textiles on the board of management of the first petitioner; (b) assignment to the said nominee of the responsibility of, inter alia, monitoring the utilisation of funds involved in the deferment of sales tax; and (c) the said nominee's heading of sub-committee of the first petitioner which should deal with the purchase and policies with power to veto any decision of the subcommittee which may be against the interest of the first petitioner's mill. By its representation dated November 16, 1990, the first petitioner-company drew the attention of the Government to the sanctioned scheme and also to the fact that the IDBI was appointed as an implementing agency who would monitor the working of the company, and requested the State government to delete the said conditions regarding the appointment of nominee director and his powers. While the aforesaid representation was pending with the first respondent, the third respondent by its Order Re. No. 73254/89/b2, dated November 29, 1990, issued pursuant to para. 7 of the said G. O. Ms. No. 304, dated October 12, 1990, appointed the Special Officer, Salem Co-operative spinning Mills as his nominee to be the ex-officio director in the board of the management of the first petitioner with special powers in terms of the said order dated October 12, 1990. But the respondent did not deal with the request of deletion of the said conditions. The second respondent by its G. O. Ps. No. 97, dated February 25, 1991, consequent on the said G. O. Ms. No, 304, dated october 12, 1990, in exercise of its powers under section 17a (1) of the Tamil nadu General Sales Act, 1959, deferred the sales tax payable by the first petitioner under the Sales Tax Act for a period of three years from October 12, 1990, subject to the same conditions/terms as in the said order dated October 12, 1990, namely appointment of a nominee director with special powers and repayment of the deferred sales tax from the fourth year onwards. With the application for deletion of conditions regarding the nominee director and his powers, the first petitioner also took up the matter pertaining to the commencement of payment of the arrears of the deferred sales tax with the first respondent, but the first respondent refused to alter the said period so as to comply with the said scheme. The first respondent has neither replied to the said letter dated november 2, 1991, nor given any personal hearing in the matter to the petitioners so far. They claim that the promoter of the first petitioner S. D. Sanghai and its co-promoter K. K. Patodia have taken numerous steps for rehabilitation/revival of the first petitioner on the basis of the terms and conditions contained in the order dated June 15, 1990, of the Appellate authority sanctioning the scheme for rehabilitation of the first petitioner. That apart from the aforesaid, various other concerned parties such as bankers, workmen, institutions, etc. , have altered their position on like premises. In these premises the petitioners have approached this court challenging the impugned orders of the first respondent and second respondent laying down special conditions for granting reliefs/concessions, which are unconditionally provided for by the sanctioned scheme under the said Act, and the first respondent's subsequent refusal to delete the said conditions. Per contra, in the counter-affidavit it is contended by the respondents that the AAIFR adopted a draft scheme prepared by the IDBI (operating agency) reworking the rehabilitation package for the mills by reckoning certain reliefs/concessions and the AAIFR adopted the rehabilitation scheme. During the AAIFR meeting held on June 13, 1990, the joint director of handlooms and textiles informed the stand of the state Government that the Government will consider two concessions (i) power cut exemption for a period of three years and (ii) deferment of sales tax for a period of three years. Accordingly the AAIFR approved the package in its hearing on June 13, 1990. The mill which had remained closed for eight years was taken over by one K. K. Patodia jointly with one D. D. Sanghai and the mill was started in August, 1990. About 400 workers who were displaced have been re-employed. The Government of Tamil Nadu in their Order Ms. No. 304, handlooms, Handicrafts, Textiles and Khadi (C2) Department, dated October 12, 1990, have sanctioned the following concessions to the petitioner mills : (i) power cut exemption for a period of three years only (ii) deferment of sales tax dues for a period of three years. The Government have also stipulated the following conditions (i) There must be a nominee of the Director of Handlooms and Textiles on the board of management of the mills; (ii) The nominee of the Director of Handlooms and textiles should be assigned the following responsibilities : (a) He should monitor the utilisation of funds involved in the deferment of sales tax and ensure that the deferment is limited to genuine requirements of the mills like margin money for working capital, payment of statutory liabilities, etc. ; deferment is not available if it is not justified with reference to the purpose; (b) He should head a sub-committee of the mills which should deal with purchase and policies with power to veto any decision of the sub-committee which may be against the interest of the mills. They contend that the sanctioned scheme does not cover the concessions envisaged in the draft scheme. According to them the Government have agreed before the AAIFR that the Government will consider only two concessions, viz. , power cut exemption for a period of three years and deferment of sales tax for a period of three years in the event of AAIFR approving the package of measures for the revival of the petitioner mills. They contend that the Government have not given any unconditional consent to the AAIFR. The AAIFR has in conformity with the views of the Government of Tamil Nadu requested the State Government to review the concessions and extend these concessions for two more years. It is the case of the respondents that appointment of a nominee oh the board of the management and the assignment stipulated to the Government nominees are done by the Government usually whoever seeks the concessions. According to them these conditions were stipulated only with a view to protect the interest of the Government funds sanctioned by way of deferment of sales tax. Further, according to the respondents assignments and powers given to the Government nominee are only in the interest of the mills and only in order to avert further loss and closure of the mills, these steps were taken by Government. It is contended by them that if the mill is allowed to run according to their own whims and fancies further closures of the mills will be imminent, and in such case all steps taken by the Government for reviving the mills will be in vain. According to them this procedure is being adopted only in the interest of the institution, besides for safeguarding the Government interest. It is their case that the beneficiary cannot question the mode, time, etc. , of the concession of deferral of tax which is legally due to the Government. Further according to them once the statutory notification is issued, it is binding on the dealer and if at all, they like to avail of the concession, once granted, at a later date convenient to them and then come up with a request to give effect from that date. It is their specific case that as committed before the Appellate authority for Industrial and Financial Reconstruction, the Government sanctioned the usual two concessions. The Government have not given any concessions unconditionally. The Government have committed before the AAIFR only to grant concessions. Thus it is their strong contention that the conditions imposed by the Government are only in the interest of the mills, workmen and for protecting the interest of the Government funds sanctioned by way of sanction of deferment of sales tax. They also contended that the government have sanctioned not only to the petitioner mills but also as many as 21 textile mills in the State. None of the twenty-one mills so availing of the usual concessions, power cut exemption and deferment of sales tax have objected to the conditions. Even some of the mills to whom rehabilitation packages were approved by the BIFR/aaifr have not disputed on the question of appointment of a Government nominee and the petitioner mills alone has objected to it for flimsy reasons. Further it is the case of the respondents that the appointment of the Government nominee on the board is not violative of article 14 of the constitution and the same does not restrict the petitioners'fundamental right to carry on business, that he has been provided veto power on any decision of the sub-committee which may be against the interest of the mills. The veto power entrusted to the Government nominee can be exercised only in case the directors acted against the interest of the mills and that therefore it is the categoric contention of the respondents that it is only for the safety and security of the mills. It is also their case that sanction of concessions were not given on the basis of statute but on the basis of satisfaction of the government in regard to requirement and repaying capacity and viability of the mills. It is reiterated by the respondents that the conditions were imposed by the Government in the interest of the mills, in the interest of the Government funds and labour and according to them, merely one nominee on the board of the mills does not affect the interest of the petitioner in the affairs of the mills. They contend that the Government has not changed its stand in assisting the unit. Thus it is contended by them that as a uniform policy, the Government extended these concessions only for a period of three years but as agreed, the government has immediately fulfilled its commitment as early as in October, 1990. Therefore, according to the respondents there is no merit at all in this writ petition and hence the same has to be dismissed. Having seen the entire material available on record and from the facts and circumstances of this case and also from the claims and counter claims made by the rival parties, the following are the admitted facts : The petitioner mills herein was declared a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985. The industrial Development Bank of India (IDBI) was appointed as an operating agency for preparation of a scheme providing for measures in relation to the mills. The IDBI prepared the scheme for revival of the mills and was examined by the Board for Industrial and Financial Reconstruction (BIFR ). The BIFR found the scheme was unviable and formed an opinion to wind up the mills. Subsequently the promoter of the mills joined with one K. K. Patodia in the mills as co-promoter. The promoter and co-promoter agreed to induct Rs. 50 lakhs each into the mills. Then, the mills appealed before the Appellate authority for Industrial and Financial Reconstruction (AAIFR) claiming viability of the mills in the above changed circumstances. The AAIFR adopted a draft scheme prepared by the IDBI (operating agency) reworking the rehabilitation package for the mills by reckoning certain reliefs/concessions and the AAIFR adopted the rehabilitation scheme. The said draft scheme was circulated to the first respondent for its consent under section 19 (2) of the said Act and out of the reliefs/concessions on its part provided for in the draft scheme, the first respondent agreed to give exemption from power cut and deferment of sales tax for a period of three years subject to review for extending the time for a period of another two years after the expiry of the three years. Accordingly the AAIFR approved the package in its hearing on June 13, 1990. The mill which had remained closed for eight years was taken over by the said K. K. Patodia jointly with D. D. Sanghai and the mill was restarted in august, 1990. About 400 workers who were displaced have been re-employed. The government of Tamil Nadu in their Order Ms. No. 304, Handlooms, Handicrafts, textiles and Khadi (C2) Department, dated October 12, 1990, have sanctioned the concession of power cut exemption for a period of three years and also deferment of sales tax dues for a period of three years. It is significant to note that, apart from the above the Government have also stipulated the following conditions : " (i) There must be a nominee of the Director of handlooms and Textiles on the board of management of the mills; (ii) The nominee of the Director of Handlooms and textiles should be assigned the following responsibilities : (a) He should monitor the utilisation of funds involved in the deferment of sales tax and ensure that the deferment is limited to genuine requirements of the mills like margin money for working capital, payment of statutory liabilities, etc. ; deferment is not available if it is not justified with reference to the purpose; (b) He should head a sub-committee of the mills which should deal with purchase and policies with power to veto any decisions of the sub-committee which may be against the interest of the mills. " The petitioner herein is aggrieved by the above conditions alone and according to them the said conditions are unwarranted and in fact opposed to the sanctioned scheme. They contend that the induction of a nominee director by the first respondent would adversely affect the working of the sanctioned scheme. Further according to them the collection of three years' deferred sales tax from the fourth year is directly contrary to the terms of the sanctioned scheme and is illegal and unauthorised and violative of the petitioner's fundamental and constitutional rights. Further it is contended by the petitioner that since the IDBI was appointed as an implementing agency which would monitor the working of the company, there is no need for the State government to impose the impugned conditions regarding the appointment of a nominee director and his powers.
(3.) IN this case, it is significant to note that during the aaifr meeting held on June 13, 1990, the joint director of handlooms and textiles informed the stand of the State Government that the Government will consider two concessions (i) power cut exemption for three years and (ii)deferment of sales tax for a period of three years. Accordingly the Government of Tamil Nadu in their Order Ms. No. 304, Handlooms, Handicrafts, Textiles and khadi Department, dated October 12, 1990, have sanctioned the said two concessions. Thus as committed before the Appellate Authority for INdustrial and Financial Reconstruction, the Government sanctioned the usual two concessions. Therefore as rightly contended by the respondents in this case once the statutory notification is issued, it is binding on the dealer and if at all, they like to avail of the concession, once granted at a later date convenient to them it cannot be sustained. Further the Government have not given any concessions unconditionally. Further it is clear in this case that it was recorded in the minutes of the AAIFR hearing that the Government have agreed for deferment of sales tax for a period of three years subject to review for extension of time for another two years after the expiry of three years. Further it is significant to note that the wording of the section is very clear that it is only a discretionary power vested with the Government and it is not obligatory on their part to give deferral to the likes and dislikes of the dealers and the beneficiary cannot question the mode, time, etc. , of the concession of deferral of tax which is legally due to the Government. That apart the AAIFR has only recommended to the Government to consider granting these concessions favourably and as committed before the AAIFR, the Government have sanctioned the usual two concessions made available to sick mills for revival and stipulated the same conditions also to the petitioner mills. The government should not show any disparity to any of the mills who availed of the assistance. Therefore, it is the categoric contention of the respondents that the collection of arrears of deferral of sales tax is not directly contrary to the terms of the sanctioned scheme, as alleged by the petitioner and that therefore, the petitioner has to repay the deferred sales tax from the fourth year onwards as ordered earlier by the Government. IN the above facts and circumstances of this case, I see every force in the above contention of the respondents. Now coming to the other contentions of the petitioner regarding the impugned condition of appointment of nominee on the board of the management and the assignment stipulated to the Government nominees, it is contended by the petitioner that since the IDBI Was appointed as an implementing agency who would monitor the working of the company, the Government need not appoint any nominee director with certain powers and that the said conditions to that effect are unwarranted and in fact opposed to the sanctioned scheme, that the impugned conditions laid down. by the first respondent are extremely arbitrary, unreasonable and capricious inasmuch as the entire financial liability of the first petitioner is owed to the financial institutions and banks on whose behalf IDBI has to monitor the scheme and that the first respondent has not granted any loan to the first petitioner. Per contra, it is contended by the respondents that the appointment of a nominee on the board of the management and the assignment stipulated to the Government nominees are done by the government usually to whoever seeks the concessions and according to them these conditions were stipulated only with a view to protect the interest of the government funds sanctioned by way of deferment of sales tax. Assignments and powers given to the Government nominees are only in the interest of the mills. It is their categoric contention that in order to avert further loss and closure of the mills, these steps were taken by the Government. Further, according to them, if the mill is allowed to run according to their own whims and fancies further closures of the mills will be imminent and in such case, all the steps taken by the Government for reviving the mills will be in vain. These concessions are granted in the interest of the workers, who are thrown out of employment and the very purpose of the sanction of concessions will not serve any useful purpose if the mills are again closed due to mismanagement. It is significant to note that about 400 workers who were displaced have been re-employed. Therefore it is contended by the respondents that the Government are stipulating a condition to appoint the Government nominees wherever the mills were assisted by the Government by way of sanction of concessions and that this procedure is being adopted only in the interest of the institution, besides for safeguarding the Government interest. Therefore it is the strong contention of the respondents that the conditions imposed by the Government are only in the interest of the mills, workmen and for protecting the interest of the Government funds sanctioned by way of sanction of deferment of sales tax. IN the facts and circumstances of this case, I see every force in the above contentions of the respondents. Therefore from all the above it is very clear in this case that the impugned conditions were imposed by the Government in the interest of the mills, in the interest of the Government funds and labour, and merely one nominee on the board of the mills does not affect the interest of the petitioner in the affairs of the mills. Like banks/financial institutions, the Government nominee is also asked to induct in the board of the mills. Further I am of the view that the Government has not changed its stand in assisting the unit, but as committed before the AAIFR, the Government has sanctioned the usual two concessions made available to sick mills for revival and stipulated the same conditions also to the petitioner mills. Therefore, for all the aforesaid reasons and in the facts and circumstances of this case and also in view of my above discussions with regard to the various aspects of this case, I am of the clear view that the petitioner herein has failed to make out any case in its favour and that therefore there is no need for any interference with the conditions impugned in this writ petition. Thus the writ petition fails and is liable to be dismissed for want of merits. IN the result, the writ petition is dismissed. No costs. .;