Bright Drug Industries Pvt. Ltd. and anr. Vs. General Manager, District Industries Centre and ors. - Court Judgment

Excerpt:
sales tax - exemption of tax - appellant purchased defaulted company by way of tender proceeding initiated by bank - got themselves registered as industrial unit - also obtained financial assistance for running unit and began commercial production - applied for grant of eligibility certificate in respect of exemption from sales tax as also entry tax by its application - application rejected by respondents on ground that since benefit of sales tax was already availed of by defaulting company, purchased by appellant therefore, appellant not entitled for any benefit - feeling aggrieved, present appeal - held, respondent not justified in rejecting application for grant of eligibility certificate on ground that since exemption was granted to defaulting unit and hence it cannot be granted - appellant had nothing to do with defaulting unit as they were bona fide auction purchaser of said defaulting unit in auction proceedings - business activity of defaulting unit came to end from date when unit was sold and transferred to appellant - appellant was entirely separate and distinct legal entity which acquired default unit for their benefit - sales tax exemption is granted to person who carries on some business activity on fulfillment of conditions stipulated for grant of exemption - therefore, respondents had to consider and decide application for grant of eligibility certificate for payment of sales tax and entry tax on its own merit treating application to have been made by appellant as distinct industrial unit for first time - accordingly, petition allowed and impugned orders set aside - constitution of india 1055. article 141; [a.k. patnaik, c.j., dipak misra, abhay gohil, s. samvatsar, & s.k. gangele, jj] dismissal of slp arising from decision of high court whether binding precedent decision of division bench in rama and company v. state of madhya pradesh, [2007(ii) mpjr 229] overruled by full bench of same high court prior to delivery of decision of full bench order passed in division bench decision assailed in slp before supreme court dismissal of slp by short reasoned order, though declaration of law, but high court is bound to follow earlier decisions in field regard being had to concept of precedents as per law laid down by apex court and larger bench decision in jabalpur bus operators association, reported in [2003(1) mpjr 158]. court clarifies that dr. jaidev siddha v. jaiprakash siddha, 2007(2) mpjr (fb) 361; air 2007 mp 269 (fb) is not impliedly overruled in view of dismissal of slp articles 226 & 227; [a.k. patnaik, c.j., dipak misra, abhay gohil, s. samvatsar, & s.k. gangele, jj] power to issue writ under article 226 - [per majority] the high courts exercise original jurisdiction under article 226 of the constitution and supervisory jurisdiction and the power of superintendence under article 227 of the constitution. but, an eloquent and fertile one, a writ of certiorari is issued in exercise of original jurisdiction. whenever word supervisory has been used in the context of article 226 it is in contrast with the appellate or revisional jurisdiction. when a writ is issued under article 226 of the constitution in respect of courts or tribunals it is done in exercise of original jurisdiction and the parameters are different than article 227 of the constitution of india. it is worth noting that the power under article 227 was there in a different manner under the government of india act. power of superintendence is distinct from the exercise of power of revisional or supervisory jurisdiction which is a facet of the power of superintendence. the confusion occurs when one applies the principle of equivalence or equates the exercise of supervisory power and power of superintendence with original or supervisory jurisdiction. there is an acceptable nuance between the concept of jurisdiction and exercise of power by certain parameters. both do come within the fundamental concept of judicial review but the jurisdiction exercised is different when under article 226 a writ is issued it is issued in exercise of original jurisdiction whether against a tribunal or inferior courts or administrative authorities. the word superintendence has not been used in article 226 of the constitution. it is also evident that the term writs is not referred to in article 227. on a scrutiny of article 227 it would be crystal clear that power of superintendence conferred on the high courts is a power that is restricted to the courts and tribunal in relation to which it exercises jurisdiction. on the contrary the power conferred on the high court under article 226 is not constricted and confined to the courts and tribunals but it extends to any person or authority. be it noted, article 226 as has been engrafted in the constitution covers entirely a new area, a broader one in a larger spectrum. when the legislature has used the terms in exercise of original jurisdiction and supervisory jurisdiction it has to be understood that they are used in contradistinction in the constitutional context as has been interpreted by the apex court. the words of the section have to be understood to mean exercise of powers under article 226 of the constitution of india which is always original. -- m.p. samaj ke kamjor vargon ke krishi bhumi hadapne sambandhi kuchakron se paritran tatha mukti adhiniyam [3/1977]. section 2: writ appeal maintainability from order of single judge-when permissible held, maintainability of a writ appeal from an order of the learned single judge would depend upon many an aspect and cannot be put into a strait jacket formula. it cannot be stated with mathematical exactitude. it would depend upon the pleadings in the writ petition, nature of the order passed by the single judge, character and the contour of the order, directions issued, nomenclature given and the jurisdictional prospective in the constitutional context are to be perceived. it cannot be said in a hyper-technical manner that an order passed in a writ petition, if there is assail to the order emerging from the inferior tribunal or subordinate courts has to be treated all the time for all purposes to be under article 227 of the constitution of india. it would depend upon the real nature of the order passed by the learned single judge. the pleadings also assume immense significance. it would not be an over emphasis to state that an order in a writ petition can fit into the subtle contour of articles 226 and 227 of the constitution in a composite manner and they can co-inside, co-exist, overlap or imbricate. in this context it is apt to note that there may be cases where the single judge may feel disposed or inclined to issue a writ to do full and complete justice because it is to be borne in mind that article 226 of the constitution is fundamentally a repository and reservoir of justice based on equity and good conscience. it will depend upon factual matrix of each case. dr. jaidev siddha v. jaiprakash siddha, 2007(2) mpjr (fb) 361: air 2007 mp 269 (fb) is not impliedly overruled in view of dismissal of slp preferred against order reported in rama and company v. state of madhya pradesh [2007 (2) mpjr 229 (db) (mp)]. - , benson pharmaceuticals failed to repay the loan and hence mpfc invoked their powers conferred under section 29 of the state financial corporation act, 1951 and advertised the aforesaid unit for sale on october 9, 1987. the petitioner submitted its tender for purchase of the defaulted unit. 1 and 2 had to consider and decide the application dated april 20, 1990 and april 12, 1990 (annexure p/19) for grant of eligibility certificate in payment of sales tax and entry tax on its own merit treating the application to have been made by the petitioner as a distinct industrial unit for the first time and then should have considered whether the petitioner satisfied all the terms and conditions necessary for the grant of eligibility certificate.ordera.m. sapre, j.1. the challenge by the petitioner in this petition filed under article 226/227 of the constitution is to an order dated july 1, 1992 (annexure p/20) and order dated july 9, 1992 (annexure p/21) by which the petitioner's application for grant of eligibility certificate in respect of the concession or/and exemption from payment of sales tax/entry tax is rejected. facts that led to filing of this petition lie in a narrow compass. they need mention in brief.2. there was a proprietory concern of one shri prabhudas shah called benson pharmaceuticals. it had one industrial unit engaged in the business of manufacture of pharmaceutical goods at industrial estate at sanwer road, indore. this concern had taken loan from mpfc for running this unit. it appears that since the concern, i.e., benson pharmaceuticals failed to repay the loan and hence mpfc invoked their powers conferred under section 29 of the state financial corporation act, 1951 and advertised the aforesaid unit for sale on october 9, 1987. the petitioner submitted its tender for purchase of the defaulted unit. eventually the petitioner was turned out to be the successful bidder and accordingly the mpfc by their letter dated december 8, 1987 (annexure p/6) accepted the petitioner's offer for rs. 8,77,832.67 paise. this was then followed by execution of panchnama (annexure p/7) by which the petitioner was actually placed in possession of the unit in question. the petitioner then executed a fresh lease deed (annexure p/10) with industries department of state. the petitioner then got themselves registered as small-scale industrial unit vide certificate issued in their favour on march 16, 1988--september 14, 1989 (annexures p/11 & p/12). since the petitioner was interested in business of manufacture and sale of drugs, they also obtained requisite manufacturing licence from the concerned authorities (annexure 13/14). the petitioner also obtained financial assistance from mpfc for running the unit and then began commercial production in 1988.3. the petitioner then applied for grant of eligibility certificate in respect of the concession or exemption from sales tax as also entry tax by its application dated april 20, 1990 and april 12, 1990 (annexure p/19). it is this application that was rejected by the general manager, district industries centre, indore, by impugned order dated july 9, 1992 (annexure p/21) essentially on the ground that since the benefit of sales tax was already availed of by the defaulting unit, i.e., benson pharmaceuticals from whom the petitioner had purchased and hence petitioner is not entitled for any benefit. this is what is contained in the order rejecting application of the petitioner :^^vkidk mdr fo'k;kafdr vkosnu i= lfefr dsle{k fopkjkfkz ,oa fu.kz; gsrq fnukad 26-12-91 dks j[kk x;k fkk] tks ftyk lrjh;lfefr }kjk fujlrh dk dkj.k] iwoz esa blh lfkku ij lfkkfir m|ksx esllz osu'kudkez}kjk fnukad 1-11-82 ls fnukad 31-10-84 rd fo; dj eqfdr dk ykhk fy;k tk pqdkgsa vr% vkidk izdj.k vf/klwpuk dh /kkjk 12 lh ds vuqlkj fujlr fd;k x;k gsa**4. it is against this rejection the petitioner has felt aggrieved and filed this petition.5. the state by filing the return supported the impugned rejection and the reasoning contained therein.6. heard shri p.m. choudhary, learned counsel for the petitioners and shri p. verma, learned government advocate, for the respondents.7. learned counsel for the petitioner while attacking the impugned order (annexure p/20) argued that reasoning contained in the impugned order and that prevailed in rejection of petitioner's application was entirely perverse as also de hors to the very object in granting exemption. it was his submission that the petitioner being an independent unit in itself having no connection whatsoever with the defaulting unit, the petitioner's application had to be considered on its own merit.8. learned counsel for the state supported the impugned rejection.9. having heard the learned counsel for the parties and having perused the entire record of the case, i am inclined to set aside the impugned order and allow this petition.10. in my considered opinion, the authorities concerned were not justified in rejecting petitioner's application for grant of eligibility certificate on the ground that since the exemption was granted to defaulting unit and hence it cannot be granted to the petitioner. this reasoning is not sustainable. in my opinion, the petitioner had nothing to do with the defaulting unit as they were the bona fide auction purchaser of the said defaulting unit in auction proceedings held by mpfc under section 29 of the state financial corporation act, 1951. the petitioner had become owner of the said unit after the auction was knocked down in their favour and they made the payment. in other words, petitioner was in no way concerned with any of the acts and activities of defaulting unit. whether the sales tax exemption was granted to defaulting unit or not had nothing to do with the petitioner's application for grant of exemption. the business activity of defaulting unit came to an end on and from the date when the unit was sold and transferred to the petitioner in auction by mpfc. the petitioner was entirely a separate and altogether distinct legal entity which acquired the unit for their benefit. the sales tax/entry tax exemption is granted to a person who carries on some business activity on fulfilment of conditions stipulated for grant of exemption. once the petitioner purchased the unit and became owner thereof on making payment to mpfc, they had become entitled to apply in their own rights to ask for the exemption for carrying on their business. it had to be therefore, considered on its own merit.11. in my opinion, therefore, the respondent nos. 1 and 2 had to consider and decide the application dated april 20, 1990 and april 12, 1990 (annexure p/19) for grant of eligibility certificate in payment of sales tax and entry tax on its own merit treating the application to have been made by the petitioner as a distinct industrial unit for the first time and then should have considered whether the petitioner satisfied all the terms and conditions necessary for the grant of eligibility certificate.12. accordingly and in view of aforesaid discussion, the petition is allowed, impugned order dated july 1, 1992, annexure p/20, and order dated july 9, 1992 are set aside by issuance of writ of certiorari. the respondent nos. 1 and 2 are directed to reconsider the application made by the petitioner on april 20, 1990 and april 12, 1990, annexure p/19, afresh on its merits in the light of observations made supra. let these proceedings be completed within six months from the date of order.no cost. security amount if deposited, be refunded to the petitioner as per the rules.

Judgment:
ORDER

A.M. Sapre, J.

1. The challenge by the petitioner in this petition filed under Article 226/227 of the Constitution is to an order dated July 1, 1992 (annexure P/20) and order dated July 9, 1992 (annexure P/21) by which the petitioner's application for grant of eligibility certificate in respect of the concession or/and exemption from payment of sales tax/entry tax is rejected. Facts that led to filing of this petition lie in a narrow compass. They need mention in brief.

2. There was a proprietory concern of one Shri Prabhudas Shah called Benson Pharmaceuticals. It had one industrial unit engaged in the business of manufacture of pharmaceutical goods at Industrial Estate at Sanwer Road, Indore. This concern had taken loan from MPFC for running this unit. It appears that since the concern, i.e., Benson Pharmaceuticals failed to repay the loan and hence MPFC invoked their powers conferred under Section 29 of the State Financial Corporation Act, 1951 and advertised the aforesaid unit for sale on October 9, 1987. The petitioner submitted its tender for purchase of the defaulted unit. Eventually the petitioner was turned out to be the successful bidder and accordingly the MPFC by their letter dated December 8, 1987 (annexure P/6) accepted the petitioner's offer for Rs. 8,77,832.67 paise. This was then followed by execution of panchnama (annexure P/7) by which the petitioner was actually placed in possession of the unit in question. The petitioner then executed a fresh lease deed (annexure P/10) with Industries Department of State. The petitioner then got themselves registered as small-scale industrial unit vide certificate issued in their favour on March 16, 1988--September 14, 1989 (annexures P/11 & P/12). Since the petitioner was interested in business of manufacture and sale of drugs, they also obtained requisite manufacturing licence from the concerned authorities (annexure 13/14). The petitioner also obtained financial assistance from MPFC for running the unit and then began commercial production in 1988.

3. The petitioner then applied for grant of eligibility certificate in respect of the concession or exemption from sales tax as also entry tax by its application dated April 20, 1990 and April 12, 1990 (annexure P/19). It is this application that was rejected by the General Manager, District Industries Centre, Indore, by impugned order dated July 9, 1992 (annexure P/21) essentially on the ground that since the benefit of sales tax was already availed of by the defaulting unit, i.e., Benson Pharmaceuticals from whom the petitioner had purchased and hence petitioner is not entitled for any benefit. This is what is contained in the order rejecting application of the petitioner :

^^vkidk mDr fo'k;kafdr vkosnu i= lfefr dsle{k fopkjkFkZ ,oa fu.kZ; gsrq fnukad 26-12-91 dks j[kk x;k Fkk] tks ftyk Lrjh;lfefr }kjk fujLrh dk dkj.k] iwoZ esa blh LFkku ij LFkkfir m|ksx esllZ osU'kudkeZ}kjk fnukad 1-11-82 ls fnukad 31-10-84 rd fo; dj eqfDr dk ykHk fy;k tk pqdkgSA vr% vkidk izdj.k vf/klwpuk dh /kkjk 12 lh ds vuqlkj fujLr fd;k x;k gSA**

4. It is against this rejection the petitioner has felt aggrieved and filed this petition.

5. The State by filing the return supported the impugned rejection and the reasoning contained therein.

6. Heard Shri P.M. Choudhary, learned counsel for the petitioners and Shri P. Verma, learned Government Advocate, for the respondents.

7. Learned counsel for the petitioner while attacking the impugned order (annexure P/20) argued that reasoning contained in the impugned order and that prevailed in rejection of petitioner's application was entirely perverse as also de hors to the very object in granting exemption. It was his submission that the petitioner being an independent unit in itself having no connection whatsoever with the defaulting unit, the petitioner's application had to be considered on its own merit.

8. Learned counsel for the State supported the impugned rejection.

9. Having heard the learned counsel for the parties and having perused the entire record of the case, I am inclined to set aside the impugned order and allow this petition.

10. In my considered opinion, the authorities concerned were not justified in rejecting petitioner's application for grant of eligibility certificate on the ground that since the exemption was granted to defaulting unit and hence it cannot be granted to the petitioner. This reasoning is not sustainable. In my opinion, the petitioner had nothing to do with the defaulting unit as they were the bona fide auction purchaser of the said defaulting unit in auction proceedings held by MPFC under Section 29 of the State Financial Corporation Act, 1951. The petitioner had become owner of the said unit after the auction was knocked down in their favour and they made the payment. In other words, petitioner was in no way concerned with any of the acts and activities of defaulting unit. Whether the sales tax exemption was granted to defaulting unit or not had nothing to do with the petitioner's application for grant of exemption. The business activity of defaulting unit came to an end on and from the date when the unit was sold and transferred to the petitioner in auction by MPFC. The petitioner was entirely a separate and altogether distinct legal entity which acquired the unit for their benefit. The sales tax/entry tax exemption is granted to a person who carries on some business activity on fulfilment of conditions stipulated for grant of exemption. Once the petitioner purchased the unit and became owner thereof on making payment to MPFC, they had become entitled to apply in their own rights to ask for the exemption for carrying on their business. It had to be therefore, considered on its own merit.

11. In my opinion, therefore, the respondent Nos. 1 and 2 had to consider and decide the application dated April 20, 1990 and April 12, 1990 (annexure P/19) for grant of eligibility certificate in payment of sales tax and entry tax on its own merit treating the application to have been made by the petitioner as a distinct industrial unit for the first time and then should have considered whether the petitioner satisfied all the terms and conditions necessary for the grant of eligibility certificate.

12. Accordingly and in view of aforesaid discussion, the petition is allowed, impugned order dated July 1, 1992, annexure P/20, and order dated July 9, 1992 are set aside by issuance of writ of certiorari. The respondent Nos. 1 and 2 are directed to reconsider the application made by the petitioner on April 20, 1990 and April 12, 1990, annexure P/19, afresh on its merits in the light of observations made supra. Let these proceedings be completed within six months from the date of order.

No cost. Security amount if deposited, be refunded to the petitioner as per the rules.