BROOKE BOND INDIA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The present writ petition has been filed praying, inter alia, for a writ of mandamus commanding the respondents to withdraw, recall and cancel the orders communicated by the letters dated May 4, 1988, and January 24, 1989, and to forbear and refrain from giving any effect or further effect thereto. There is a further prayer for commanding the respondents to make a recommendation as contemplated under sections 72A(1) and 72A(3) of the Income-tax Act, 1961, and for other consequential reliefs on the ground that the specified authority, having already given an intimation under Section 72A(3) of the Act after being satisfied about the conditions mentioned under Section 72A(1), is bound to make a recommendation to the Central Government under Section 72A(1) of the Act. It is asserted that, on the basis of the said recommendation, the Central Government is bound to make a declaration under the aforesaid section, regard being had to the facts and circumstances of the case. An attempt is made to make out a case that the refusal of the specified authority to make a recommendation and the refusal of the Central Government to make a declaration are arbitrary, unreasonable, whimsical and capricious. The grievance of the petitioner company is that the respondents have acted irregularly and illegally in rejecting the application and the impugned orders have been passed by the respondents for extraneous reasons and/or for extraneous considerations.

(2.) It is stated in detail that, on or about February 1, 1984, the petitioner duly applied under Section 72A(3) of the Income-tax Act for the approval of the scheme by the specified authority. By an order dated February 7, 1985, the petitioner received approval of the respondents under Section 72A(3) of the Act and the said scheme of amalgamation, after complying with all necessary formalities and the requirements of the Companies Act, 1956, was duly approved by the High Court of Karnataka and the High Court at Calcutta. The Department of Industrial Development, Ministry of Industry, has since issued a set of guidelines for approval of the amalgamation and the petitioner is alleged to have received the approval of the Controller of Capital Issues under the Capital Issues (Control) Act, 1947, inasmuch as the certificate of the specified authority under Section 72A(2) of the Act has to be enclosed with the original return of income of the petitioner. The petitioner is alleged to have filed under Section 72A(1) of the Act and by letter dated July 15, 1986, the Department of Industrial Development sought a clarification from the petitioner which was duly explained. The Respondents, thereafter, sent queries and sought information by letter dated April 23, 1987, which was duly furnished and further information was sought for by letter dated May 11, 1987, and June 19, 1987. AH information was duly supplied as required. Apart from the aforesaid correspondence, the petitioner's representative allegedly met the officer on special duty, but the petitioner is surprised to receive a letter dated May 4, 19,88, from the respondents alleging that the information sought for by the letter dated November 10, 1987, has not been furnished by the petitioner and, in the absence of such information, the specified authority has rejected the case of the petitioner. The further grievance of the petitioner is that, after the sanction of the scheme, substantial funds were invested in the unit of the amalgamating company, and strenuous efforts were made to rehabilitate the said unit and to make it viable. The steps taken, by the respondents are contrary to law, Having no other alternative remedy, the petitioner is compelled to come to the writ court to seek reliefs. The petition is opposed. No affidavit has, however, been filed.

(3.) Having heard the learned lawyers appearing for the respective parties, it appears that on March 28, 1988, the assessment order was passed by the Income-tax Officer for the assessment year 1985-86. The Income-tax Officer concerned disallowed the petitioner's claim for loss under Section 72A and for benefit of carry forward and set off as to accumulated loss of Karnataka Scooters Ltd. as no certificate of the specified authority under Section 72A(2.) was filed with the income-tax return. The petitioner has preferred an appeal before the Commissioner of Income-tax (Appeals) and applied for stay of the order whereas there is a direction upon, the petitioner to deposit Rs. 4.30 crores out of the balance demand as a condition precedent for the stay. The Central Government has written a letter to the petitioner that the necessary information asked for in the letter dated November 10, 1987, has not been supplied by the petitioner-company. There is another letter dated July 18, 1988, whereby the Government of India asked the petitioner to supply certain information about up-to-date production and sales data, contribution of. the petitioner and the steps taken for revival. By order dated July 24, 1989, the Central Government rejected the application of the petitioner-company for a certificate/declaration under Section 72A(1), of the Income-tax Act. According to the petitioner-company, the original demand for the assessment year 1985-86 is Rs. 9,70,00,958 and there is an order of rectification lessening the demand to Rs. 9,53,50,958 out of which the petitioner claims to have made part payment of Rs. 4,30,00,000 and there is balance income-tax demand Rs. 8,23,80,958.