HIMACHAL SHODDY MILLS LTD. AND ANR. Vs. UNION OF INDIA (UOI) ETC.

JUDGEMENT

(1.) This writ petition filed by Messrs Himachal Shoddy Mills Ltd. under Article 226 of the Constitution is directed essentially against the Textile Commissioner and the State Trading Corporation Ltd., asking for a writ of mandamus calling upon the Respondents to do their public duties, by recalling the impugned secret instructions directing with -holding of the raw material already allocated to the Petitioners and asking for a writ of prohibition so that the Respondents are prohibited from acting in any manner in furtherance of the said impugned secret instructions and further asking for immediate release of the allocated raw material, namely, imported woollen rags in favour of the Petitioners from the State Trading Corporation of India. The Petitioners are an incorporated Company of which the registered office is at Bhadrinagar, Paonta Sahib, in the District of Sirmur. The Petitioners manufacture shoddy yarn from the imported raw material, namely, woollen rags and also manufacture blankets and fabrics. According to Petitioners they have installed 1600 spindles and employ near about 115 persons including staff and workers and their monthly wage bill comes to about Rs. 42,000/ -. The basic raw material required for the manufacture of shoddy yarn is old woollen rags of different description, which are imported from the foreign suppliers. Formerly on the basis of essentiality certificate granted by the Textile Commissioner the Petitioners were being granted import licence by the Chief Controller of Imports and Exports but subsequently the import was canalised through the State Trading Corporation Ltd., (hereto referred as the S.T.C.) and this was done in 1968. The S.T.C. makes purchases on behalf of the actual users in which category the Petitioners are included, and the allocations are made by the Textile Commissioner. In fact the bulk import licences are issued by the Government of India in favour of the S.T.C. and the imports are allocated to various actual users like the Petitioners and allocation letters are issued by the Textile Commissioner. The Petitioner company at present enjoys the annual allocation of woollen rags for its manufacture to the tune of about two lacs per annum although it should be much more according to their spindlage capacity. In order to procure the raw material through the S.T.C. the Petitioners have to establish internal letters of credit in favour of the S.T.C. according to its buying programme. Thereafter external letters of credit are opened by the S.T.C. in favour of the foreign suppliers. The Petitioners availed of the facilities of the Punjab National Bank Ludhiana who are their bankers in that connection. The goods remain pledged with them. The Petitioners have obtained L -4 Licence under the provisions of the Central Excise Act, 1944, and the Central Excise Rules, 1944. As such the manufacture of shoddy woollen yarn and its clearance is completely regulated and controlled by the provisions of the Excise Act and the Excise Rules. The company maintains prescribed books which are called R.G.I. and the said books are periodically scrutinized by the Excise Officers. Since April 1974 the Petitioner -mill has been working intermittently due to prolonged labour trouble and several complaints were made against them because the labour wanted frantic increase in wages. According to Petitioners the pending allocations from April 1973 to September 1974 were to the tune of more than two lacs. Besides, the Petitioners opened internal letters of credit for the back log of allocations to the tune of five lacs and the material was to be supplied by the foreign suppliers, namely, Atlas Textile, Winni Peg Wiper, B.L. Kassel Company, Wool and Rayon Waste Wool and Waste Wool (Aust.) Co. These foreign suppliers, however did not make the supplies to the Petitioners. Subsequently by letters dated 12th February and 15th February, 1975 (Annexure 'D'), the S.T.C. wrote to the Petitioners that they have been advised by the Textile Commissioner to keep unserviced allocations in abeyance. No reason was assigned as to why this order of abeyance was passed by the Textile Commissioner. The effect is that a complete embargo has been placed on the right of the Petitioners to make purchases of woollen rags against their pending actual users allocations. The action of the Textile Commissioner as well as of the S.T.C. is illegal, arbitrary and devoid of jurisdiction. The Petitioners have a legal right to the allotment of material under Sec. 18 -G of the Industries (Development and Regulation) Act, 1951. They are entitled to get proper and fair allocations of raw materials without which they cannot carry on their business of the manufacture of shoddy yarn. In fact by the abeyance order, the Petitioners have been condemned un -heard and no opportunity to show cause was afforded to them. It was all due to false and frivolous complaints sent to the Textile Commissioner against the Petitioners. Subsequently a settlement was arrived at with the union of the labour and the Petitioners, in December, 1974, and the Petitioners agreed to make an increase in the yearly wage bill which was nearly doubled. Under the Imports Control Order, 1955, the abeyance order could not be made against the Petitioners without a show cause notice and the entire decision is non -est. In fact the Petitioners have been black listed and have also been discriminated. Articles 14, 19 and 31 of the Constitution give the Petitioners fundamental rights which have thus been violated. There is a violation of a principle of natural justice as the Petitioners were condemned un -heard, the action itself was mala fide and vindictive and above all the Textile Commissioner had no jurisdiction to issue the impugned directions. On these facts and allegations the Petitioners claim release of the allocated raw material and withdrawal of the impugned abeyance order issued by the Textile Commissioner.

(2.) The Textile Commissioner (Respdt. No 2) and the S.T.C. (Respdt. No. 3) have both filed their returns. It is contended in reply, that the Court has no jurisdiction, as the office of the answering Respondents is located at New Delhi and that the Petitioners have no locus standi to file the writ petition. The Respondents explained that they are not responsible for non -supply by the Atlas Textile Waste (Aust.) Ltd., and by Winni Peg Wiper, Australia, because in the case of the former the shipping documents were incomplete while in the case of the latter an objection was raised as to the mutilation certificate. As regards the other foreign suppliers they did not supply the material for no fault of the Respondents. The abeyance order was issued by the S.T.C. under a direction or guideline given by the sponsoring authority, namely, the Textile Commissioner and the S.T.C. was bound, under paragraph 97 (5) of the Import Trade Control Handbook of Rules and Procedure (hereinafter referred to as the Red Book) to comply with that direction or Guideline. In fact the last date for the import of the material was 31 -5 -1975 but the Petitioners represented to the Court that the last date was 31 -3 -1975 and thereby committed fraud and mis -representation and obtained an interim stay of the abeyance order. Due to this fraud and misrepresentation committed by the Petitioners they are not entitled to any relief in the writ petition. The Collector of Customs as well as the Central Excise authorities reported against the Petitioners that they were misutilizing the imported raw material and enquiries were pending against them. Due to these complaints the impugned order of abeyance has been made by the Textile Commissioner. The Petitioners were asked to produce their accounts but they have "persistently failed" to produce their records for verification. According to Respondents the raw materials have been sold in black market at Ludhiana and Amritsar. At any rate the complaints related to that misuse or mis -utilization of the raw material. Highly disputed questions of facts arise in the writ petition and that too is a ground for refusing the relief sought to be granted. It is denied that the instructions were given by the Textile Commissioner without notice or without affording the Petitioners any opportunity. In fact sufficient opportunities were afforded inasmuch as, they were repeatedly asked to produce their accounts for inspection. As they did not do so, the abeyance order was made. It is, therefore, pleaded that the Petitioners are not entitled to any relief.

(3.) It is undisputed that the Petitioner -company possesses L -4 Licence under the Central Excise Act, 1944, and it is also a registered industry under the provisions of the Industries (Development and Regulation) Act, 1951. The woollen rags as well as the woollen yarn are no doubt items of a scheduled industry as defined in Sec. 3(i) and as such the Petitioners are an existing industrial undertaking within the meaning of that Act. It is also evident that the provisions of the Central Excise Act and the Customs Act are applicable to the Petitioners. This would mean that the raw material is to be utilised strictly under the supervision of the Central Excise and Custom authorities. There is bound to be a periodical check and the Petitioners have also quoted instances when such physical checks have taken place.