Shyam Dyeing Mills (P) Ltd. And ... vs Lt. Governor Of Delhi And Ors.
1990 Latest Caselaw 261 Del

JUDGMENT

S.N. Sapra, J.

(1) The challenge, in the present writ petition, filed under Article 226 of the Constitution of India, is to the refusal, on the part of respondents 1 and 2. to grant no objection certificate, for the factory of the petitioners, at D-30, Okhla Industrial Area, Phase-1, New Delhi.

(2) Briefly, the facts are that petitioner no. 2, one of the Directors of petitioner No. 1 Company, was granted a provisional registration of a Small Scale Industry Unit, vide communication dated September .17, 1983 for manufacture and sale of Alloy Steel Castings (excluding Ingots), by the Directorate of Industries. Thereafter, petitioners started- taking effective steps, in respect of implementation of the proposed Project/Unit, for the aforesaid purpose. In this regard, petitioners approached the Directorate of Industries, for the issue of Essential Certificate which is the pre-requisite, for the issue of Import license, by the Joint Controller of Imports & Exports, for the import of capital goods, i.e. plant and machinery, for the proposed project. The Essential Certificate was issued on January 5, 1984 and on their recommendation, the Joint Controller of Imports & Exports, issued import license No. P/CG/208020 dated February 17, 1984, for the import of 1240 Kw, 1000 HZ. 2 Tonnes High Frequency Induction Melting Furnace with power track Hydraulic Unit.

(3) Subsequent to the obtaining of provisional registration and import license, petitioner no. 2 had acquired land in approved industrial area, i.e. Okhla Phase I, New Delhi, by becoming a Director in petitioner No. 1 company, which held the said plot of land. Thereafter, petitioners constructed the building on the plot and also obtained forms 'C', and 'D', on March 4, 1985 and April 25, 1985, respectively thereby showing that the construction was completed on the dates, mentioned therein. The induction furnace was shipped by the foreign supplier, again within the validity period of import license and the same was cleared by the Customs at Delhi, vide Bill of Lading No. 0013/35602 dated November 20,1985. by paying customs duty of Rs. 8,20,860.00 . The total cost of the plant and machinery, including the customs duty, comes to about Rs. 23,13,333.00 .

(4) In the meanwhile, petitioner applied for revalidation of the provisional registration, as per the condition, before one month of the expiry of such period of provisional registration, after informing the Directorate of Industries, regarding various steps taken by petitioners. Petitioners did not hear anything, from the Directorate of Industries.

(5) It is further alleged that petitioners had installed the Induction and other plant and machinery, in the factory, constructed by them at the aforesaid plot. After installation petitioners again approached the Directorate of Industries, for grant of No Objection Certificate, for the manufacture and sale of Alloy Steel Castings (excluding ingots), to enable the petitioners to get the power connection, from respondent no. 3. On this, the officers from the Directorate of Industries, inspected the premises of the petitioners and also the imported plant and machinery, installed therein. The officials were fully satisfied that the plant and machinery were validity imported by petitioners and that the same was duly installed in the factory premises. The officials informed the petitioners that since, the Inspection had been completed, No Objection Certificate would be issued in routine.

(6) It is the case of petitioners that although, Directorate of Industries had accepted the factual position, that petitioners had taken all the effective steps, as brought out to their notice, but had a doubt that in view of the nonavailability of the valid provisional certificate, issue of No Objection Certificate was not possible. In order to verify and get permission from the Development Commissioner, Small Scale Industries, Ministry of Industries, New Delhi, which is the supreme and controlling authority of all the small scale industries, had vide its communication dated August 22, 1988, addressed to the Development Commissioner, sought the aforesaid clarification and the permission for issue of the No Objection Certificate, to petitioners. Copy of this letter is annexure 'F'. The aforesaid communication, rent by Directorate of Industries, to the Development Commissioner, was fully examined by the Development Commissioner, Ssi and in response to the query to the same, the Development Commissioner stated: "PLEASE refer to your letter No. 20 (S)Ph. 11/24/88/DI 3657 dated 22.8.1988 and the letter of the party dated 8.9.1988, copy of which has been endorsed to you on the above subject. The validity of provisional registration beyond the stipulated period of three years cannot be extended. However, since Provisional Registration is not a prerequisite for granting a permanent registration and if, the Directorate of Industries is convinced that the Unit has taken all the effective steps to start production and has complied with all the requirements/ formalities, this office has no objection if the Unit is granted permanent registration since a Unit can, if it qualifies, obtain a permanent registration directly from the date, it get ready to commence production. As the item Alloy Steel Casting (excluding Ingots) does not fall under the category of restricted items/special regulation industries, this office has no objection in your granting the No Objection Certificate." The letter of the Development Commissioner is annexure 'G'.

(7) In spite of this, Directorate of Industries, failed to issue No Objection Certificate. Rather, vide its communication dated October 1, 1988, Directorate of Industries, Delhi Administration, informed the petitioners that the petitioners could not be granted 'No Objection Certificate' in view of the fact that it had not taken the effective steps, for production, prior to March 21,1985.

(8) Petitioners, then, sent a representation to the Commissioner, Ssi, on November 30, 1988. Again, the Directorate of Industries, informed petitioners that No Objection Certificate could not be issued because, irreversible steps were not taken by petitioners, before the cut of date of March 21, 1985.

(9) Respondents 1 and 2 have filed reply. It is not disputed that the import license was granted in the name of petitioner No. 2 and that the provisional registration was also issued. But, according to respondents 1 and 2, No Objection Certificate, could not be given to petitioners, since at the relevant time, they were not having provisional registration. It is further alleged that the Director of Industries could issued No Objection Certificate only to registered Ssi Units. On the cut off date of March 21, 1988, petitioner No. 2's provisional certificate, had already lapsed.

(10) The stand, taken by respondents and 1 and 2, in not granting No Objection Certificate, to petitioners, is that they failed to take irreversible steps, before the cut off date of March 21, 1985. It may be noticed that this stand was taken, for the first time, in October 1988. This defense of respondent no. 2, is against the record. The letter dated August 22, 1988, written by respondent no. 2. to the Development Commissioner, Small Scale Industries, New Delhi, falsifies the subsequent stand, taken by respondents. In this letter it is clearly stated that, though, the provisional Ssi certificate was no more valid, but the Unit has taken the following steps :- (I)The Unit had imported on Induction Furnace of 2 M.T. capacity on the basis of recommendation made by this office; (ii) The said Induction Furnace has been installed at the premises No. D-13, Okhla Industrial Area, Phase-1, New Delhi. (iii) The Unit has invested Rs. 4.5 lakhs on land and Rs. 20 lakhs on construction of the building.

(11) Further, it was made clear by respondents no. 2, that it had been found that the Unit had taken all effective steps for installation of Induction Furnace. Under these circumstances. Development Commissioner was requested to extend the validity of provisional Ssi certificate, so that the Unit could be considered for issue of No Objection Certificate. This letter is annexure 'F'.

(12) Vide letter dated September 22, 1988, the Development Commissioner informed that since the Provisional Registration was not a prerequisite, for granting a permanent registration and if the Directorate of Industries was convinced that the Unit had taken all the effective steps, to start production, and it complied with all the requirements/formalities, then the office of the Development Commissioner has no objection, if the Unit was granted permanent registration, since a Unit could, if it qualified, obtain a permanent registration, directly from the date, it was ready to commence production.

(13) In our view, after this, there was no basis for respondents 1 and 2, to refuse the grant of No Objection Certificate, to petitioners. The Development Commissioner made it clear that, if the Unit had taken all the effective steps, production, then, the Provisional Registration was not per-requisite for granting of permanent registration, and that it had no objection, if, the Unit was granted permanent registration.

(14) It means that the only factor, which required examination, by the Directorate of Industries, was whether, petitioners had taken all the effective steps or not. This was made clear by the communication dated September 22, 1988, sent by the Development Commissioner to respondent no. 2. In its letter dated August 22, 1988. respondent no. 2 has stated the various steps, taken by petitioners, and further categorically stated that the Unit had taken all effective steps for installation of Induction furnace. The only objection, was with regard to the extension of the validity of provisional registration, as per the instructions of Development Commissioner, (SSI). This doubt was clarified by the Development Commissioner, in communication dated September 22, 1988.

(15) So, in our view, respondents 1 and 2 are not justified in refusing to issue No Objection Certificate to petitioners. The stand, taken by respondents 1 and 2, that petitioner failed to take effective steps before the cut off date, is without basis.

(16) Under the facts and circumstances of the case, the Rule is made absolute and we direct respondents 1 and 2 to issue No Objection Certificate to petitioners, for manufacture and sale of Alloy Steel Castings (excluding Ingots), in their factory premises No. D-13, Okhla Industrial Area Phase-1, New Delhi, within 5 weeks from today.

(17) After the issue of No Objection Certificate, petitioners are at liberty to approach, by way of application and completing all other formalities, to respondent no. 3 for sanction of power. Respondent no. 3 shall consider such application on merits and dispose off the same, within 3 weeks. No. order as to costs.