Bagalkot Udyog Ltd. (Earlier ... vs Union Of India & Ors.
2012 Latest Caselaw 4127 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                       Date of decision: 13th July, 2012

+                               W.P.(C) No.494/1991

       BAGALKOT UDYOG LTD. (EARLIER KNOWN AS
       KANORIA INDUSTRIES LTD.) & ORS.         ..... Petitioners
                   Through: Mr. C.U. Singh, Sr. Adv. with Mr.
                            Varun Singh, Mr. P. Kumar Jha, Mr.
                            Dhaval & Mr. Gaurav Nair, Advs.

                                   Versus

       UNION OF INDIA & ORS.                           ..... Respondents
                    Through:          Mr. A.S. Chandhiok, ASG with Mr.
                                      Sumeet Pushkarna, Mr. Ritesh Singh
                                      & Mr. Gaurav Varma, Advs. for UOI.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. This petition impugns the, i) amendment dated 09.01.1981 to the

Cement Control Order, 1967; ii) the Cement Control (Regulation of

Production) Order, 1981 dated 24.02.1981; and, iii) seeks to prohibit the

respondents from acting upon the notices dated 28.06.1990 and

25/26.10.1990 demanding a sum of `69,52,538.80 with interest at the rate of

18% per annum from the petitioners and upon the failure of the petitioners to

pay the same, threatening to initiate criminal proceedings against the

petitioners. Notice of the petition and the application for interim relief was

issued and vide order dated 19.03.1991, the respondents restrained from,

initiating any proceedings against or making any recoveries from, the

petitioners. Rule was issued in the petition and the interim order made

absolute on 18.01.1993. The writ petition thereafter was twice dismissed in

default of appearance of the petitioner but restored. The petitioners have

filed CM No.1462/2012 for urging additional grounds, facts and

circumstances. The counsels have been heard.

2. It is the case of the petitioners:

(i) that the petitioner No.1 of which the other petitioners are

Directors, was engaged in the manufacture of cement and which

activity was governed by the Cement Control Order, 1967

issued in exercise of powers under Section 18G of the

Industries (Development and Regulation) Act, 1951 (IDRA);

(ii) that the Cement Control Order, 1967 excluded from its purview

the coloured cement other than the Grey Colour Portland

Cement;

(iii) that the petitioner on 05.11.1980 commenced manufacturing of

coloured cement and got the pricelist thereof approved from the

Excise Authorities and informed the Cement Controller of the

same;

(iv) that though the definition of cement in the Cement Control

Order, 1967 was amended with effect from 09.01.1981 but

without any effect on the coloured cement being manufactured

by the petitioners; however the authorities under the Cement

Control Order, 1967 treated the coloured cement being

manufactured by the petitioners to be within the purview of the

said Order;

(v) the petitioner No.1 company having its manufacturing unit at

Bagalkot in the State of Karnataka filed writ petition

No.1672/1981 in the Karnataka High Court at Bangalore; vide

interim order in the said writ petition, the operation of the

Cement Control Order, 1967 with regard to the coloured

cement being manufactured by the petitioner was stayed;

(vi) that the authorities under the Cement Control Order, 1967 vide

order dated 24.02.1981 sought to restrain the petitioner from

manufacturing and selling coloured cement;

(vii) the petitioner No.1 company filed another writ petition being

writ petition No.27794/1981, again in the Karnataka High

Court, challenging the said order dated 24.02.1981 and vide

interim order dated 09.12.1981, the operation of the said order

dated 24.02.1981 was stayed on the undertaking of the

petitioner No.1 to that High Court to maintain accounts for

production and sale of the said coloured cement;

(viii) that the petitioners with effect from 27.02.1982 stopped the

manufacture of coloured cement and in view thereof withdrew

both the writ petitions aforesaid preferred before the Karnataka

High Court;

The notices dated 28.06.1990 and 25/26.10.1990, impugning the

demand wherein the present petition has been filed, were in pursuance to the

demand in the year 1985 by the authorities under the Cement Control Order,

1967 on the petitioner towards the dues on account of the said 'coloured

cement', under the said Cement Control Order, 1967. The petitioner

contends that the Cement Control Order, 1967 being not applicable to the

coloured cement, the said demand is bad.

3. It is not necessary to go into the intricacies of the challenge aforesaid

to the demand since the opposition by the respondents to the petition is on

the following grounds:

(a) that the petitioners had started manufacture of 'coloured

cement' without any authority and in violation of the Cement

(Quality) Control Order, 1962 and without obtaining any

licence therefor;

(b) that the petitioners sold, in all 58,820 tons of coloured cement

between 05.11.1980 and 27.02.1982 and did not contribute the

amount of `69,52,538.80 on account thereof to the Cement

Regulation Account as required under Clause 9 of the Cement

Control Order, 1967;

(c) that the petitioners by filing the earlier writ petitions aforesaid

before the Karnataka High Court and obtaining interim orders

therein restrained the respondents from recovering the said dues

but that did not stop the petitioners from making the

contribution to the Cement Regulation Account as they were

obliged in law to make; that the petitioners thereafter did not

press the petitions and withdrew the same;

(d) that the petitioners are therefor in contravention of Section 18G

of the IDRA and are liable to be prosecuted under Section 24

thereof;

(e) that the petitioners having earlier raised a similar challenge

before the Karnataka High Court and having withdrawn the

same, are not entitled to maintain the present petition;

(f) that the territorial jurisdiction of this Court has been invoked

mischievously; no part of the cause of action has accrued within

the territorial jurisdiction of this Court.

4. The petitioners by way of CM No.1462/2012 (supra) seek to urge that

the petitioner No.1 company was declared sick under the provisions of the

Sick Industrial Companies (Special Provisions) Act, 1985 on 02.06.2000;

that a Scheme for rehabilitation and revival of the petitioner No.1 company

was sanctioned by the Board for Industrial and Financial Reconstruction

(BIFR) on 20.09.2007; that the respondents have not put forth before the

BIFR any claim under the Cement Control Order, 1967 qua which the

present petition has been filed; that accordingly the rehabilitation scheme

does not make any provision therefor; that even otherwise BIFR has ordered

payment only of 10% of the outstanding dues, that too without any interest

and in six annual installments qua all unsecured and contingent creditors and

the petitioners even if failing in the present petition would be liable to pay

only 10% of the principal amount of `69,52,538.80.

5. The learned Additional Solicitor General in response to the aforesaid

application has urged that the respondents having restrained by interim order

in this petition could not have urged their claims before the BIFR.

6. The senior counsel for the petitioners in rejoinder has handed over a

copy of the order dated 28.05.2007 of the BIFR to contend that the said

hearing was attended by the representative of the Ministry of Commerce

who had informed the BIFR of the then claim of `139 lacs plus interest

under the Cement Regulation Account and on the basis thereof has urged

that the BIFR having made no provision thereof in the rehabilitation scheme,

the petitioners cannot be liable therefor even if this petition was to be

dismissed on merits by this Court.

7. The senior counsel for the petitioners relies on Vallabh Das Vs. Dr.

Madan Lal 1970 (1) SCC 761 to urge that the notices of demand raised on

the petitioners constitute a fresh/new cause of action and the filing of the

earlier writ petitions in the Karnataka High Court do not disentitle the

petitioners from maintaining the present petition.

8. Learned Additional Solicitor General has relied on M/s Shree

Chamundi Mopeds Ltd. Vs. Church of South India Trust Association AIR

1992 SC 1439 on the effect of interim order.

9. We are of the opinion that the present petition is not maintainable for

the reason of the same raising the same challenge as earlier raised by the

petitioners before the Karnataka High Court and which petitions were

unconditionally withdrawn by the petitioners after enjoying the fruits of the

interim orders therein. Had the petitioners pursued the petitions filed in the

Karnataka High Court and succeeded in the same, the occasion for the

respondents raising a demand impugned in this petition would not have

arisen. The senior counsel for the petitioners has been unable to satisfy us

that the challenge, as made in those petitions in the Karnataka High Court, is

not substantially the same as made in this petition. The reliance on the

judgment in Vallabh Das supra before us is of no avail. The Supreme Court

in that case was concerned with a subsequent suit for possession on the basis

of title after withdrawal of the earlier suit for partition and separation, with

liberty to file fresh suit. That is not the position here. The cause of action

for filing of the petitions before the Karnataka High Court was the action of

the respondents of bringing within the ambit of the Cement Control Order,

1967 the 'coloured cement' being then manufactured by the petitioners and

which the petitioners claimed to be outside the ambit and purview of the

Cement Control Order, 1967. Owing to the interim orders obtained by the

petitioners in the said writ petitions, the respondents could neither enforce

the contribution which the petitioners were required to make under the said

Cement Control Order, 1967 to the Cement Regulation Account nor restrain

the petitioners from manufacturing and selling the so-called 'coloured

cement' for not making the said contribution. The petitioners having

invoked the jurisdiction of the Karnataka High Court, and rightly so, its

manufacturing unit being situated within the jurisdiction of that Court, if,

notwithstanding having stopped the manufacture of the coloured cement,

interested in evading the liability for the coloured cement manufactured and

sold under the ambit of the interim order, ought to have pursued that

petitions. The petitioners however chose to withdraw the same. The

petitioners appear to have entertained a hope that by stopping the

manufacture, their illegal actions under the protection of the interim orders

of the Court would be wiped out. The notices of demand challenged in the

present writ petition are nothing but a consequence of the same activity. It

cannot be lost sight of that the said demand was raised on the petitioners as

far back as in the year 1985; even if the petitioners earlier wrongly

entertained a hope that by stopping the manufacture of coloured cement,

their liability for the quantity manufactured under the protection of the

interim order would be wiped out, ought to have then immediately

approached the Karnataka High Court for revival of the earlier petitions.

The petitioners however did not do so and continued to engage the

respondents in multifarious correspondence, thereby delaying the recoveries.

The present petition was filed after more than six years, when threatened

with prosecution.

10. It cannot be lost sight of that the jurisdiction under Article 226 of the

Constitution of India which has been invoked is a discretionary jurisdiction.

The said jurisdiction of this Court will never come to the aid of any litigant

who is found to have indulged in such practices amounting to abuse of the

process of this Court. The petitioners are clearly so, guilty. This is further

evident from the petitioners, though based in Karnataka and having earlier

approached the Karnataka High Court for the redressal of their grievance

have for the second round of litigation on the same cause of action chosen to

approach this Court. The petitioners appear to have been aware that having

once approached the Karnataka High Court and having withdrawn the

challenge therefrom, could not approach that High Court.

11. We therefore are not inclined to entertain the present writ petition.

12. That however still leaves us with another aspect. The petitioners not

only enjoyed the fruits of the interim relief of the Karnataka High Court but

have for the last over twenty years been enjoying the interim relief aforesaid

in these proceedings also. The Supreme Court in Indian Council for

Enviro-Legal Action Vs. Union of India (2011) 8 SCC 161, Abhimanyoo

Ram Vs. State of U.P. (2008) 17 SCC 73 and in Ramesh Chandra Sankla

Vs. Vikram Cement AIR 2009 SC 713 has held that it is the bounden duty

and obligation of the Court to neutralize any unjust enrichment and

undeserved gain made by anybody by invoking the jurisdiction of the Court

and that when a party applies and gets a stay or injunction from the Court, it

is always at the risk and responsibility of the party applying, and an order of

stay cannot be presumed to be conferment of additional right upon the

litigating party. Equities flowing from the interim orders ought to be

balanced and a litigant cannot get the benefit of an interim order. The

attempts by litigants to retain the benefits of interim orders have been

deprecated and have been directed to be dealt with sternly.

13. Notice may also been taken of Nava Bharat Ferro Alloys Ltd. Vs.

Transmission Corporation of Andhra Pradesh Ltd. (2011) 1 SCC 216

holding that where the consequences of non-payment have been provided,

the same have to be enforced notwithstanding any interim orders of the

Courts. It was held that after the decision of the Court upholding the

demand, the demand stood revived with full force with all its consequences,

though it had remained unenforceable for some period on account of the

orders of the Court. The principle of restitution was invoked and it was held

that the Court has to endeavour to ensure that a party who has suffered on

account of an order that is finally reversed should be put back in the same

position as far as may practicable, in which it would have been if the

decision of the Court adversely affecting it had not been passed. The offer

of the defaulter in that case to pay interest @ 18% per annum on the unpaid

amount was rejected and the defaulter held liable to pay additional amounts

as provided. It was yet further held that an erroneous decision of the High

Court or the default being not deliberate on account of such erroneous

decision will not affect such restitution.

14. Mention may yet further be made of another recent judgment in State

of Rajasthan Vs. J.K. Synthetics Ltd. 2011 (7) SCALE 117 where the

Supreme Court enhanced the rate of interest for the period of interim

protection in the earlier round of litigation to 18% per annum and 24% per

annum. It was held that where the statute or contract specifies the rate of

interest, usually interest will have to be paid at such rate unless there are

special reasons for not doing so, as any other interpretation would encourage

unscrupulous debtors to file writ petitions and make attempts to obtain

interim orders of stay. It was further held that if the obligation, to make

restitution by paying appropriate interest on the withheld amount, is not

strictly enforced, the loser will end up with a financial benefit by resorting to

unjust litigation and the winner will end up as the loser financially, for no

fault of his.

15. The petitioners having evaded the coercive recoveries of

`69,52,538.80 with interest at 18% per annum and of prosecution under the

interim orders of this Court, are directed to within four weeks hereof pay the

entire said amount into the Cement Regulation Account and furnish proof

thereof to the Registry of this Court, failing which the Registry to re-list the

matter before this Court for further appropriate action against the petitioners.

16. As far as the pleas raised of sickness and rehabilitation of the

petitioner are concerned, in the light of the above, the same have no bearing

whatsoever on our aforesaid direction. Suffice it is to state that sickness is of

a date much after the interim restrain order obtained in this petition and but

for such interim order, the amounts would have been coercively recovered

from the petitioners and would have been un-affected by the subsequent

sickness.

17. We therefore dismiss the petition with directions aforesaid. The

petitioners to also pay cost of `30,000/- of the present writ petition to the

respondents.

RAJIV SAHAI ENDLAW, J

ACTING CHIEF JUSTICE JULY 13, 2012 'gsr'