Grasim Industries Ltd. vs Union Of India (Uoi) And Ors.
2006 Latest Caselaw 2131 Del

JUDGMENT

S. Muralidhar, J.

CM 14095/2006 and 14096/2006

1. CM 14096/2006 is an application by the petitioner seeking restoration of the Writ Petition (C) 2210/1991 which was dismissed on 14.3.2006 by this Court in default on account of the non-appearance of the petitioner. CM 14095/2006 is an application seeking the condensation of delay of 212 days in filing the application for restoration.

2. This case was effectively the second in the cause list for 17.11.2006. When the case was called out the Advocate for the applicant/petitioner requested for a pass over on the ground that the senior counsel who was to argue the case was not available at that point in time. We were not minded to entertain this request for two reasons. First, it is clearly indicated in the cause list of this Court that no pass over will be granted in the first five matters. Secondly, we believe that it should be possible for senior counsel to prioritize and organise their professional commitments in a manner that does not inconvenience the Court in having to wait for their eventual appearance, particularly when the case is high up on the board. It is our experience that granting 'pass-overs' for a senior counsel as distinguished from a counsel on record, results in a wastage of the severely scarce time available for hearing and disposal of cases. The intention of the legislature is evident on a perusal of proviso (c) to Rule 2 of Order XVII CPC that the preoccupation of a pleader in another Court is not sufficient reason for granting an adjournment. We, therefore, requested the Advocate for the applicant/petitioner to proceed to make her submissions.

3. Ms. Rabina Nath, Advocate appearing on behalf of the applicant/petitioner submitted that the cause list for 14.3.2006 did not indicate the name of the Advocate-on-record for the petitioner (M/s. Khaitan & Company) and, therefore, the matter was overlooked. As regards the explanation for the delay, it is stated in the application that the applicant became aware of this fact only "while reviewing the list of its pending matters in September 2006." It is further explained that since the staff of the applicant was preoccupied with various statutory compliances during the month of October 2006, the application for restoration could be filed only on 14.11.2006.

4. We are not inclined to condone the delay in filing of the application for restoration since, in our view the reasons stated therein do not constitute a satisfactory explanation. We are also not satisfied with the reasons stated in the application seeking restoration of the writ petition. The cause list does indicate the names of some of the counsel for the petitioner who appeared at an earlier stage. Secondly, the case figures in the list of regular matters and is most likely to have been shown on the list for some days earlier as well. Thirdly, and more importantly, since we are satisfied that the writ petition is without merits, we are of the view that no further indulgence need be shown to the petitioner by restoring the writ petition which had been pending for over 15 years before it was dismissed. We proceed to briefly record our reasons for the conclusion that the writ petition is without merit. This we do to obviate the need to prolong the proceedings any further in this Court.

5. This writ petition was filed on 16.7.1991 seeking the quashing of two orders dated 21.8.1990 and 29.8.1990 passed by the Assistant Commissioner of Income Tax ('ACIT'), Central Circle 1, Mumbai (Respondent No. 5) to the extent they rejected the claim of the petitioner for higher investment allowance for its 'Grasilene Division' under Section 32A(2B) of the Income Tax Act, 1961 ('Act'). The writ petition also challenges an order dated 15.2.1988 passed by the Respondent No. 1 Union of India, through the Secretary, Ministry of Finance, Department of Revenue rejecting the petitioner's claim for higher investment allowance. The further prayer in the writ petition is for a mandamus to Respondent No. 2, the Secretary, Department of Scientific & Industrial Research (DSIR), Government of India, to grant a certificate to the petitioner in terms of Section 32A(2B)(ii) of the Act and to direct Respondent No. 4 [The Commissioner of Income Tax (Appeals) Bombay (CIT(A)] and the Respondent No. 4, the ACIT, to accept the said certificate and grant higher investment allowance to the petitioner as claimed by it for the Assessment Years (AY) 1977-78 to 1987-88 in respect of the plant and machinery at the said Grasilene plant.

6. At the first hearing of this writ petition on 17.7.1991, notice was directed to issue in the writ petition and the application for stay was dismissed. The petitioner filed two applications [CM Nos. 293-294/1992] seeking to amend the writ petition to include a challenge to a letter dated 20.2.1982 whereby the Senior Scientific Officer of Respondent No. 2 (DSIR) held that the petitioner's case was not covered by Section 32A(2B). These applications were dismissed as withdrawn on 17.11.1992.

7. Thereafter, a counter affidavit was filed on behalf of Respondent No. 1 on 17.1.1992 and at the petitioner's request time to file rejoinder was granted on 6.3.1992. However, no rejoinder affidavit was filed by the petitioner. Thereafter Rule was issued on 21.7.1992. As already noted, on 14.3.2006 when the writ petition was listed for hearing no one appeared for the petitioner and therefore, the petition was dismissed in default.

8. At the outset it requires to be noticed that claim for higher investment allowance is made by the petitioner under Section 32A(2B) of the Act, which was introduced with effect from 1.4.1978 and which reads as under:

(2B) Where any new machinery or plant is installed after the 30th day of the June, 1977 but before the 1st day of April, 1987 for the purposes of business of manufacture or production of any article or thing and such article or thing-

a) is manufactured or produced by using any technology(including any process) or other knowhow developed in, or

b) is an article or thing invented, in a laboratory owned or financed by the Government or a laboratory owned by a public Section company or a University or by an institution recognised in this behalf by the prescribed authority, the provisions of sub.Section(1) shall have effect in relation to such machinery or plant as if for the words 'thirty five per cent' had been substituted, if the following conditions are fulfillled, namely:

i) the right to use such technology(including any process) or other know-how or to manufacturer produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner;

ii) the assessed furnishes, along with his return or income for the assessment year for which the deduction is claimed, a certificate from the Prescribed Authority to the effect that such article or thing is manufactured or produced by using such technology(including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory; and

iii) the machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule.

9. It is not in dispute that if the requirements of Sub-section (2B) of Section 32A of the Act are satisfied by the petitioner, the investment allowance permissible would be 35% instead of 25%. The requirements to be fulfillled by the person seeking the benefit of Section 32A(2B) are:

(a) The new machinery or plant should be installed after 30.6.1977 but before 1.4.1987;

(b) the machinery must be for the purpose of the business of manufacture or production of any article or thing ;

(c) such article or thing should be manufactured or produced by using any technology or other know-how developed in, or invented in "a laboratory owned or financed by the Government, or a University or by an institution recognised in this behalf by the prescribed authority";

(d) the further conditions to be fulfillled include, inter-alia, the assessed furnishing, along with his return for income for the assessment year for which the deduction is claimed, a certificate from the prescribed authority that the article has been manufactured or produced by using technology developed in a laboratory or institution recognised by such prescribed authority. That the prescribed authority is the DSIR, respondent No. 2 is not in dispute.

10. The petitioner, which has its registered office at Birlagram, Nagda Madhya Pradesh, set up the new plant in 1977-78 for the manufacture of man-made High Performance Fibre of Cellulosic origin at Harihar in District Dharwar, Karnataka under its Division known as Grasilene Division. The petitioner claims that it has been manufacturing the said fibre by using the indigenous technology and process developed by the Birla Research Institute for Applied Sciences ('BRIAS') Birlagram, Nagda. The petitioner states that as on the date of the filing the present writ petition, the application made by the petitioner to the Respondent No. 2 (DSIR) for recognition of BRIAS for the purposes of Section 32A(2B) of the Act had not been accepted, although BRIAS had been approved for the purposes of Section 35(1)(ii) of the Act. The petitioner claims that its plant at Harihar commenced trial production of grasilene fibre on 2.7.1977. It made an application on 8.3.1978 to the DSIR for grant of a certificate in terms of Section 32A(2B)(ii). It is further submitted that all the details called for by the Respondent No. 2 were furnished by the petitioner. Ultimately, by the letter dated 20.2.1982 the petitioner's application was rejected stating that the plant and machinery had been installed prior to July 1977 and therefore, the petitioner's case was not covered under Section 32A(2B).

11. It is stated that thereafter the petitioner kept writing to Respondent No. 2 disputing the correctness of this determination. It also wrote on 12.9.1988 to the Central Board of Direct Taxes to furnish the comments of Respondent No. 2. However, it received no response.

12. It is further stated that for the AY 1978-79 (relevant to the previous year in which, according to the petitioner, the new plant and machinery had been installed i.e. after 1.7.1977) the petitioner claimed an investment allowance of Rs. 1,78,36,556/- @ 35%. However, the Respondent No. 5(ACIT), by his order dated 30.3.1981 allowed investment allowance only at 25%. Likewise, the claim for the higher investment allowance made by the petitioner for the AYs 1979-80, 1980-81 were rejected by the Assessing Officer by orders dated 23.1.1982 and 24.9.1983 respectively.

13. The appeals against these orders were allowed by the CIT(A) by orders dated 16.1.1990, 20.3.1990 and 1.1.1991 respectively directing the Respondent No. 5 to examine this question afresh. Thereafter, when Respondent No. 5 again passed an order for the AYs 1978-79 and 1979-80 on 21.8.1990 and 28.9.1990 respectively, he again rejected the petitioner's claim for higher investment allowance on the ground that Respondent No. 1 had rejected the petitioner's claim by a letter dated 15.2.1988. The petitioner claims that this letter dated 15.2.1988 had never been disclosed to it by the Respondent. Thereafter, the present petition challenging these two orders was filed.

14. At the outset it must be stated that there is no reasonable explanation why the petitioner waited for over nine years to challenge the rejection by Respondent No. 2 on 20.2.1982 of the petitioner's request for grant of a certificate relevant for making a claim under Section 32A(2B) of the Act. The petition in this regard is, therefore, clearly barred by laches. In any event, this Court did not entertain the plea for amendment of the writ petition to challenge the said letter dated 20.2.1982 which holds that the petitioner did not comply with the primary condition that the plant and machinery had to be installed after 30.6.1977. The petitioner contests this by stating that the said plant was in fact installed only after 1.7.1977. What in effect the petitioner is seeking is an adjudication by this Court of this disputed question of fact, which cannot be examined under Article 226. Therefore, both on the grounds of laches as well as on disputed questions of fact, the petitioner cannot now seek to challenge the determination arrived at in the letter dated 20.2.1982.

15. As regards the second essential condition required to be fulfillled,viz. the furnishing of a certificate by the prescribed authority in terms of Section 32A(2B), there are two reply affidavits filed on behalf of the Respondents. The first is by Respondent No. 1 dated 15.1.1992 which categorically states as under in para 5 thereof:

In the instant case, the petitioner's claim is that the machinery installed was manufactured or produced by using technology or knowhow developed by Birla Research Institute for Applied Science(BRI). However, BRI has not been recognised in this behalf by the aforesaid prescribed authority under Section 32A(2B). The petitioner in para 10 page 19 of the writ petition has claimed that it made an application to prescribed authority under Section 32A(2B) on 19.4.1978. However, it does not claim that any such recognition under Section 32A(2B) has been received by it.

16. As noticed earlier, although the petitioner sought time for filing a rejoinder, it never filed any rejoinder to counter the above facts. A separate counter affidavit has been filed by Respondent No. 2, the DSIR, where again in Para 4 it is said that the BRIAS "has not been recognised in this behalf by this Ministry, the prescribed authority under Section 32A(2B) of the Income Tax Act." This too has not been denied by the petitioner on affidavit. Thus the factual position which remains uncontroverter by the petitioner is that the second essential condition of Section 32A(2B) was also not satisfied. We may add here that the decision of the DSIR not to recognise the BRIAS as an institution for the purpose of Section 32A(2B) is not per se justiciable, particularly in the absence of judicially manageable standards to evaluate such a decision. Given the recognised limitations of the scope of judicial review under Article 226 of the Constitution, we decline the petitioner's plea to invite us to examine the correctness of the decision of the government in this regard.

17. Consequently, it is clear that the petitioner, not having satisfied the essential requirements of Section 32A(2B), is not entitled to the higher investment allowance as claimed by it in the writ petition.

18. For the above reasons, we find no merits in the writ petition and accordingly are not inclined to entertain the applications for its restoration.

19. The applications are accordingly dismissed.