Rajasthan High Court - Jaipur
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.
(Downloaded on 01/04/2024 at 08:36:00 PM)
[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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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- (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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, (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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 (Downloaded on 01/04/2024 at 08:36:00 PM) [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- (Downloaded on 01/04/2024 at 08:36:00 PM)
[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/ (Downloaded on 01/04/2024 at 08:36:00 PM) Powered by TCPDF (www.tcpdf.org)