JANARDHANA MILLS LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(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.

(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. .