LAWS(BOM)-1987-11-45

ZIPPER INDIA PVT LTD Vs. UNION OF INDIA

Decided On November 19, 1987
Zipper India Pvt Ltd Appellant
V/S
UNION OF INDIA Respondents

JUDGEMENT

(1.) Petitioners who are Manufacturers of Zip-fasteners. a Director of such Manufacturers and an Association of Small Scale Industries, engaged in the manufacture of Zip-fasteners, question the validity of Notification bearing S.O. No. 3f)9 I El dated May 30. 1986. issued under S. 29- B(2A) of the Industries (Development and Regulation) Act. 1951 hereinafter referred to as the' IDRA Act' or' Act'.

(2.) The problem arising in this petition can be better appreciated by an enumeration of the background. The Act aforementioned has for its purpose the development and regulation of certain industries. The preamble to the Act specifies that it is intended to provide the Central Government with the means of implementing their industrial policy announced in a Resolution issued in 1948. and, as amended from time to time. Section 29-B of the Act confers on the Central Government the power to exempt small undertakings of scheduled industries from the operation of the Act. The power to exempt is to be exercised when the Central Government is of the opinion, that having regard to the smallness of the number of workers employed or to the amount invested in any industrial undertaking or to the desirability of encouraging small undertakings generally or to the stage of development of any scheduled industry, "It would not be in public interest to apply all or any of the provisions of the Act thereto". If so be its opinion, it may by a Notification in the Official Gazette, exempt, subject to such conditions as it may think fit to impose, any industrial undertaking or class of undertakings etc. etc....... from the operation of all or any of the provisions of the Act or any Rule or Order. made thereunder. With a view to exercise this power properly sub's. (2B) of S. 29-B empowers the Central Government to constitute an Advisory Committee consisting of such persons as have in its opinion "the necessary expertise to give advise in the matter". Sub-section t2C) enumerates the matters to he taken into consideration by the Advisory Committee before it communicates its recommendations of the Central Government. The Central Government, under sub-sec. (2A). after considering the recommendation made to it by the Advisory Committee may make an order by notification reserving for exclusive production by an ancillary or a small scale industrial undertaking, any article or class of articles. The article or class of articles so reserved are referred to as"reserved article/s". The petitioner avers that there appears to be no power in the Act enabling the Central Government to dereserve an article, once reserved for production by the ancillary or small industrial undertakings. It may be pleaded that such a power may be said to exist by virtue of S. 21 of the General Clauses Act. In exercise of the power conferred by S. 29-B of the Act, the Central Government on 16 Feb. 1973 issued a notification the result whereof was that Zip fasteners - metallic as also non- metallic - became items reserved for exclusive manufacture by the small scale sector. For quite sometime there had been murmurings against the continuance of the protection granted to the small scale manufacturers of Zip-fasteners. The Standing Committee of the Directorate General of Technical Development at its 9th meeting held on July 2, 1983, constituted a Study Team to deliberate over the question. This team consisted of two officers of DGTD and two of the Directorate of Control of Small Scale Industries. The team visited units of certain small scale sector manufacturers in the trade and submitted a report. The report was considered at the arc. and 4th meetings by the Advisory Committee on reservations. The said Committee opired thus :

(3.) The petition was admitted and in relation to interim relief, the respondents delayed the filing of an affidavit-in-reply and produce the report of the Advisory Committee. That led to the grant of interim relief staying the operation of the impugned notification. The admission and the interim relief granted, were challenged in appeal. but to no avail. Petitioners challenge the de- reservation of Zip-fasteners - metallic and non-metallic - manufactured in an integrated plant manufacturing all components. They contend that the notification does not reveal the criteria and circumstances taken into consideration for excluding the item from the purview of the exemption and earlier reservation. Next, despite a demand the respondents had refused to furnish a copy of the report or the recommendations of the Advisory Committee. Section 29B of the IDR Act prescribed an objective criteria for taking of decisions by the Central Government. This made the notification issued by the Central Government under S. 29B, justiciable. The de-reservation was contrary to the settled and proclaimed policy of the Central Government to encourage production in the small scale sector and to further the Directive Principle of preventing concentration- of economic power to the common detriment. The de-reservation was made with a view to oblige industrial houses itching to enter the trade, and destroy small units whom the petitioners represented. Relevant factors having a hearing upon de-reservation or the continuance of reservation had not been taken into consideration. The de-reservation rested upon unproved assumptions regarding small scale units. The notification had not been issued by or on behalf of or in the name of the President of India. Therefore, no presumption could be attached to the same as representing the mind of the Government. The power to act on behalf of the Central Government could not be said to vest in respondent 2 unless it was proved that there was a valid delegation in his favour. The notification treated unequals as equals. Manufacturers of Zip-fasteners functioning through integrated units manufacturing all components and, others not so manufacturing, could not be rationally differentiated. In any case having regard to the nature of the trade, no such distinction could be reasonably made. The Advisory Committee, on the recommendation of which the Government had acted could not be said to have functioned with the fairness expected of a statutory body. In any case, before acceptance of the recommendations of the Advisory Committee, the Government was under an obligation to hear the affected Small Scale manufacturers. The notification violated the fundamental rights guaranteed to the petitioners under S. 190)(g) of the Constitution of India Various contentions have been taken to supplement the ones summarised above in a rejoinder as also a .supplemental affidavit the latter, filed as recently as 18 Nov. 1987. Primarily, the rejoinder and the supplemental affidavit seek to meet the submissions made by respondents in their returns. In relation to the report of the Study Team it is submitted that the same cannot be said to be properly authenticated bearing as it does the purported signatures of only two of its members. The team's report did not project the true position. It was one- sided and therefore, should not have been accepted by the Advisory Committee or the respondents.