ORIENT PAPER MILLS Vs. UNION OF INDIA

JUDGEMENT

(1.) Common questions of law and facts are involved in these Rules. All these Rules were heard together. My judgment in C. R. 2529(W) of 1974 shall govern all other Rules.

(2.) In these Rules the petitioners challenge the validity of the notification dated 18-2-1970 issued by the Central Government under Section 3 of the Commissions of Inquiry Act, 1952, appointing a Commission of Inquiry known as "Sarkar Commission", in particular, items Nos. 2, 4, 9, 11, 12 and 13 of the Schedule 'C' to the said notification. The main grounds of challenge are that, those items are vague, indefinite and not definite matters of public importance; some of the matters had already been inquired into by the various departments of the Government, measures and actions had already been taken, as such those matters could not form the subject-matter of further inquiry by the said Commission.

(3.) The petitioner is a public limited company under the Indian Companies Act, 1913. It is one of the largest paper producing concern in India, On May 1, 1967 the Government announced to appoint a committee to go into basic question regarding the functioning of licensing system during the last 10 years. On July 22, 1967 the Government appointed an expert committee headed by Prof. M. S. Thacker to inquire into the working of licensing system during the last 10 years with a view to ascertain whether larger industrial houses have secured undue advantage over the other applicants in the matter of issue of licenses. After resignation of Prof. Thacker, Sri Subimal Dutt became the Chairman of the committee. In July 1967 Sri Chandrasekhar, a member of Parliament, submitted a memorandum to the Prime Minister containing various allegations against Birla companies including the petitioner. Allegations were also made against the petitioner with regard to licence capacity of the paper mill units at Amlai and Brajraj-nagar and relating to the forest lease granted to Amlai Unit. On August 25, 1967 the Central Government sent abstracts of the allegations made in the said memorandum of Sri Chandrasekhar to Dutt committee and requested it to look into the said allegations since they had a bearing on industrial licensing. The Dutt committee was invested with powers under the Commissions of Inquiry Act, 1952. In September and December, 1967, two further memoranda were submitted by Sri Chandrasekhar to the Prime Minister containing allegations against Jute Mills, Paper Factories etc. in Birla group of concerns and also alleging evasion of payment of excise duty in respect of certain quality of paper manufactured by the petitioner. In February, 1969 reports of detailed investigations made by various Ministries about the allegations made to three memoranda of Sri Chandrasekhar were read before Rajya Sabha. the report found : (i) no instance of assessment of kraft paper at lower rate applicable to printing and writing paper and (ii) the other allegations relating to inflating of cost structure etc. were too vague and general. It is stated in paragraph 14 of the petition that on March 5, 1969 the then Dy. Prime Minister Sri Morarji Desai stated in Rajya Sabha that demand for excise duty had been quashed by Delhi High Court and no evidence of any organised evasion of duty or collusion with Central Excise Staff was found. On March 10, 1969 Lata Fakiruddin AH Ahmed, the former Minister of Industrial Development stated in Rajya Sabha that there was no substance on the basis of which the matter could be referred to a Commission of Inquiry. A resolution was moved in Rajya Sabha for the appointment of a Commission of Inquiry but that resolution was lost Thereafter, on April 25, 1969 a similar resolution was moved in Parliament for the appointment of a Commission of Inquiry but that was also lost In July, 1969, the Dutt Committee submitted its report recommending revision of the industrial licensing policy to make it more purposeful and effective, On July 23, 1969, a supplementary report was submitted by Dutt committee dealing with the allegations containing industrial licensing made against Birla group of industries concerning in the memoranda of Sri Chandrasekhar. On August 25, 1969 Sri Fakiruddin Ali Ahmed stated in Rajya Sabha that the Government would take action to appoint a Commission of Inquiry in respect of the cases where the Dutt committee had stated that it was not possible for them to give their views as all the facts were not before them and affected parties were not given opportunity to place their cases. On August 28 1969, the proposal to appoint the Commission of Inquiry was brought before the Central Cabinet and the Cabinet approved the proposal of such appointment at a meeting held on 28th August, 1969. On August 29, 1969 the Government at the highest level decided to appoint a commission of inquiry, announcement of which was made through a statement by the Minister of Industrial Development, Internal Trade and Company Affairs in Rajya Sabha. It was stated by the Minister that in view of certain lapses, improprieties and acts of commission and omission as referred to in the Dutt committee's report which were definite matters of public importance, a fun and comprehensive inquiry was necessary in respect of the above cases, It, was, therefore, decided to set up a commission of inquiry under the Commissions of Inquiry Act, 1952 to go into all these matters. On February 18, 1970 a notification was Issued by the Central Government under Section 3 of the Commissions of Inquiry Act, 1952 hereinafter referred to as "the Act", appointing a Commission of Inquiry consisting of Sri A. K. Sarkar, Former Chief Justice of India, for a full inquiry into the matters referred to in the said notification and to determine the measures which were necessary to prevent the recurrence of such irregularities, lapses or improprieties, On October 22, 1970, the petitioner wrote a letter to the respondent No. 5 stating that the matters set out in Schedules 'B' and 'C' were vague and indefinite and it was impossible for the petitioner to know the allegations against it Between February, 1971 to April, 1974 various letters were exchanged between the petitioners and the officers of the inquiry commission relating to supply of various informations. On September, 29, 1973 a letter was received by the petitioner from the Joint Director, Inspection stating that it was necessary to examine how land covered by Factory was utilised and the cost incurred for construction of different assets on land. The petitioner was required to furnish information as per pro forma enclosed in the said letter. It was urged before the commission that the allegations in Schedule 'C' into which the inquiry had been directed were vague. It was urged that the vagueness of the matter to be inquired into, made it difficult to commercial houses to collect the necessary evidence to meet the cases against them. On 7th November, 1973 the petitioner sent a letter to the Joint Director, Inspection stating that the allegations under Item No. 4 of the Schedule 'C' to the terms of reference would be Justified when there was some prima facie allegations against the company relating to de-frauding or attempt to defraud the Government of its legitimate revenue and/or any unauthorised retention of foreign exchange abroad by manipulation of invoice on the value of the goods imported or exported during a particular period. There was no such allegation with reference to which the information sought for by the Commission might be considered relevant On 2nd April, 1974, the Additional Director wrote a letter to the Principal Officer of the petitioner company wherein it was stated that in the Commission's opinion Item No. 4 of Schedule 'C' was specific enough to justify the inquiry proposed to be made by the Commission and if, how-ever, the petitioner felt that the view taken by the Commission was not correct, then the only course was for the petitioner to go to Court and have the validity of interpretation of Item No. 4 of Schedule 'C' determined. It was, therefore, decided that if the petitioner did not move the Court within a week, the Commission would be compelled to serve upon the petitioner summons and other processes necessary to get informations and documents required by it. Thereafter, on 8th May, 1974 the petitioner filed the present application under Article 226 of the Constitution and obtained a Rule and a limited order of injunction by which the enquiry with respect to the matters referred to in Schedule 'C' to the notification had been stayed. As a matter of fact the Commission did not conclude its inquiry into the matters referred to in Schedules 'A' and 'B' to the notification.