Supreme Court of India
DOBURG LAGER BREWERIES PVT. LTD.versusDHARIWAL BOTTLE TRADING CO. & ANR
- Citation
- 1986 INSC 42
- Decided
- 14 March 1986
- Disposal
- Appeal(s) allowed
- Bench
- E S VENKATARAMIAH
Holding
A declaration under section 3 of the Bombay Relief Undertakings (Special Provisions) Act, 1958 can be made where any loan, guarantee or financial assistance has been provided by the State Government, irrespective of whether the loan is made "under" the Act, and the preamble does not impose a condition precedent.
Summary
Doburg Lager Breweries Ltd., a private company operating in a backward area of Maharashtra, had borrowed Rs 52.30 lakhs from SICOM and later an additional Rs 15 lakhs from the State Government. Facing winding‑up proceedings, the Maharashtra Government declared the company a "relief undertaking" under section 3 of the Bombay Relief Undertakings (Special Provisions) Act, 1958, and stayed all pre‑declaration claims. The creditor challenged the notifications, and the Bombay High Court quashed them on the ground that a loan must be granted "under" the Act as a condition precedent and that the preamble controlled section 3. The Supreme Court held that the Act does not require the loan to be made under it; any loan, guarantee or financial assistance by the State suffices, and section 3 is not governed by the preamble. Consequently, the High Court’s decision was set aside and the appeal was allowed, with the matter remanded to the High Court for further consideration.
Issues considered
- Whether a declaration under section 3 of the Bombay Relief Undertakings (Special Provisions) Act, 1958 requires that the loan or financial assistance be granted "under" the Act as a condition precedent.
- Whether the preamble to the Act controls the operation of section 3.
- Whether the notifications declaring the appellant’s undertaking as a relief undertaking were ultra vires for lack of such a condition precedent.
- Whether the State Government’s loan via SICOM qualifies as "State Government" assistance within the meaning of the Act.
Legislation cited
- Bombay Relief Undertakings (Special Provisions) Act, 1958s. 1, s. 2, s. 3, s. 4
Subjects
relief undertakingunemployment reliefcondition precedentstatutory interpretationBombay Relief Undertakings Actwinding upstay of proceedingspublic interest
Judgment
841
A
DOBURG LAGER BRl!lll!RIES wr. LTD.
v.
D11AR1WAL BO'ITLE TRADING <Xl. & ANR.
MARCH 14, 1986
B
[E.S. VENKATARAMIAH AND M.P. THAKKAR, JJ.]
Bombay Relief Undertakings (Special Provisions) Act,
1958, sa. 3 and 4 - Declaring an industrial undertaking as a
"relief undertaking" - Whether grant of loan under the Act is
a condition precedent - Whether s. 3 is controlled by the
Preamble to the Act. . C
The appellant, a private limited company, canfing on
business in a backward area of the State, had employed about
200 workmen. It had borrowed about Rs. 52.30 lakhs from the
State Industrial and Investment Corporation of Maharashtra
Limited (SICOM). It ran into financial difficulties as a D
result of which winding up proceedings ware counenced against
it by a creditor, respondent No. l in the year 1982. Taking
into consideration the financial position of the appellant-
company and the consequences that were likely to ensue if the
industry was to be closed, the State issued a notification
under section 3 and sub-clause (iv) of clause (a) of sub- E
section (1) of section 4 of the Bombay Relief Undertakings
(Special Provisions) Act, 1958 declaring it as a relief
undertaking and directing that any right, privilege,
obligation or liability accrued or incurred by the appellant-
company (except those mentioned in the Notification) before it
was declared a . relief undertaking and any remedy for the F
enforcement thereof became suspended and all proceedings
relative thereto pending before any court, tribunal, officer
or authority came to be stayed automatically. Consequently,
the Company Judge of the High Court stayed the proceedings in
the winding up petition. The Division Bench also confirmed the
order of the Company Judge in appeal. The State Government G
also issued subsequent notifications on May 9, 1984, May 10,
1985 and November 8, 1985 for t~e same purpose and pursuant to
the resolution of SICOM dated February 17, 1984 another loan
of Rs.15 lakhs was advanced to the appellant-company by the
State Government through SIC<!!.
H
,
842 SUPREME COURT REPORTS (1986] l S.C,R.
A
Respondent No.l then filed a writ petition in July 1984
in the High Court challenging the aforesaid Notifications. The
learned Single Judge allowed the writ petition and quashed the
Notifications on the ground that in order to invoke the powers
under section 3(1) of the Act, the condition precedent was
that the State Government 1111St have provided under the Act,
B loan guarantee and other financial assistance to the under-
taking as a measure preventing unemployment relief as per the
Preamble of the Act and since it had not been established that
Rs.52.30 lakhs had been lent by SICOM under the Act as a
measure of preventing unemployment or employment relief, the
Notification dated November 10, 1983 was ultra vires the Act
c and that the advance of Rs.15 lakhs by the State Government
before May 9, 1984 did not cure the defect. The appellant-
company filed an appeal against the order of the learned
Single Judge and the same was dismissed by the Division llP.nch
in limine.
D Allowing the appeal,
HELD: l, The decision of the High Court that unless
loan is advanced by the State Government under the Act no
declaration can be made under section 3 of the Act is wholly
erroneous. It is not warranted by the provisions of the
E statute. The case is remanded to the High Court to consider
the other contentions of the parties. (854 A; 853 H]
2, The whole object of the Act is to subserve the public
interest and in particular to prevent unemployment or to grant
unemployment relief, Section 3 of the Act which is a
F self-contained one refers to the industrial undertakings in
respect of which a declaration may be made under it. It is not
controlled by the Preamble to the Act. An induatrial
undertaking · which may be declared as a relief undertaking
under sec. 3 may be of two kinds. It may be an industrial
undertaking started, acquired or otherwise taken over by the
G State Government and carried on or proposed to be carried on
by the State Government or under its authority. It may also be
an industrial undertaking to which any loan, guarantee or
other financial assistance has been provided by the State
Government. There should be a declaration that an industrial
undertaking of either kind should be conducted to serve as a
H mea&ure of preventing unemployment or an unemployment relief•
OOBURG LAGER v. DHARIWAL 843
Then such an undertaking will be deemed to be a relief under- A
taking for the purposes of the Act. The consequences of such
declaration are contained in section 4 of the Act, one of thell
being that the State Government gets the power to direct that
notwithstanding any law, usage, custom., contract, instrument,
decree, order, award, submission, settlement, standing order
or other provision whatsoever any right, privilege, obligation B
or liability accrued or incurred before the undertaking was
declared as relief undertaking and any remedy for the enforce-
ment thereof shall be suspended and all proceedings relative
thereto pending before any court, tribunal, officer or autho-
rity shall be st.ayed. A notification issued under sub-11ection
(1) of section 3 is renewable by like notification from tillll
to time for further periods not exceeding twelve months at a c
time, so however that all the periods the aggregate do not
exceed fifteen yeara. (851 F-H; 852 A-J?)
3. A distinction has been made in the Act between cues
falling under sub-clause (ii) of clause (a) of sub-section (1)
of section 4 of the Act and caaes falling under aub-clause D
(iv) of clause (a) of sub-11ection (1) of section 4 of the Act.
Sub-clause (ii) of section 4(l)(a) of the Act refers to the
agreements, settlements, awards, standing ordera made under .
the several labour laws lll!lltioned under the Schedule to the
Act and states that "!lreements etc. Which may be applicable to
a relief undertaking before it was acquired or taken over by E
the State Governlll!llt or before any loan, prantee or other
financial assistance was provided to it by or with the
approval of· the State Govermient for being run as a relief
undertaking may be suspended in operation or shall, if so
directed by the State Govennoent be applied with auch
modifications as may be specified io. the ootificatioo. issued F
for the said purpose. In this r.ase the Act seems to resolve a
likely value-conflict between loau given for running the
industry as a relief undertaking and the rights of wodalen
under the agreements, awards etc. under the labour laws in the
Schedule. Thia sub-clause does not have anything to do with
sub-clause (iv) of section 4(l)(a) under Which the case of a G •
creditor like respondent No, l falls. Another distinction
which may be noticed is the difference betweeo. the language
in aub-clauae (ii) of section 4(l)(a) and io. aectioo. 3, '?be
fol'lll!r contains these words 'before any 10&11., guarantee or
other financial assistance wu provided to it by or with the
H
844 SUPREME COURT REPORTS [1986] 1 s.c.R.
A
approval of the State Govert111ent for being run as a relief
undertaking' (emphasis added), In section 3, the words are "or
to which any loan, guarantee, or other financial assistance
has been provided by the State Government shall with effect
from. • • • • be conducted to serve as a measure or of
Unell!jlloyment relief." (emphasis added). The only precondition
B for the exercise of the power under section 3 is that loan
llllSt have been "'\vanced prior to the date of notification and ·t
it 111St still be outstanding on that day. This is what leaps
to the eyes effortlessly on the mere opening of the eyes. On
the other hand, section 3 does not say expressly or by
implication "a loan etc. is given for being run as a relief
c undertaking under this Act." [852 H; 853 A-G]
In the i11$tant case, the State of Maharashtra had
provided through SICOM which is virtually an agent of the
State Rs. 52.30 lakha by way of an advance to the appellant-
company before the first notification was issued, and at any
D rate before the second notification was issued the State ~
Govenment itself had advanced Rs. 15 lakha in addition to
what SICOM had .advanced esrlier. Hence the industry of the
appellant-company was one to which any loan, guarantee or
other financial assistance had been provided by the State
Government. There is no provision in the Act requiring that
E any. such loan should be granted under it before a declaration
may be made under section 3(1) thereof. [852 E-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 932 of
1986.
F From the Judgment and Order dated 21.1.1986 of the Bombay ~-.
High Court in Appeal No. 28 of 1986. All
Dr. Y.S. Chitale and Mukul Mudgal for the Appellant.
K. Rajendra Choudhary for the Respondents.
G
The Judgment of the Court was delivered by
VENrATABAllIAH, J. At the conclusion of the hearing of
the .above appeal on March 10, 1986 we passed the following ~
order in the above appeal and the connected special leave
H petition:
DOBURG LAGER v, DHARIWAL [VENKATARAMIAH, J, ] 845
A
"Special leave granted. lie do not agree with the
view of the High Court that the loan iri question
should have been advanced under the Act in order to
attract the provisions of sections 3 and 4 of the
Bombay Relief Undertakings (Special Provisions) B
Act, 1958. The judgment of the learned Single Judge
and of the Division Bench of the High Court are set
aside and the case is remanded to the learned
Single Judge to consider the submissions to be made
on other points involved in this case. It is open
to the Union which has filed Special Leave Petition
No. 3428 of 1986 to apply to the High Court for c
being impleaded and the High Court on such applica-
tion being made will consider it in accordance with
law. The appeal and Special Leave Petition No. 3428
of 1986 are disposed of accordingly. There is no
order as to costs.
D
Reasons follow. 11
lie are quite unhappy with the order of the Bombay High
Court against which this appeal is filed, The grounds urged in
support of the writ petition were fallacious, the reasons
given by the learned Single Judge for allowing it were faulty E
and the order of dismissal of the appeal in limine passed by
the Division Bench exhibits indifference. Courts are expected
to show more concern and to give greater attention before
quashing a statutory instrument made or issued under a
beneficent legislation intended to prevent large scale
unemployment and misery than what is shown by the High Court F
in this case.
The facts of the case are these. The appellant herein is
a private limited company and has been carrying on business in
the State of Maharashtra. It ran into financial difficulties
as a result of which winding-up proceedings were commenced G
against it. M/s. Dhariwal Bottle Trading Co., respondent No.I
herein, which is a partnership firm filed Company Petition No,
119 of 1982 as a creditor for winding-up of the appellant
company. The appellant company was carrying on business in a
backward area of the State of Maharashtra. It had employed
about 200 workmen who were likely to be thrown out of H
employment. The appellant company had also borrowed about
846 SUPREME COURT REPORTS [19861 l s.c.R.
Rs.52,30,000 from the State Industrial and Investment Corpora-
tion of Maharashtra Ltd. (SICOM). Taking into consideration
the financial position of the appellant company, and the con-
sequences that were li!tely to ensue if the industry which was
being run by it was to be closed, the Government of Maharash-
tra took action under the Bombay Relief Undertakings (Special
B Provisions) Act, 1958 (hereinafter referred to as 'the Act')
by declaring it as a relief undertaking with effect from t
November 10, 1983 by its notification issued on November 10,
1983 under section 3 and sub-clause (iv) of clause (a) of
sub-section ( 1) of section 4 of the Act. The notification
reads thus:
c
"NOTIFICATION
Industries, Energy and Labour
Department, Mantralaya,Bombay
400032, Dated the 10th day of
November, 1983.
D
No BRU-1083/(9602)/IND-10. In exercise of the
powers conferred by section 3 and sub-clause (iv)
of clause (a) of sub-section (1) of section 4 of
the Bombay Relief Undertakings (Special Provisions)
Act, 1958 (Bom. XCVI of 1958), the Government of
E Maharashtra, hereby-
(a) declares that the industrial undertaking called
''M/s. Doburg Lager Breweries (P) Ltd., Bombay"
(hereinafter referred to as "the said relief
undertaking") to which. State Industrial and
F Investment Corporation Maharashtra Ltd. , has
provided a loan of Rs, 52. 30 lakhs, shall for a
period of 6 months commencing from 10th day of
November, 1983 be conducted to serve as a measure
of unemployment relief; and
G (b) directs that in relation to the said relief
undertaking and in respect of the said period for
which the said relief undertaking continues as
such, any right, privilege, obligation or liability
(excepting the obligations or liabilities incurred
in favour of workmen of the said relief undertaking
H or in favour of the industrial units which are
DOBURG LAGER v. DHARIWAL [VENKATARAMIAH, J.] 847
A
registered as small scale industrial units with the
Directorate of Industries of the Government of
Maharashtra, the Maharashtra State Electricity
Board, the State Industrial and Investment Corpora-
tion of Maharashtra Limlted, the Maharashtra State
Financial Corporation, Bank of Maharashtra, Vijaya B
Bank, Bank of India, Industrial Development Bank of
+ India, Industrial Finance Corporation of India and
Industrial Credit and Investment Corporation of
India and the dues of the Employees' State Insu-
rance Corporation, and any liability incurred under
the Bombay Sales Tax Act, 1959 (Bom. LI of 1959),
the Maharashtra State Tax on Professions, Trades, c
Calling and Employments Act, 1975 (Mah. xvr of
197 5), and the Employees' Provident Fund and Mis-
cellaneous Provision Act, 1952 (19 of 1952),
accrued or incurred before the 10th day of November
1983 and any remedy for the enforcement thereof
shall be suspended and all proceedings relative D
thereto pending before any Court, tribunal, officer
or authority shall be stayed.
By order and in the name of the Governor of Maharashtra.
P.L. Sawai, E
Desk Officer,
Industries, Energy &
Labour Department"
The above notification was to be effective for a period
of six months at the first instance. F
Section 3 and the relevant part of section 4 of the Act
read as follows :
"3.(i) If at any time it ·appears to the State
Government necessary to do so, the State Government G
may, by notification in the Official Gazette,
declare that an industrial undertaking specified in
the notification, whether started, acquired or
otherwise taken over by the State Government, and
carried on or proposed to be carried on by itself
or under its authority, or to which any loan, H
848 SUPREME COURT REPORTS [1986] 1 S.C.R.
A
guarantee or other financial assistance has been
provided by the State Government shall, with effect
from the date specified for the purpose in the
notification be conducted to serve as a measure of
preventing unemployment or of unemployment relief
and the undertaking shall accordingly be deemed to
B
be a relief undertaking for the purposes of the +
Act.
(2) A notification under sub-section (1) shall have
effect for such period not exceeding twelve months
as may be specified in the notification; but it
c shall be renewable by like notifications from time
to time for further periods not exceeding twelve
months at a time, so however that all the periods
in the aggregate do not exceed fifteen years.
4. (1) Notwithstanding any law, uoage, custom,
D contract, instrument, decree, order, award,
submission, settlement, standing order or other
provisions whatsoever, the State Government may, by
notification in the Official Gazette, direct that -
(a) in relation to any relief undertaking and
E
in respect of the period for which the relief
undertaking continues as such under sub-section (2)
of section 3 -
...................................................
(iv) any right, privilege, obligation or liability
accrued or incurred before the undertaking was
F
declared a relief undertaking and any remedy for ;--
the enforcement thereof shall be suspended and all
proceedings relative thereto pending before any
court, tribunal, officer or authority shall be
stayed;
G
.......................... "
The effect of the above mentioned notification dated
!~ovember10, 1983 was thst any right, privilege, obligation or
liability accrued or incurred by the appellant company (except
those mentioned therein) before it was declared a relief
undertaking and any remedy for the enforcement thereof beca.e
H
suspended and all proceedings relative thereto pending before
DOBURG LAGER v. DHARIWAL [VENKATARAMIAH, J. ] 849
A
any Court, tribunal, officer or authority came to be stayed
automatically. Conaequently the proceedings in the winding-up
petition (Company Petition No. 119 of 1982) filed by the lst
respondent againat the appellant company were also stayed by
the Company Judge of the High Court. Against his order an
appeal was filed before the Division Bench and that appeal was B
dismissed. The order of stay thus became final. Having failed
in its attempt to get the order of stay vacated, the
respondent No. 1 apparently in order to coerce the ·appellant·
filed a writ petition, being Writ Petition No. 1'552 of 198~
out of which this appeal arises on the file of the Bombay High
Court challenging the notification issued under sections 3 ·and'
4 of the Act and subsequent notificationa which had ·been C
issued from time to time on May 9, 1984, May 10, 1985 and
November 8, 1986 for the same purpose. It may b.e stated here
that even today the last of the ncitif ications truit is the one
issued on November 8, 1985 under those provisions is in force;
It should also be stated here that pursuant to the resolution
of SICOM dated February 17, 1984, another loan of Rs. D
15,00,000 wa~ advanced to the appellant company by the State
Government through SICOM. The notification dated May 9, 1984
recites that Rs.15,00,000 had been so advanced. It says that
the State Government had provided the said loan under a
package scheme of incentives through SICOM and the said
recital is repeated in each of the subsequent notificationa. E
Everyone of them contains a declaration in terms of' section 3
and a direction under section 4(l)(a)(tv) of the Act as stated
above. Each one of them can stand by itself though they refer
to the fact that the undertaking is having the protection with
effect from November 10, 1983, that is from the date of the
fi.rst notification, as that date becomes relevant for purposes F
of computing the aggregate period under section 3(2) of the
Act.
The Writ Petition was allowed by the learned Single Judge
with costs and the notificationa were quashed. An appeal filed
by the appellant company against the order of the learned G
Single Judge was dismissed by the Di vision Bench in limine.
The order of the Division Bench ran as follows:
"Heard both sides. Stay to continue for four weeks.
Dismissed."
H
850 SUPREME COURT REPORTS (1986] I S.C.R.
A
This appeal is filed under Article 136 of the
Constitution against the order of the Division Bench.
The writ petition was filed in July 1984 after the State
Government had issued the notification dated May 9, I 984
containing the statement that the State Government had
B advanced an additional loan of Rs. I5,00,000 to the appellant
co""any. The contention urged on behalf of the respondent No.I t
(the petitioner in the writ petition) may be stated in the
language of the learned Single Judge himself, thus :
"5. Shri Cooper, learned counsel appearing for the
c petitioners while attacking the notification dated
November 10, I983 being illegal and contrary to
section 3 of the Act urged that the said Notifica-
tion does not fulfil the condition precedent pres-
cr.ibed under section 3 of the Act viz. 'giving a
financial assistance to a sick unit like the
D respondent No.2 herein UDder the Act before issuing
such notification. According to the learned counsel
before issuance of the notification under section
•.
3(1) of the Act the Government llJ.ISt have given
under that provision any loan, guarantee or other
financial assistance. He further submitted that no
E financial assistance and/or loan and/or guarantee
has been provided by the State Government under the
Act before issuing the notification dated November
IO, I983, and, therefore, the impugned Notification
is contrary to section 3(1) of the Act."
(emphasis added)
F
Having set out the contention of the respondent No.I the
learned Single Judge assumed for purposes of the case that
SlCOM was 'the State' within the meaning of Article 12 of the
Constitution. Then he proceeded to observe that Rs.52.30 lakhs
had been advanced by SlCOM as loan not "under this Act", but
G it was only an ordinary coillllercial transaction. Then he held
that in order to invoke the powers under section 3(1) of the
Act, the condition precedent was that the State Government
D11st have provided under the Act loan, guarantee and other
financial assistance to the undertaking as a measure prevent-
ing unemployment relief as per the Preamble of the Act and
H since it had not been established that Rs.52.30 lakhs had been
DOBURG LAGER v. DHARIWAL [VENKATARAMIAH, J.] 851
A
lent by SICOM under the Act as a measure of preventing un-
employment or unemployment relief, the notification dated
November 10, 1983 was ultra vires the Act. He further held
that the advance of Rs.15,00,GOO by the State Government
before May 9, 1984 did not cure the defect. He was of the
opinion that the subsequent notifications having been i~sued B
in continuation of the first notification were equally in-
+ appellant
effective. The petition thus came to be allowed and the
company lost the protection granted to it by the
Act. Since the Division Bench has not given any reasons for
its order we need not refer to it in greater detail.
The Act contains just four sections in addition to its C
long-title and the Preamble. The Preamble reads :
"WHEREAS it is expedient to make temporary
provision for industrial relations and other
matters to enable the State Government to conduct,
or to provide loan, guarantee or financial D
assistance for the conduct of, certain industrial
undertakings as a measure of preventing
unemployment or of unemployment relief; It is
hereby enacted in the Ninth Year of the Republic of
India as follows ;-11
E
Section 1 of the Act sets out the short title of the Act
and the extent of its application. Section 2 of the Act
defines 'industry' and 'relief undertaking'. 'Relief under-
taking' means an industrial undertaking in respect of which a
declaration under section 3 is in force. Section 3 of the Act
and the material part of section 4 have already been set out F
above. Section 3 which is a self-contained one refers to the
industrial undertakings in respect of which a declaration may
be made under it. It is not controlled by the Preamble to the
Act. An industrial undertaking which may be declared as a
relief undertaking under section 3 may be of two kinds. ·rt may
be an industrial undertaking started, acquired or otherwise G
taken over by the State Government and carried on or proposed
to be carried on by the State Government or under its
authority. It may also be an industrial undertaking to which
any loan, guarantee or other financial assistance has been
provided by the State Government. There should be a declara-
tion that an industrial undertaking of either kind should be H
852 SUPREME COURT REPORTS [1986] 1 S.C.R.
A
conducted to serve as a measure of preventing unemployment or
an unemployment relief. Then such an undertaking will be
deemed to be a relief undertaking for the purposes of the Act.
The consequences of such declaration are contained in section
4 of the Act one of them being that the State Government gets
the power to direct that notwithstanding any law, usage,
B custom, contract, instrument, decree, order, award,
submission, settlement, standing order or other provision t
whatsoever any right, privilege, obligation, or liability
accrued or incurred before the undertaking was declared as
relief undertaking and any remedy for the enforcement thereof
shall be suspended and all proceedings relative thereto pend-
c ing before any court, tribunal, officer or authority shall be
stayed. A notification issued under sub-section (1) of section
3 is renewable by like notification from time to time for
further periods not exceeding twelve months at a time, so
however that all the periods the aggregate do not exceed
fifteen years. It is seen that the whole object of the Act is
D to subserve the public interest and in particular to prevent
unemployment or to grant unemployment relief.
In the instant case the State of Maharashtra had provided
through SICOM which is virtually an agent of the State
Rs.52.30 lakhs by way of an advance to the appellant company
E before the first notification was issued and at any rate
before the second notification was issued the State Government
itself had advanced Rs. 15,00,000 in addition to what SICOM
had advanced earlier. Hence the industry of the appellant
company was one to which any loan, guarantee or other
financial assistance had been provided by the State Govern-
F ment. It is not clear how the High Court came to the conclu-
sion that such loan should have been granted "under" the Act.
There is no provision in the Act requiring that any such loan
should be granted under it before a declaration may be made
under section 3(1) thereof. If any such loan is granted by the
State Government to an industrial undertaking or illarantee or
G other financial assistance is given then it may be declared as
a relief undertaking. The conclusion of the High Court is not,
therefore, warranted by the provisions of the statute.
It may also be noticed that a distinction has been made
in the Act between cases falling under sub-clause (ii) of
H clause (a) of sub-section (1) of section 4 of the Act and
DOBURG LAGER v. DllARIWAL [VENKATARAMIAH, J,] 853
A
cases falling under sub-caluse (iv) of clause (a) of
sub-section (1) of section 4 of the Act. Sub-clause (ii) of
section 4(l)(a) of the Act refers to the agreements,
settlements, awards, standing orders made under the several
labour laws mentioned under the Schedule to the Act and states
that agreem•mts etc. which may be applicable to a relief B
undertaking before it was acquired or taken over by the State
Government or before any loan, guarantee or other financial
assistance was provided to it by or with the approval of the
State Government for being run as a relief undertaking may be
suspended in operation or shall, if so directed by the State
Government be applied with such modifications as may be
specified in the notification issued for the said purpose. In c
this case the Act seems to resolve a likely value conflict
between loans given for running the industry as a relief
undertaking and the rights of workmen under the agreements,
awards etc. under the labour laws in the Schedule. This
sub-clause does not have anything to do with sub-clause (iv)
of section 4(1 )(a) under which the case of a creditor like D
respondent No.l falls. Another distinction which may be
noticed is the difference between the language in sub-clause
(ii) of section 4(l)(a) and in section 3, The former contains
these words 'before any loan guarantee or other financial
Ysistance waa provided to it by or with the approval of the
State Government fo' being r1111 ae a relief undertaking'
(~basis added), In section 3 we have these words "or to
E
which any loan, guarantee, or other financial assistance bas
been provided by the State Government shall with effect
, from ... be conducted to serve M a - e or preventing
UDell(>l.a}'Ent: or of unenp]._.,c relief." (emphasis added), The
only precondition for the exercise of the power under section F
3 is that loan IDJSt have been advanced prior to ·the date of
notification and it IDJSt still be outstanding on that day.
This is what leaps to the eyes effortlessly on the mere
opening of the eyes. On the other hands section 3 does not say
expressly or by implication 'a loan etc. is given for being
run as a relief undertaking under this Act.' G
Shri Shanti Bhushan, learned counsel for the respondent
No.I, very fairly stated that the order of the High Court may
be set aside and the case may be remanded to the High Court to
consider other .Points which had not been considered by the
learned Single Judge. H
854 SUPREME COURT REPORTS [19B6J 1 s.c.R.
A
We are of the view that the decision of the High Court
that unless loan is advanced by the State Government under the
Act no declaration can be made under section 3 of the Act is
wholly erroneous. The judgment of the High Court appears to be
a very strained one and it is unfortunate that the learned
Single Judge committed an error in being carried away by
B
(putting it in the words of the learned Judge) the "very neat
and intelligent question of law" raised by the counsel for the t
petitioner in the writ petition. The learned Judge failed to
evince awareness of the incalculable public prejudice that was
likely to be caused by the acceptance of the said fallacious
contention and to notice that the case called for close and
c thorough consideration. The summary dismissal of the appeal
which deserved to be allowed for the illere asking of it by the
Division Bench is equally lamentable to say the least about
it.
This appeal should therefore be allowed and the case
D
should be remanded to consider the other contentions of the
parties. ntese are the reasons for our order dated March 10,
1986.
M.L.A. Appeal allowed.
...
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