ZIPPERS KARAMCHARI UNION Vs. UNION OF INDIA

JUDGEMENT

(1.) M/s. Y.K.K. Corporation, Japan, (for short 'YKK') an international group company, having worldwide net of companies and business locations in various countries, on April 29, 1995 submitted a proposal/representation to the Foreign Investment Promotion Board, New Delhi (for short 'FIPB') seeking approval to set up integrated plants for manufacturing zip fasteners (metallic and non-metallic) with hundred per cent own capital investment with no export obligation. On consideration of this proposal the FIPB forwarded the same with its recommendation to the Central Government. The Deputy Secretary to the Government of India, Ministry of Industry, Department of Industrial Policy and Promotion vide its letter dated 7th July, 1995 communicated the approval on behalf of the Government of India to YKK. Accordingly, YKK through its subsidiary company M/s. YKK Zippers, Singapore (P) Ltd., the third respondent set up integrated plants at Bawal in Haryana.

(2.) The petitioners claiming to be the members of various trade unions operating in the companies engaged in manufacture of zip fasteners have filed this Writ Petition under Article 32 of the Constitution of India seeking mandamus to quash the permission granted to YKK for setting up "INTEGRATED PLANTS' for manufacturing metallic and non-metallic zip fasteners in India. In addition to this prayer, a Writ of Mandamus is also sought to set aside the Notification No. S.O. 309 (E) dated 30th May, 1986 and for declaration that new industrial policy of 1991 is in violation of the Industries (Development and Regulation) Act, 1951 (for short 'the Act'). First respondent is the Union of India and the second respondent is Foreign Investment Promotion Board (FIPB).

(3.) It is alleged by the petitioners that zip fasteners and its components were being manufactured in India since 1949. Eversince 1971 the manufacturing of zip fasteners has been reserved exclusively for the small scale sector. Zip fasteners are broadly classified into two categories, metallic and non-metallic zip fasteners. It is undisputed that the zip fastener is the final product of various components. There are about 150 small scale units in India engaging over 45,000 workers in the manufacturing process of various components for the end product i.e. zip fastener. Most of these manufacturers fall within the parameters of small scale industry. These manufacturers after putting their hard work and on obtaining knowhow have been manufacturing the zip fasteners and successfully competing with the international market of zip fasteners. They have been supplying zip fasteners to the manufacturers of readymade garments, leather garments and allied articles. As of today the high technology used by these manufacturers is successfully competing the word market and earning valuable foreign exchange for India. Notwithstanding this factual position the reservation contained in Section 29-B (2) (2B) read with item 38 (3) in the First Schedule of the Act, the Central Government dereserved this item providing exception in case of integrated plant - manufacturing zip fasteners (metallic and non-metallic) by violating the said provisions of the Act and extending favourable treatment to the foreign investor for extraneous consideration. The action of the Central Government is illegal and be quashed.