Rajasthan High Court
M/S. Swadeshi Cement Ltd vs State And Ors on 28 March, 2024
Bench: Manindra Mohan Shrivastava, Praveer Bhatnagar
[2023:RJ-JP:41451-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Special Appeal Writ No. 396/1996
1. M/s. Swadeshi Cement Ltd., a company incorporated and
registered under the Companies Act, 1956 having its Registered
Office at Sitani Nagar, Village Bhaislani, Tehsil Kotputli, Distt.
Jaipur and administrative office at 501, Lakshmi Bhawan 72,
Nehru Place New Delhi- 110019 through its Managing Director
cum Chairman Shri U.S. Sitani Son of Shri G.P. Sitani aged about
45 years.
2. Shri U.S. Sitani son of Shri G.P. Sitani Managing Director &
Chairman, M/s. Swadesh Cement Limited 501, Lakshmi Bhawan,
72, Nehru Place, New Delhi- 110019.
----Appellants
Versus
1. State of Rajasthan through Secretary (Mines), Secretariat,
Jaipur.
2. Rajasthan State Industrial Development And Investment
Corporation Ltd., Udyog Bhawan, Tilak Marg, Jaipur.
3. Rajasthan State Minerals Development Corporation Ltd.,
Udyog Bhawan, Tilak Marg, Jaipur
4. Union of India through Secretary (Mines), Udyog Bhawan,
New Delhi.
5. M/s Grasim Industries Ltd.
----Respondents
For Appellant(s) : Mr. Aarohi Bhalla with
Mr. Rishabh Khandelwal and
Mr. Anuraag Sharma
For Respondent(s) : Mr. Kamlakar Sharma, Senior
Advocate assisted by Ms. Alankrita
Sharma,
Mr. Ajeet Bhandari, Senior Advocate
assisted by Mr. Jitendra Mishra
Mr. R.K. Salecha with
Ms. Tanisa Khoobchandani
Mr. Dheeraj Verma
Mr. Anil Mehta, AAG and
Mr. Rajendra Soni, AAG with
Ms. Archana,
Mr. Yashodhar Pandey,
Mr. Jaivardhan Singh for
Mr. R.P. Singh, AAG
Ms. Nidhi Khandelwal.
[2023:RJ-JP:41451-DB] (2 of 14) [SAW-396/1996]
HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA
HON'BLE MR. JUSTICE PRAVEER BHATNAGAR
Judgment
Pronounced on: 28/03/2024
(Per Hon'ble the Chief Justice):
1. This appeal is directed against the order dated 22.12.1995
passed by the learned Single Judge, whereby appellants' petition
seeking directions not to interfere in the mining activities of
appellant No.1 over the land ad-measuring 5.45 sq. kms. in
Village Kuzotu, Mohanpura, Jodhpura in Tehsil Kotputli, District
Jaipur, as also the prayer for issuance of direction for transfer and
assignment of the lease to appellant No.1 along with the prayer to
prohibit respondent No.3 from interfering with the mining
activities as also the direction for immediate removal of operations
of respondent No.3 from the subject land, has been dismissed.
Relevant factual matrix of the case:
2. The relevant facts, necessary for adjudication of the
controversy involved in the present appeal, are that vide order
dated 29.06.1984, the Government of Rajasthan granted mining
lease for mining of limestone in favour of Rajasthan State
Industrial Development and Investment Corporation (hereinafter
referred to as 'RIICO') over the area comprising 554 hectares in
Village Kojota, Mohanpura, Jodhpura in Tehsil Kotputli. The lease
was granted with the condition that RIICO would establish a
cement plant within five years of the grant of lease and use
limestone for cement manufacturing only. On 03.07.1984, the
[2023:RJ-JP:41451-DB] (3 of 14) [SAW-396/1996]
mining lease agreement was entered into between the
Government of Rajasthan and RIICO, which contained specific
terms and conditions. Towards manufacturing for the purposes of
establishing and operating the cement manufacturing plant, the
RIICO and appellant-Company M/s Swadeshi Cement Limited (for
short, 'SCL'), promoted a project in joint sector. Though the
cement plant started commercial production in July, 1985, for
various reasons, the appellant-Company SCL became a sick
industrial company within the meaning of Section 3 of the Sick
Industrial Company (Special Provisions) Act, 1985 (for short,
'SICA'). A reference was, therefore, made to the Board of
Industrial and Financial Reconstructions (for short, 'BIFR') for the
purposes of framing a scheme for rehabilitation. A rehabilitation
scheme was also prepared and sanctioned by the BIFR under
Section 18(4) of the SICA on 26.02.1990. However, in the
meantime, the mining lease granted in favour of RIICO was
cancelled by the Government on 06.11.1990, mainly on the
ground that mining activities had remained suspended. The
Government of Rajasthan thereafter appointed Rajasthan State
Mineral Development Corporation as its agent for carrying out
mining operations in the area. The appellant-Company challenged
the aforesaid order by way of revision before the Central
Government, which was allowed on 08.01.1993. However, as no
transfer of lease, as claimed by the appellant-Company, took place
despite repeated demands and claims, nor the sanctioned scheme
for rehabilitation was properly implemented, the appellant-
Company, not because of its failure but because of non-
[2023:RJ-JP:41451-DB] (4 of 14) [SAW-396/1996]
cooperation of the State Government and RIICO, continued as sick
company. At this stage, appellant No.2 took over the appellant
No.1- Company making investments, so that the cement plant
could be restarted.
3. Feeling aggrieved by non-transfer of mining lease in favour
of the appellants, a petition came to be filed. The case of the
appellants/writ-petitioners was that as the project for
establishment of a cement manufacturing company was a joint
venture of RIICO and SCL and even while applying for grant of
lease, the RIICO had clearly stated that eventually the lease would
be finally transferred in favour of SCL (appellant No.1-Company),
the scheme for rehabilitation having already been framed for
rehabilitation of the SCL Company and further a specific
observation made by the Division Bench of this Court in order
dated 09.07.1985 in D.B. Special Appeal No.26/1984- Rameshwar
Prasad Bajaj Vs. Mrs. Protima Chatterjee and other connected
appeals, the appellants were entitled to the relief, as sought in the
writ petition.
4. On the other hand, the State, RIICO and RSMDC by filing
their separate returns contested the case of the appellants.
According to the State, the mining lease was granted in favour of
RIICO for the purposes of manufacturing cement and it was not
solely for the appellant-Company SCL. The mining lease in favour
of RIICO was declared as having lapsed on 06.11.1990 and
RSMDC was appointed as the operating agency. The order passed
in revision on 08.01.1993 was sought to be collaterally challenged
[2023:RJ-JP:41451-DB] (5 of 14) [SAW-396/1996]
as being without jurisdiction. It was further stated by the State
Government that the State took into consideration to reassess the
requirement of limestone for use of the appellant-Company and no
vested right could be claimed. According to the State, looking to
the need of the appellant-Company, the State was entitled to
allocate and demarcate the area, which would be sufficient and
necessary for the proper functioning of the cement plant
established under the joint project of RIICO and appellant-
Company, so as to enable it to carry out the mining activities to its
maximum capacity. It was also asserted that the mining area
which was not necessary to be allotted in favour of the appellant-
Company, could be used for supplying limestone to other cement
plants coming up in the area and it was in public interest. It was
stated that the respondent-State and RIICO had ensured
continuous supply of limestone sufficient for running the cement
plant of the appellant-Company without any interruption. The
entire mining lease area ad-measuring 5.54 sq. kms. which was
far more than the requirement of the appellant-Company, could
not be claimed as a matter of right. It was further brought to the
notice of the Court that after the order was passed in the revision
on 08.01.1993, the State passed an order for grant of mining
lease for limestone in favour of RIICO only to the limited extent of
1.25 sq. kms., which was identified by the RIICO for captive use of
cement plant of joint venture with appellant-Company vide order
dated 17.02.1993. This order was passed keeping in view the
present and future requirements of limestone for the appellants'
cement plant. It was further stated by the respondents that to the
[2023:RJ-JP:41451-DB] (6 of 14) [SAW-396/1996]
extent of requirement of the cement plant of the appellant-
Company, the State and RIICO supported rehabilitation scheme
framed by the BIFR.
5. The learned Single Judge, vide impugned order, held that the
petitioners are not entitled to any relief. The petitioners' claim for
grant of mining lease over the entire area of 5.54 sq. kms. based
on promissory estoppel was repelled on consideration that for
application of doctrine of promissory estoppel, representations and
terms should be definite and unambiguous and there should be
clear evidence on it. It was held that vague assurances do not
form basis for establishing the plea of estoppel. The learned Single
Judge recorded that there is no material on record to show that
the appellant No.2 took over the SCL Company on a definite
assurance or representation of the RIICO that the area of the
mining lease standing in favour of RIICO shall be transferred in his
name or in the name of taken over company SCL (appellant No.1-
Company).
The learned Single Judge further held that the order of the
Division Bench dated 09.07.1985 does not create any legal right.
In the absence of clear legally enforceable right, no lease could be
granted in favour of the petitioners.
Submission of the appellants:
6. The submission of the learned counsel for the appellants is
threefold.
The first submission is that the common order dated
09.07.1985 passed by the Division Bench of this Court in three
[2023:RJ-JP:41451-DB] (7 of 14) [SAW-396/1996]
appeals (D.B. Special Appeal No.26/1984- Rameshwar Prasad
Bajaj Vs. Mrs. Protima Chatterjee and two other connected
appeal) clearly states that lease granted in favour of RIICO was
only to facilitate transfer of the same in favour of appellant-
Company i.e. SCL. Therefore, in view of the aforesaid clear
observations, the State was obliged under the law to transfer the
lease in favour of the appellants.
7. The second limb of submission is that after appellant No.1-
SCL Company was declared sick company and on a reference
made, a rehabilitation scheme was framed, wherein the State and
RIICO incurred obligation to transfer the lease in favaour of
appellant-Company as a measure of rehabilitation of a sick
company under the statutory scheme of SICA. Therefore, both the
State and RIICO, were duty bound to fulfill their obligations
towards rehabilitation by taking necessary steps by transferring
the lease in favour of the appellant-Company.
8. The third limb of submission is that right from the beginning
the joint venture project of appellant-Company SCL and RIICO
was launched with an object, wherein initially the mining lease
was to be granted in favour of RIICO by the State Government for
the purposes of fulfilling limestone requirements of the appellant-
cement manufacturing company and when the cement plant
established, the lease was to be eventually transferred. It was on
this representation that the appellant-Company as well as
appellant No.2, its promoter, proceeded with the project and
appellant No.2 also invested huge funds. Therefore, by application
[2023:RJ-JP:41451-DB] (8 of 14) [SAW-396/1996]
of principle of promissory estoppel, the State and the RIICO were
duty bound to transfer the existing lease in favour of appellant-
Company.
Learned counsel for the appellants argued that though
initially the State Government cancelled the lease of RIICO vide
order dated 06.11.1990, on a revision being preferred, the Central
Government set aside the aforesaid order vide its order dated
08.01.1993. Thus, the lease granted in favour of RIICO was
revised but even then the State Government did not transfer the
lease in favour of the appellant-Company but kept on passing
avoiding orders to transfer the lease.
9. On the other hand, learned counsel appearing for the
respective respondents have opposed the reliefs sought by the
appellants. One of the foremost submissions is that during
pendency of the present appeal, the scheme of rehabilitation failed
and when the BIFR found that there was no possibility of revival, it
initiated winding up proceedings after formation of opinion on
06.01.1994, followed by a notice of winding up dated 16.02.1994.
Though initially in that writ petition, an interim order was passed
on 25.02.1994, but that writ petition was dismissed for want of
prosecution. After its restoration, Writ Petition No.1071/1994 was
finally heard and was dismissed vide order dated 03.04.2018. In
the meantime, the BIFR passed a fresh order on 21.05.2007, re-
initiating winding up proceedings, which was assailed by filing an
appeal before the Appellate Authority for Industrial and Financial
Reconstruction (for short, 'AAIFR') by M/s Raghupati Cement
[2023:RJ-JP:41451-DB] (9 of 14) [SAW-396/1996]
Private Limited, which had acquired a part of company's debt.
During pendency of that appeal, one of the secured creditors M/s
Assets Care Enterprise Limited moved an application seeking
declaration of abatement of reference proceedings as it had
already proceeded to take measures under Section 13(4) of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to
as the 'SARFAESI Act'). The AAIFR passed an order on 12.01.2009
declaring that proceedings have abated, therefore, rehabilitation
scheme no longer remained in existence. The aforesaid order is
challenged in D.B. Special Appeal (Writ) No.281/2010, therefore,
at this stage, the appellants are not entitled to any relief on the
basis that the State and RIICO are obliged under the rehabilitation
scheme to transfer lease in favour of the appellant-Company. It
has also been submitted that after the order was passed by the
Revisional Authority on 08.01.1993, the State Government passed
an order on 17.02.1993 limiting restoration of mining lease
looking to the requirements of the appellant-Company, which was
never challenged. Therefore, in the absence of challenge to the
order dated 17.02.1993, the reliefs as sought in the writ petition,
were rightly refused. It is also stated that on 04.10.1996 the
working permit granted in favour of RIICO was also revoked,
which was also not challenged. It is further submitted that the
appellants' claim based on so-called promise is not enforceable
under the law in the absence of challenge to the order dated
17.02.1993 of the State Government and also because no such
promise was ever extended by the State Government in favour of
[2023:RJ-JP:41451-DB] (10 of 14) [SAW-396/1996]
the appellants. Once the winding up proceedings have already
been initiated and an order has already been passed by the BIFR
declaring abatement of proceedings, the appellant-Company has
become sick and there is no possibility of revival and its winding
up is inevitable, at this distance of time, when other companies
have been granted lease in respect of the area in dispute, the
appellants are not entitled to any relief.
Analysis and conclusions:
10. The chequered history of the present case reveals that
though initially a joint venture project of RIICO and appellant- SCL
Company was launched to establish a cement manufacturing plant
and RIICO had applied for grant of mining lease, which was
granted in its favour by the State Government so as to fulfill
continuous supply of limestone as one of the main raw materials
used for manufacture of cement, the appellant-Company,
admittedly, became sick. The rehabilitation scheme was also
framed in its favour by BIFR. In that scheme, the State
Government and RIICO had already lent assurance to help the
appellant-Company. However other developments have taken
place. The BIFR in its meeting dated 06.01.1994, formed a
tentative opinion that as the Company could not be rehabilitated
and revived despite efforts made, it initiated winding up
proceedings by issuance of notice dated 16.02.1994. This notice
was challenged by filing a writ petition being Civil Writ Petition
No.1071/1994. In that writ petition, initially an interim order was
passed in favour of the appellant-Company on 25.02.1994,
[2023:RJ-JP:41451-DB] (11 of 14) [SAW-396/1996]
however the said writ petition came to be dismissed for want of
prosecution. An application for restoration was also dismissed.
Aggrieved by the said order, a Special Leave Petition was filed in
the Hon'ble Supreme Court. The Hon'ble Supreme Court restored
the writ petition, however vide order dated 03.04.2018, that writ
petition came to be dismissed.
The other development during pendency of the appeal is that
later on the AAIFR vide its order dated 12.01.2009 declared that
per force provisions contained in third proviso to sub-section (1)
of Section 15 of the SICA, reference proceedings have abated.
That order was challenged by filing a writ petition, which was
dismissed. Against that order, D.B. Special Appeal(Writ)
No.281/2010 was preferred.
The present writ-appeal i.e. D.B. Special Appeal (Writ)
No.396/1996 and D.B. Special Appeal(Writ) No.281/2010 were
heard analogously. We have dismissed D.B. Special Appeal(Writ)
No.281/2010 taking into consideration the detailed facts and
circumstances of the case in the matter of challenge to abatement
of reference proceedings vide order dated 12.01.2009 of AAIFR.
11. Moreover, we find that during pendency of this appeal, lease
of the area has been granted in favour of one of the respondents
herein i.e. respondent No.5. That apart, we find that even though
the Central Government had set aside the order of cancellation of
lease, which was earlier granted in favour of RIICO vide its order
dated 08.01.1993, while reviving the lease of RIICO, it was limited
to the need or requirement of the appellant-Company vide order
[2023:RJ-JP:41451-DB] (12 of 14) [SAW-396/1996]
dated 17.02.1993. The said order dated 17.02.1993 has not been
challenged.
12. It is not in dispute that appellant No.1 became sick and
suffered winding up proceedings and finally the sanctioned
scheme has also abated by operation of law due to abatement of
reference proceedings. It is also not in dispute that the appellant-
Company stopped manufacturing activities since long as it could
not be revived. The allegation is that the appellant-Company was
engaged in selling limestone in open market.
13. The learned Single Judge has rightly held that the
petitioners/appellants are not entitled to any relief on the basis of
observations made in common order dated 09.07.1985 passed by
the Division Bench of this Court in the case of Rameshwar
Prasad Bajaj (supra) and other connected appeals. One
Gyarsilal and Mrs. Protima Chatterjee had filed two separate writ
petitions assailing the validity of Rule 63 of the Rajasthan Miner
Mineral Concession Rules, 1977 as ultra-vires to the Constitution
of India with a further prayer that lease granted in favour of
Rameshwar Prasad Bajaja and RIICO on 14.09.1981 be quashed
and set aside. A prayer was also made that the State Government
be restrained from granting mining lease to Rameshwar Prasad
Bajaj and RIICO and grant the mining lease after due notification
inviting applications. In that case, the State had taken stand that
RIICO had also applied for grant of mining lease over a large area
of 10 sq. kms. for the purposes of establishing mini. cement plant
and further that an area ad-measuring 5.54 sq. kms. was given in
[2023:RJ-JP:41451-DB] (13 of 14) [SAW-396/1996]
favour of RIICO on the condition that RIICO will establish a
cement plant within five years, failing which the lease shall be
cancelled. The facts which were placed before the Court were that
RIICO was intending to establish a cement plant in a joint
collaboration with appellant-SCL Company. The RIICO and SCL
had taken identical stand contesting the claim for grant of lease to
others. On the basis of the stand which was taken before the
Court, it was observed that RIICO was granted lease for Swadeshi
Cement Limited.
That order, at the most, reflected the factual position that a
project for establishing a cement plant was launched by the RIICO
in joint project with the appellant-SCL Company. However, that
would not create a vested right in favour of the appellants to get
the lease transferred in its favour.
14. Under the circumstances, in view of subsequent
developments and that the appellant itself became sick and
suffered winding up proceedings, no right could be claimed. In
view of the subsequent events that the appellant could not
continue with the operation of the plant and the same is lying
closed for more than two decades and furthermore in absence of
any challenge to the order dated 17.02.1993 of the State
Government limiting mining lease in favour of RIICO itself, the
relief claimed by the appellants has rightly been rejected by the
learned Single Judge.
15. Therefore, in view of the aforesaid developments,
particularly taking into consideration that against the appellant-
[2023:RJ-JP:41451-DB] (14 of 14) [SAW-396/1996]
Company winding up proceedings were initiated long back,
sanctioned scheme for rehabilitation had already abated and the
order of abatement of reference proceedings has been upheld by
us by dismissing D.B. Special Appeal(Writ) No.281/2010, heard
analogously with the present appeal, at this stage, no relief can be
granted in favour of the appellants.
16. In view of the aforesaid observations, the appeal is
dismissed. Pending applications, if any, also stand dismissed.
(PRAVEER BHATNAGAR),J (MANINDRA MOHAN SHRIVASTAVA),CJ
Kamlesh Kumar/
Powered by TCPDF (www.tcpdf.org)
