Telangana High Court
Small Scale Barium Manufacturers ... vs Union Of India, Rep. By Its Secretary To ... on 5 June, 2023
Author: K. Lakshman
Bench: K.Lakshman
HON'BLE SRI JUSTICE K.LAKSHMAN
WRIT PETITION No.24634 of 2008
ORDER:
Heard Sri M.S.Prasad, learned Senior Counsel appearing for the petitioners, Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, appearing for respondent Nos.1 to 4 and Sri Challa Gunaranjan, learned counsel appearing for respondent No.5. Perused the record.
2. This writ petition is filed with the following relief:-
"to issue an appropriate Writ order or direction more particularly one in the nature of Writ of Mandamus declaring the impugned notification of the 1st respondent dated 10.10.2008 bearing No.S.O.2439 (E) and published in Gazette of India dated 10.10.2008 in respect of Item No.256 i.e. Barium Carbonate as illegal, null, void, without jurisdiction, contrary to the provisions of Section 29 (B) 29 (B) 2 (9) & 2(C) of I(D&R) Act, 1951 and against the principles of natural justice and unconstitutional and declare all further consequential actions of the respondent No.1 as illegal, null and void and to pass such other order or orders".
3. Vide the aforesaid impugned Notification, dated 10.10.2008, respondent No.1 made certain further amendments to the notification issued by Government of 2 India vide S.O.477(E) dated 25.07.1991 and the said amendment are as follows;
"In the said notification, in Schedule III relating to the list of items Reserved for Exclusive Manufacture in Small Scale Sector, the serial numbers "16, 126, 133, 134, 136, 235, 236, 242, 256, 279, 393, 464, 553 and 587 and the entries relating thereto shall be omitted".
2. This notification shall come into force on the date of its publication in the Official Gazette.
4. According to Sri M.S.Prasad, learned Senior Counsel appearing for the petitioners that while issuing the impugned notification, respondent No.1 did not put the petitioners on notice and no opportunity was given. There is no consideration of recommendation of Advisory Committee. Respondent No.1 is not having power to issue such notification. There is no discussion and the reasons assigned by respondent No.1 in the impugned notification for the said amendments. The impugned proceedings are against the spirit of the Industries (Development & Regulation) Act, 1951 (hereinafter referred as "the Act"). With the said submissions, he sought to set aside the impugned Notification.
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5. Whereas Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, appearing for respondent Nos.1 to 4 and Sri Challa Gunaranjan, learned counsel appearing for respondent No.5 referring to the counter filed by him, would submit that as per Section 29B of the Act, respondent No.1 is having power to issue the said notification and there is no error in it. While issuing the said notification, respondent No.1 has considered the recommendations of Advisory Committee and the said notification was issued in exercise of powers conferred by under Section 29B of the Act and there is no error in it. The decision of removal of the items from the list of reserved items has been done in the larger interest of Industry as a whole in the country in general. Advisory Committee took note of the entire aspects, reviewed the products one by one and after deliberations, it was decided that first category of item Nos.1 to 7, 9, 14, 15 and 16 of fourth category are less sensitive items, therefore, the same may be recommended for de-reservation. The whole process of de-reservation (excepting issuance of Notification) from the Constitution of Advisory Committee, holding the stake holders meeting for 4 each item, then preparation of agenda and holding the Advisory Committee meeting is carried out by M/o.MSME, Office of DC (MSME). After the deliberation of the Advisory Committee, the minutes got approved by Minister for MSME and sent to respondent No.1 for issuance of requisite notification. Approval of Commerce and Industries Minister with regard to said proposal after due legal vetting from Legislative Department, Ministry of Law and Justice. The Notification for de-reservation has got issued by respondent No.1. The primary role of respondent No.1 lies in issuance of final Notification on recommendation of the Ministry of MSME, O/o.DC (MSME). With the said submissions respondent Nos.1 to 4 sought to dismiss the present writ petition.
6. Adopting the said contentions, Sri Challa Gunaranjan, learned counsel appearing for respondent No.5, would supplement that petitioners herein have filed Writ Petition No.5375 of 2008 alleging that respondent No.5 violated the conditions of license and therefore sought a direction against unofficial respondents to initiate action against respondent No.5 including the cancellation of 5 license. The said writ petition was disposed of vide order dated 06.05.2008 and modified order dated 17.06.2008, respondent No.5 preferred Writ Appeal Nos.712 and 746 of 2008 respectively. Respondent No.5 brought to the notice of Division Bench about Notification, dated 10.10.2008, issued by respondent No.1, wherein reservation of Barium Carbonate de-reserved from exclusive manufacture of Small Scale Sector. Press notes were also brought to the notice of Division Bench. Therefore, considering the said aspects and new policy of respondent No.1, writ appeals were disposed of vide order dated 05.03.2008. Thus, by virtue of the said orders and impugned notification dated 10.10.2008, issued by respondent No.5 is entitled to sell the entire products in domestic market. Respondent No.1 issued the said notification in exercise of powers conferred by Section 29 of the Act. Therefore, there is no error. He would further submit that vide notification dated 15.04.2015 S.O.No.998(E) dated 10.04.2015, on the recommendations of the Advisory Committee, respondent No.1 have decided to de-reserve remaining 20 (Twenty) items presently reserved for exclusive manufacture by MSE Sector. The details of the 6 said items were also specifically mentioned in the said Notification. The said policy initiatives have been taken to encourage greater investment, including the existing MSME units, to incorporate better Technologies, Standard and Branch for these products. In view of the said submissions of learned counsel appearing for respondent Nos.1 to 5, a cause in the writ petition does not survive.
7. In view of the same, it is relevant to extract Section 29B of the Act, which reads as under:-
29B. Power to exempt in special cases:-
(1) If the Central Government is of opinion, having regard to the smallness of the number of workers employed or to the amount invested in any industrial undertaking or to the desirability of encouraging small undertakings generally or to the stage of development of any scheduled industry, that it would not be in public interest to apply all or any of the provisions of the Act thereto, it may, by notification in the Official Gazette, exempt, subject to such conditions as it may think fit to impose, any industrial undertaking or class of industrial undertakings or any scheduled industry or class of scheduled industries as it may specify in the notification from the operation of all or any of the provisions of this Act or any rule or order made thereunder.
(2) Where any notification under sub-section (1) granting any exemption is cancelled, no owner of any industrial undertaking to which the provisions of section 10, section 11, section 11A or clause (d) of sub-section (1) of section 13, would have applied, if the notification under sub-
section (1) had not been issued, shall carry on the business of the undertaking after the expiry of such period as may be specified in the notification cancelling the exemption except under and in accordance with a licence issued in this behalf by the Central Government and, in the case of a 7 State Government, except under and in accordance with the previous permission of the Central Government.
(2A) In particular, and without prejudice to the generality of the provisions of sub-section (1), the Central Government may, if it is satisfied, after considering the recommendations made to it by the Advisory Committee constituted under sub- section (2B), that it is necessary so to do for the development and expansion of ancillary, or small scale, industrial undertakings, by notified order, direct that any article or class of articles specified in the Schedule I shall, on and from such date as may be specified in the notified order (hereafter in this section referred to as the "date of reservation"), be reserved for exclusive production by the ancillary, or small scale, industrial undertaking (hereafter in this section referred to as "reserved article").
(2B) The Central Government shall, with a view to determining the nature of any article or class of articles that may be reserved for production by the ancillary, or small scale, industrial undertakings, constitute an Advisory Committee consisting of such persons as have, in the opinion of that Government, the necessary expertise to give advice on the matter.
(2C) The Advisory Committee shall, after considering the following matters, communicate its recommendations to the Central Government, namely:--
(a) the nature of any article or class of articles which may be produced economically by the ancillary, or small scale, industrial undertakings;
(b) the level of employment likely to be generated by the production of such article or class of articles by the ancillary, or small scale, industrial undertakings;
(c) the possibility of encouraging and diffusing entrepreneurship in industry;
(d) the prevention of concentration of
economic power to the common
detriment; and
(e) such other matters as the Advisory
Committee may think fit.
(2D) The production of any reserved article or class of
reserved articles by any industrial undertaking 8 (not being ancillary, or small scale, industrial undertaking) which, on the date of reservation, is engaged in, or has taken effective steps for, the production of any reserved article or class of reserved articles, shall, after the commencement of the Industries (Development and Regulation) Amendment Act, 1984, or, as the case may be, the date of reservation, whichever is later, be subject to such conditions as the Central Government may, by notified order, specify.
As per the aforesaid provision, respondent No.1 is having power to issue notification considering the recommendation made by the Advisory Committee constituted under Sub Section 2 (B) of section 29 (B) of the Act.
8. Advisory Committee in its 28th meeting dated 12.12.2007 recommended for de-reservation of 79 items including the Barium Carbonate. In the said recommendations, there is specific mention that it is specific less sensitive items could be considered for de-reserving at this stage. In the said recommendations, it is also specifically mentioned that the Barium Carbonate manufacturing associations have expressed strongly evidence against de-reserved items, on the ground that MSME may also take up for manufacturing of these items. This would affect existence of Micro and Small Enterprises in 9 the Industry. Therefore, it is felt that this Industry may continue to be in the de-reserved list for the present.
9. Vide notification S.O.No.246 (E) dated 05.02.2008, Annexure-2 containing minutes of the 28th meeting of the Advisory Committee on reservation dated 12.12.2007, Stipulation of Reservation Policy in I (D&R) deliberations and regulation Act, 1951 is specifically mentioned. The Advisory Committee constituted under Section 29B (2B) of the Act meets at periodic intervals and recommends to the Government the items to be added to or deleted from the list of reserved items. This Committee has met 28 times so far. According to Section 29B (2C) of the Act, the Advisory Committee is expected to consider the following before making its recommendations on the nature of any article or class of articles that may be reserved under Section 29B (2C) of the Act. The same are as follows.
a. the nature of any article or class of articles which may be produced economically by the ancillary or small scale industrial undertakings; b. the level of employment likely to be generated by the production of such article or class of articles by the ancillary small scale industrial undertakings;
c. the possibility of encouraging and diffusing entrepreneurship in the industry;
d. the prevention of concentration of economic power to the common detriment; and 10 e. such other matters as the Advisory Committee may think fit.
Though this Act has no corresponding provision or direction on de-reservation of products once reserved, the above-mentioned factors would need to be kept in mind while making recommendations.
10. It is relevant to note that in its 29th meeting dated 07.07.2018, the Advisory Committee decided to de-list some more items. The aforesaid facts would reveal that under Section 29B of the Act, respondent No.1 is having power to issue notification but the advice of de-reserved in certain items is on the recommendations of Advisory Committee. As discussed Supra, Advisory Committee recommended to de-reserve certain items, which are specifically mentioned in the notification including the Barium Carbonate. In the impugned notification there is specific mention about recommendation of Advisory Committee. Therefore, the contention of Sri M.S.Prasad, learned Senior Counsel appearing for the petitioners that Central Government has no power to issue impugned Notification de-reserving certain items including Barium Carbonate is unsustainable.
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11. As discussed Supra, at the cost of repetition, the impugned Notification was issued on the recommendations of the Advisory Committee in exercise of the powers under Section 29B of the Act. Therefore, there is no error in it.
12. As discussed Supra, the Advisory Committee has to follow the aforesaid criteria for de-reserving the items. The said aspects were considered while recommending for de-reservation of the Barium Carbonate in its 28th meeting held on 12.12.2007. There is no provision under the Act and in the aforesaid Notification that the petitioners shall be put on notice and afford them an opportunity. Therefore, the contention of the petitioners that they were not put on notice and no opportunity was afforded to them before issuance of impugned Notification is unsustainable.
13. Vide notification S.O.No.998(E) dated 10.04.2015, respondent No.1 has decided to de-reserve remaining 20 items and the details of the same are specifically mentioned therein. The above policy initiatives have been taken to encourage greater investment, including 12 the existing of MSME units to incorporate better Technologies, Standard and Branch building to enhance competition in Indian and Global market for the said products. In view of the same according to this Court a cause in the writ petition does not survive.
14. It is also relevant to note that the Director of Government of India, Ministry of Micro and Small, Medium Enterprises (MSME) - Development Institute, Balangar Hyderabad has instituted prosecution against respondent No.5 Vide S.T.C.No.51 of 2007. Vide judgment, dated 31.08.2017, the Additional Judicial Magistrate of First Class at Srikalahasti respondent No.5 was convicted and imposed a fine of Rs.5,000/- each on the accused. Though this writ petition was filed in the year, 2018 challenging the impugned Notification dated 10.10.2008, this Court did not grant any interim order. In the light of the above said discussion, this writ petition is liable to be dismissed.
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15. Accordingly, the writ petition is dismissed. There shall be no order as to costs.
As a sequel, the miscellaneous petitions, if any, pending in the Writ Petition shall stand closed.
__________________ K. LAKSHMAN, J 05.06.2023 Dsu/Pss