BHAGWAN MOTORS PVT LTD., PITHAMPUR Vs. MADHYA PRADESH TRADE AND INVESTMENT FACILITATION CORPORATION LTD., BHOPAL

JUDGEMENT

(1.) Petitioner a Private Limited Company claims to be engaged in the business of manufacture and sale of Sheet Metal Automobile components which in turn constitute raw material for the purpose of manufacture of motor vehicles had submitted an application before the Facilitation Corporation seeking its registration under the Madhya Pradesh Udyog Nivesh Samvardhan Sahayata Scheme, 2004 (for short "the Scheme"). The application was rejected by the Facilitation Corporation vide order dated 24-11-2009 (Annexure P-18) on the grounds that the petitioner's unit will be covered under the negative list dated 17-8-2006 (Annexure P-9) and the amended negative list dated 5-2-2008 (Annexure P-10) mentioning the units which are ineligible for their registration under the Scheme. While rejecting the petitioner's claim, the Facilitation Corporation recorded a finding that the petitioner is manufacturing products distinct from the products manufactured by the earlier unit. However, it held that since there are dues of the commercial tax on the erstwhile unit it will cover under the negative list disentitling it from registration under the Scheme. Aggrieved by the aforesaid order dated 24-11-2009 (Annexure P-18), the petitioner had filed an appeal before the second respondent, which has been dismissed vide order dated 1-6-2010 (Annexure P-1). Feeling aggrieved, the petitioner has filed this petition under Article 226/227 of the Constitution of India.

(2.) Shri P.M. Choudhari, learned counsel for the petitioner has argued that in exercise of its powers under section 29 of the State Financial Corporation Act, the M.P. Financial Corporation had conducted an open auction of a unit viz. M/s. Saurabh Spinners Pvt. Ltd. in order to realise its dues against the loan advanced to the said unit. The petitioner company being interested to purchase the said unit which was put to auction had participated in the auction proceedings and had purchased the said unit M/s. Saurabh Spinners Pvt. Ltd. After its purchase the petitioner had started its own independent unit for manufacturing entirely a different product from the product of the erstwhile unit. He, therefore, argued that when the petitioner had nothing to do with the earlier unit, the petitioner cannot be made to suffer if there are any dues of Commercial Tax by treating it to be falling in the negative list of the earlier unit. He also argued that the question as to whether, for the recovery of dues of Commercial Tax Department from the earlier company M/s. Saurabh Spinners Pvt. Ltd., the petitioner's property could be put to auction by the M.P. Commerce and Employment Department or not, has already been decided by this Court vide order dated 17-2-2009 passed in W.P. No. 2107/2007 holding therein that the arrears of the commercial tax on the erstwhile unit could not be recovered from the petitioner. In the circumstances, according to him, the rejection of the petitioner's application for registration by raising the same issue of dues of erstwhile unit is wholly unjustified. He further argued that the petitioner was nowhere connected with any of the acts and activities of the earlier company, but had purchased the property in an open auction from the Madhya Pradesh Financial Corporation and has set up its entirely new unit manufacturing a distinct product, the impugned orders passed by the respondents treating the petitioner to be covered under the clauses of negative list are ex-facie illegal and are not sustainable.

(3.) Shri Vivek Patwa and Ms. Mini Ravindran, learned counsel for the respondents, on the other hand, supported the impugned orders and argued that in view of the arrears of the tax on the unit, which the petitioner had purchased, the petitioner has rightly been denied the registration in the scheme in view of the provision contained in the negative lists. According to them, the petitioner having purchased the earlier unit it will not be a new unit.