Grasim Industries Ltd. vs Union Of India (Uoi) And Ors.
2006 Latest Caselaw 2134 Del

JUDGMENT

S. Muralidhar, J.

CM No. 14095 of 2006 and 14096 of 2006

1. CM No. 14096 of 2006 is an application by the petitioner seeking restoration of the Writ Petn. (C) No. 2210 of 1991 which was dismissed on 14th March, 2006 by this Court in default on account of the non-appearance of the petitioner. CM No. 14095 of 2006 is an application seeking the condensation of delay of 212 days in firing the application for restoration.

2. This case was effectively the second in the cause list for 17th Nov., 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. Firstly, 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 14th March, 2006 did not indicate the name of the advocate-on-record for the petitioner (M/s Khaitan & Co.) 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 14th Nov., 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 16th July, 1991 seeking the quashing of two orders dt. 21st Aug., 1990 and 29th Aug., 1990 passed by the Assistant Commissioner of Income-tax ('Asstt. CIT'), 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 IT Act, 1961 ('Act'). The writ petition also challenges an order dt. 15th Feb., 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. 5, the Asstt. CIT, to accept the said certificate and grant higher investment allowance to the petitioner as claimed by it for the asst. yrs. 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 17th July, 1991, notice was directed to be issued in the writ petition and the application for stay was dismissed. The petitioner filed two applications (CM Nos. 293-294 of 1992) seeking to amend the writ petition to include a challenge to a letter dt. 20th Feb., 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 17th Nov., 1992.

7. Thereafter, a counter-affidavit was filed on behalf of respondent No. 1 on 17th Jan., 1992 and at the petitioner's request time to file rejoinder was granted on 6th March, 1992. However, no rejoinder-affidavit was filed by the petitioner. Thereafter rule was issued on 21st July, 1992. As already noted, on 14th March, 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 w.e.f. 1st April, 1978 and which reads as under:

(2B) Where any new machinery or plant is installed after the 30th day of 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 know-how 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 sector 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 'twenty-five per cent', 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 manufacture or 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 of 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 per cent instead of 25 per cent. 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 30th June, 1977 but before 1st April, 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 of 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 2nd July, 1977. It made an application on 8th March, 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 dt. 20th Feb., 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 12th Sept., 1988 to the CBDT to furnish the comments of respondent No. 2. However, it received no response.

12. It is further stated that for the asst. yr. 1978-79 (relevant to the previous year in which, according, to the petitioner, the new plant and machinery had been installed i.e. after 1st July, 1977) the petitioner claimed an investment allowance of Rs. 1,78,36,556 @ 35 per cent. However, the respondent No. 5 (Asstt. CIT), by his order dt. 30th March, 1981 allowed investment allowance only at 25 per cent. Likewise, the claims for the higher investment allowance made by the petitioner for the asst. yrs. 1979-80, 1980-81 were rejected by the AO by orders dt. 23rd Jan., 1982 and 24th Sept., 1983 respectively.

13. The appeals against these orders were allowed by the CIT(A) by orders dt. 16th Jan., 1990, 20th March, 1990 and 1st Jan., 1991 respectively directing the respondent No. 5 to examine this question afresh. Thereafter, when respondent No. 5 again passed an order for the asst. yrs. 1978-79 and 1979-80 on 21st Aug., 1990 and 28th Sept., 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 dt. 15th Feb., 1988. The petitioner claims that this letter dt. 15th Feb., 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 20th Feb., 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 dt. 20th Feb., 1982 which holds that the petitioner did not comply with the primary condition that the plant and machinery had to be installed after 30th June, 1977. The petitioner contests this by stating that the said plant was in fact installed only after 1st July, 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 dt. 20th Feb., 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 dt. 15th Jan., 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 know-how 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 p. 19 of the writ petition has claimed that it made an application to prescribed authority under Section 32A(2B) on 19th April, 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 IT 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.