judgement:
ivil Appeal No. 1197 of 1987.
From the Judgment and Order dated 5.1.1987 of the Madhya Pradesh High Court in Civil Revision No. 382 of 1986.
K.K. Venugopal, A.K. Chitale, Deepak K. Thakur and S.K. Gambhir for the Appellant.
Y.S. Chitale, M.S. Ganesh and Ravi Wagmare for the Respondent.
This is an appeal by special leave against the Judgment & Order dated 5 1 1987, of the High Court of Madhya Pradesh, Bench at 251 Indore, in Civil Revision No. 382 of 1986, by which the High Court affirmed the order dated 28 11 1986 of the District Judge, Ujjain in Civil Execution Case No. 1249 of 1986, filed by the respondent against the appellant.
The appellant is a textile undertaking at Agra Road, Ujjain.
The Madhya Pradesh Government enacted the Madhya Pradesh Sahayata Upkram (Vishesh Upbandh) Adhiniyam, 1978 (No. 32 of 1978), for short the Act, with the object of giving relief to sick undertakings.
Relief was given to the appellant company first by notification No. F 17 87 79 XI B 1, dated 15 11 1980, extended from time to time by subsequent orders, the relief so given to continue till 15 11 1987.
The respondent filed a summary suit against the appel lant in the Bombay High Court on its original side, as summary suit No. 124 of 1986 claiming a decree for Rs. 12,12,327.50, with interest and costs.
The appellant did not contest the suit.
The suit was accordingly decreed.
The respondent got the decree transferred for execution to the District Judge, Ujjain on 26 9 1986 and then applied for execution of the decree.
The appellant resisted execution by filing objection pleading that it was a relief undertaking under the Act, the benefits under which Act were available till 15 11 1986 at the time the objection was filed (now upto 15 11 1987) and that the decree could not therefore be executed against it in view of the bar contained in Section 5 of the Act.
The respondent admitted the appellant to be a relief undertaking.
However, it was contended that the District Judge had no jurisdiction to entertain any objec tion to the execution of the decree, validly passed by the Bombay High Court The Execution Court, it was contended, could not go behind the decree and the decree mandated execution on its terms.
The learned District Judge upheld the contentions of the respondent and held that the appellant could not take advan tage of the notifications under the Act because the rights and liabilities of the parties had to be determined by the transferee court in accordance with the substantive law beating on the question in the court that passed the decree.
He further held that the execution of the decree could not be challenged before the transferee court unless it was shown that the transferor Court had no jurisdiction to pass the decree.
The objection of the appellant was thus reject ed.
The appellant thereupon filed a revision in the High Court.
The High Court rejected the revision and affirmed the order of the District Judge.
Hence this appeal.
252 The questions of law raised before us are as follows: (a) Whether on a true construction of Section 5 of the Act, execution of the ex parte decree obtained by the respondent against the petitioner at Bombay can be insti tuted, commenced or proceeded with by the respondent against the petitioner, even though the petitioner 's textile undertaking is admit tedly a State Relief Undertaking under the Act? (b) Whether Section 5 of the aforesaid Act is substantive law or procedural law? The High Court considered this question and held that there was no bar against execution of the decree after considering the effect of Section 5 quoted above on the general law governing decrees and their execution as provid ed in the Civil Procedure Code.
The High Court relied upon the settled position that the executing Court cannot go behind the decree even if it is erroneous on law or on facts.
We extract below the finding by the High Court against the appellant in paragraph 20: "It may be stated that it was perhaps due to the position of the law as propounded in the Delhi decision that the suit in the Bombay High Court was not contested by the petition er.
With the determination of the rights of the parties by the Bombay High Court according to the substantive law applicable to the State of Maharashtra, the nonapplicant was manifest ly clothed with the absolute right to execute the decree unless some express provisions of law in Maharashtra empowered the Court to restrain him from executing the same.
Such fight cannot again be subjected to and/or regulated by any law of the State of M.P. to which the decree is sent only for execution.
Any provision to suspend such right of execu tion of a valid decree does partake of the character of substantive law and cannot be interpreted as merely a rule of procedure within the meaning of Sec. 40 of the C.P.C. prescribing the manner of execution.
It has, therefore to be held on the authority of Ramavtar 's case (supra) that the provision in Section 5 of the Adhiniyam pertains to the domain of substantive law and cannot be said to relate to the realm of adjective or proce dural law.
The petitioner, therefore.
has no locus standi to seek shelter under Section 5 of the Adhiniyam, against 253 the execution of the decree passed by the Bombay High Court, it being a substantive law of the State of M.P. and not merely a proce dural law, within the meaning of Section 40 of the C.P.C. or procedural power under Section 42 ibid governing the mode of execution.
The suit in the Bombay High Court was not liable to be stayed and so is the decree therein passed.
" It is evident from the above discussion that the High Court completely overlooked the purpose of the Act and the limited period of operation of Section 5.
It has to be borne in mind that the Act in question was enacted with a specific purpose.
The preamble to the Act states that the Act has been enacted "to enable the State Government to make special provisions for a limited period in respect of industrial relations, financial obligations and other like matters in relation to industrial undertakings the running of which is considered essential as a measure of preventing, or of providing relief against, unemployment.
" It is necessary to note that the State Government and other financial institu tions invest large sums of money to revive sick units or relief undertakings.
The Government and such institutions are interested in seeing that the amount so invested are utilised for the purpose of running the relief undertaking so that it can be gradually revived and what is more impor tant, to provide continuous employment to a large number of workers.
The Government is interested in making sure that the relief undertakings do not incur burdensome debts, engage in costly litigations and consequent attachment of their machineries and moveables thus gradually destroying the units completely.
The Act has been enacted to safeguard the interest of the general public, the workers and the amounts invested.
It is for this purpose that relief was given to the unit against execution of decrees for a maximum period of seven years.
If creditors of the relief undertak ings ingeniously manage to obtain decrees against them from Courts situated in areas where the Act is not in operation and thus try to circumvent the operation of the Act by getting such decrees transferred to the area where the Act is in operation and plead that their decrees are saved from the mischief of the Act, such actions would be to defeat the very purpose of the Act.
When we say this, we do not want to encourage such relief undertakings not to pay current li abilities.
We are only concerned here with the interpreta tion of the sections of the Act.
We will presently refer to some of the relevant sections and consider their operation both for pre notification and post notification debts.
Section 2(3) defines relief undertaking and section 2(4) a state industrial undertaking, as follows: 254 "2(3) "relief undertaking" means a State industrial undertaking in respect of which a declaration under Section 3 is in force: 2(4) "State industrial undertaking" means an industrial undertaking.
(a) which is started or which, or the management of which is under any law or agree ment acquired or otherwise taken over by the State Government or by a Government company and is run or proposed to be run by, or under the authority of, the State Government or a Government company; or (b) to which any loan, advance, or grant has been given, or in respect of any loan whereof, a guarantee has been given, by the State Government or Government company; or (c) in respect of which a notified order under the Industries (Development and Regula tion) Act, 1951 (No. 65 of 195 1) is in opera tion.
" Declaration of a relief undertaking is provid ed for in Section 3 which reads as follows: "The State Government may, if it is satisfied that it is necessary or expedient so to do in the public interest, with a view to enabling the continued running or re starting of a State industrial undertaking as a measure of preventing, or of providing relief against, unemployment, declare, by notification , that the State industrial undertaking shall on and from such date and for such period as may be specified in the notification, be a relief undertaking.
Provided that the period so specified shall not, in the first instance, exceed one year but may, by a like notification, be extended, from time to time, by any period not exceeding one year at any one time so however that such periods in the aggregate shall not exceed seven years.
" Section 4 provides for suspension of certain enactments, contracts, agreements etc. appel icable to relief undertaking.
The Section reads as follows: 255 "4.
Application of certain enactments and contracts, agreements, etc.
to relief undertaking That State Government may, if it is satisfied that it is necessary or expedient so to do for the purposes specified in section 3, direct, by notification , (a) that in relation to any relief undertaking all or any of the enactments specified in the Schedule to this Act shall not apply or shall apply with such adaptations whether by way of modification, addition or commission (which does not, however affect the policy of the said enactments), as may be specified in such notification, or (b) that the operation of all or any of the contracts, assurances of property, agree ments, settlements, awards, standing orders or other instruments, in force (to which any relief undertaking is a party or which may be applicable to any relief undertaking) immedi ately before the date on which the State industrial undertaking is declared to be a relief undertaking, shall remain suspended or that all or any of the rights, privileges, obligations and liabilities accruing or aris ing thereunder before the said date, shall remain suspended or shall be enforceable with such modifications and in such manner as may be specified in such notification.
" The Schedule to the Act mentions the following six Acts: (1) The Industrial Employment (Standing Or ders) Act, 1946 (No. 20 of 1946).
(2) The (No. 14 of 1947).
(3) The (No. 11 of 1948).
(4) The Madhya Pradesh Shops and Establish ments Act, 1958 (No. 25 of 1958).
(5) The Madhya Pradesh Industrial Relations Act, 1960 (No. 27 of 1960).
256 (6) The Madhya Pradesh Industrial Employ ment (Standing Orders) 1961 (No. 26 of 1961).
Now we come to the important Section with which we are vitally concerned in this appeal and that is Section 5 which reads as follows: "5.
Suspension of suits or other legal pro ceedings against relief undertakings: As from the date specified in the notification under sub section (1) of section 3, no suit or other legal proceedings shall be instituted or commenced or, if pending, shall be proceeded with against the industrial undertaking during the period in which it remains a relief under taking any law, usage, custom, contract, instrument, decree, order, award, settlement of other provisions whatsoever notwithstand ing.
" What we are called upon to decide in this case is wheth er proceedings taken in the Madhya Pradesh Court for execu tion of a decree validly obtained in the Bombay High Court has to be or can be stayed under this Section.
We have already seen that the maximum period of the stay is seven years and this period will expire on 15 11 1987.
Section 7 deals with suspension or modification of certain remedies, rights etc.
and reads as follows: "7.
Suspension or modification of certain remedies, rights etc.
, stay of proceedings, their revival and continuance.
Any remedy for the enforcement of any right, privilege, obligation or liability referred to in clause (b) of Section 4 and suspended or modified by a notification under that section shall, in accordance with the terms of the notification, be suspended modified, and all proceedings relating thereto pending before any court, tribunal, officer or other authority shall accordingly be stayed or be continued subject to such modification, so however, that on the notification ceasing to have effect (a) any right, privilege, obligation or liability so suspended or modified shall revive and be enforceable as if the notifica tion had never been issued; and 257 (b) any proceeding so stayed shall be proceeded with subject to the provisions of any law which may then be in force from the stage which had been reached when the proceed ing was stayed.
" A close scrutiny of the above section reveals that Section 5 has a free field of operation unfettered by any limitation.
The section is not happily worded.
What the section intends to convey, according to us, if the words are re arranged, would be as follows: "Notwithstanding any law,usage, custom, con tract, instrument, decree, order, award, settlement or other provisions, no suit or other legal proceedings shall be instituted or commenced or if pending shall be proceeded against the industrial undertaking as from the date specified in the notification under sub section (1) of Section 3 during the period in which it remains a relief undertaking.
" So read, the object of the section becomes clear.
The section seeks to confer benefit to the relief undertakings from the ravages of litigation during the period it remains a relief undertaking.
The expression 'decree ' is very mate rial for our purpose.
Inclusion of 'decrees ' in the section shows that the fact that decrees were validly obtained against a relief undertaking will not pose any danger to it during the period the declaration is in force.
In other words, the section prevents execution of a decree validly obtained against the undertaking during the period mentioned above.
That takes us to the question as to whether the words "other legal proceedings" in the section would take in execution proceedings.
It is not disputed that the Section bars institution of suits and starting of other proceedings.
What is disputed is that expression "other legal proceed ings" will not take in execution proceedings.
The contention is grounded on the general principle that the execution court cannot go behind a valid decree and that the execution court cannot, therefore, refuse to execute it.
It is admit ted that the decree obtained from the Bombay High Court is a valid decree.
That being so, law should take its course and execution should proceed.
It is by virtue of the enabling provisions contained in Sections 40 & 42 of the Civil Proce dure Code that this validly obtained decree got transferred to the Court in Madhya Pradesh.
It is contended that by the mere transfer of this decree in accordance with the proce dural law, its validity does not disappear nor its binding force cease to exist.
We find difficulty in accepting this contention.
If we are to accept this submission, it would be rendering section 5 of the Act nugatory and to 258 destroy the benefits sought to be conferred by that section.
Nobody questions the validity of the decree.
All that is sought to be done is to suspend its animation for the period mentioned in the notification.
No Court in Madhya Pradesh can question its validity, nor can refuse to execute it after the period is over.
To direct execution of the decree in the teeth of Section 5 would be to encourage filing of suits in Courts outside Madhya Pradesh, secure decrees and defeat the purpose of the Act.
We do not think that such an abuse is permissible in the face of Section 5 of the Act.
We have, therefore, to answer this question in favour of the appellant.
For the disposal of this case, we do not think it neces sary to refer to the lengthy discussion made by the High Court on substantive and procedural law.
We have to construe and interpret the section as it stands.
The section is unambiguous and full import has to be given to its words and its intent.
The non obstante clause in this section takes within its ambit, all the decrees passed against the relief undertakings.
The bar of 'institution or commencement ' takes within its ambit suits or other 'legal proceedings ' which include execution petitions also.
An attempt was made by the learned counsel for the respondent to contend that the expression "other legal proceedings" cannot take in proceedings to execute validly obtained decrees.
It was further contended that if we give such a wide construction to the expression "other legal proceedings" institution of even claims of workers under the and other similar beneficial legis lations, arising after the issue of notification, will be barred.
On the wording of the section we feel such a conclu sion is inescapable.
Reliance was placed by the counsel for the respondent on the decision in the case of State Bank of India vs Jaipur Udyog & Ors., AIR 1986 Delhi 357 to contend that no objec tion can be raised to the execution of the decree validly obtained from the Bombay High Court.
We find that the above decision has no application to our case.
In that case, an attempt was made to block a suit filed in the Delhi Court against a relief undertaking under the Rajasthan Relief Undertakings (Special Provisions) Act 9 of 1961, based on Section 3 & 4.
That contention was repelled and according to us rightly.
There the State Bank of India brought a suit for the recovery of certain amounts against Jaipur Udyog Limit ed, the principal debtor, a company based in Rajasthan and the guarantors.
This company had been declared by the State of Rajasthan as a relief undertaking under Section 3 of the Act.
Section 2 of the Act barred institution or commencement of suit 259 or other legal proceedings against a relief undertaking.
This section contains an explanation as to what "legal proceedings" are.
Relying upon this section, the company and the guarantors pleaded that the suit was liable to be stayed.
The question before the High Court was whether the Act had extra territorial operation.
The case was heard by a Single Judge who referred it to a Division Bench in view of the conflict between the Allahabad High Court and the Punjab & Haryana High Court.
The High Court referred to Section 1(2) of the Act which stated that the Act "extends to the whole of the State of Rajasthan" which was an explicit declaration of the legislature about the territorial appli cation of the Act and held that the contention of the debt ors that the suit in Delhi Court ought to be stayed was unsustainable.
We are here confronted with a different situation.
If what is contended before us had been contended before the Bombay High Court, same result would have fol lowed.
We have here a situation entirely different and that is, steps to execute a decree in a territory over which the Madhya Pradesh Act has application.
If the decree obtained from the Delhi High Court had been transferred to a Rajas than Court and a decision was rendered on an objection to its execution in favour of the decree holder, that would have helped the respondent.
No support can be taken by the respondent from this case.
We may seek support for our construction of the words 'legal proceedings ' to include execution proceeding from a judgment of the Federal Court in the case The Governor General in Council vs Shiromani Sugar Mills Ltd., The factual details in brief are as follows: The respondent company was assessed to income tax for the year 1941 42 by an assessment order dated 25th February, 1943.
In the meantime, however, a petition to wind up the company had been presented on the 26th November, 1941, a provisional liquidator had been appointed on the 7th Decem ber, 1941 and finally on the 17th April, 1942, a winding up order had been made by the High Court at Allahabad.
On 10th March, 1943, a notice of demand was served on the official liquidator of the respondent company under Section 29 of the Income tax Act, 1922.
The official liquidator pointed out to the Income tax department that the proper procedure to be followed was to lodge a claim in the winding up in respect of the tax alleged to be due from the Company.
Instead of adopting this procedure the Income tax department adopted its statutory procedure under Section 46 and accordingly sent an arrear demand, informing the latter that the demand was recoverable as arrears of land revenue.
The official 260 liquidator thereupon made an application to the High Court under Sections 171, 228 and 233 of the Indian Companies Act, 1913, against the department asking for an order that the respondent be directed to put in a formal claim to the official liquidator in respect of the sum due.
The Allahabad High Court restrained the department from proceeding accept ing the plea of the company as the leave of the Court was not obtained under Section 171.
We are only concerned with the manner in which the Federal Court understood the expres sion "other legal proceeding" occurring in Section 171 of the Indian Companies Act.
That Section reads as follows: "When a winding up order has been made or a provisional liquidator has been appointed, no suit or other legal proceeding shall be pro ceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose.
" The Federal Court discussed this question at page 56 as follows: "That still leaves open the question whether action under Section 46 of the Indian Income tax Act is covered by the phrase "other legal proceeding." Clearly it is not a proceeding in an ordinary Court of law.
But we see no reason why in British India no "legal proceeding" can be taken otherwise than in an ordinary Court of law, or why a proceeding taken elsewhere than in an ordinary Court of law, provided it be taken in a manner prescribed by law and in pursuance of law or legal enactment, cannot properly be described as a "legal proceeding.
" If it be considered that the effect of the Income tax authorities putting the machinery of section 46 of the Income tax Act in motion for the collection of arrears of income tax is to bring into operation all the appropriate legal enactments relating to the collection of land revenue in the Province concerned, it is, in our judgment, very difficult to say that they are not taking a "legal proceeding.
" In fact, in this very case, had the company not been in liquidation, the appellant would have had the choice at his option of (a) proceeding by "suit" in the ordinary Courts in respect of the arrears, or (b) by forwarding (under section 46(2) of the Income tax Act) to the Collector the requisite Certificate, initiating and putting into force collection of the arrears as arrears of land revenue under and in ac cordance with the appropriate provisions of the 261 U.P. Land Revenue Act (III) of 1901.
Surely such last mentioned action on the part of the income tax authorities, would be the adoption of another legal proceeding for the collection of the arrears as opposed to the institution of a suit.
The proviso to section 46(2) empowers the Collector, if he so chooses, to exercise all the powers which a civil court may exer cise in respect of the attachment and sale of debts due to a judgment debtor.
If the Income tax Officer will be taking a "legal proceeding" when he moves the Collector as we think he must be held to do to realize the tax by attachment and sale of debts due to the assesee, it can make no difference in princi ple that the Collector is asked to exercise his summary powers under the land revenue law.
Accordingly, we agree with the learned Judges of the Allahabad High Court in holding that the words "other legal proceed ing" in section 171 of the Indian Companies Act, 19 13, comprise any proceeding by the revenue authorities under section 46(2) of the Indian Income tax Act, and that accordingly before forwarding the requisite certificate under section 46(2) of the Indian Income tax Act.
" There is no reason why the expression 'other legal proceedings ' in section 5 should not include execution petitions also.
If we look into the scheme of the Act and the various sections, it will be evident that Section 5 is an independ ent section uncontrolled by Sections 4, 6 & 7.
Sections 4, 6 & 7, deal with suspension or modification of certain reme dies, rights etc.
, stay of proceedings, their revival and continuance.
Section 5 does not make any reference to Sec tion 4.
It had been enacted with a definite object and that is to protect the relief undertakings from litigations and consequent actions.
The object is clear.
The Government wants to relieve such undertakings from litigative pressure for a period of time.
It is not a permanent relief.
The Government are interested to see that the investments made by it and other financial institutions do not get frittered away by avoidable litigation and other legal proceedings.
The bar contained in Section 5 by way of suspension of suits or other legal proceedings is thus an absolute bar but only for the period contemplated by the Act.
The limited question that we have to answer is as to whether 262 Section 5 operates even against execution of decrees ob tained against the relief undertaking by its creditors outside the State of Madhya Pradesh.
The learned counsel for the respondent brought to our notice decisions reported in AIR 1948 Patna 245 and AIR and similar other decisions to contend that the execution court cannot, while executing decrees, adopt a procedure under any special law available in the State in which the execution court is situate, in relation to decrees obtained outside the States.
For example, suppose a decree is obtained in Madras and it is transferred to Madhya Pra desh.
Suppose again that in Madhya Pradesh, there is an enactment to scale down the decree amount either in instal ments or to wipe out the debt of an agriculturist; will it be open to the executing court to take recourse to such enactments and give relief to debtors in the State in rela tion to a decree obtained in a Court outside the State.
It is settled law that the transferee Court has to execute the decree in accordance with the law obtaining in the Court that passed the decree and determine the rights and liabili ties of the parties in accordance with the substantive law obtaining in the State where that Court is situate.
That being so the judgment debtor cannot move the execution court and get the benefit of the procedure available in the State in which the transferee Court is situated.
Here we are not confronted with such a situation.
Nobody contends that the executing Court has to change the terms of the decree.
All that is stated is that its execution has to be suspended for a specified period.
Section 5, therefore, does not come into conflict either with Section 40 or sec tion 42 of the Civil Procedure Code.
In our view, the bar under Section 5 is an absolute one for the duration of the period contemplated in the Act.
If the relief undertakings are not protected by a provi sion like Section 5, the position will be distressing.
The creditors will proceed against them.
Their properties and goods will be attached.
The workers will be rendered job less.
In this case, this unit is said to employ nearly 2,000 workers.
The creditors will not be in a more advantageous position either.
If liquidation proceedings are initiated, the creditors will get only pro rata from the sale proceeds of the assets.
If creditors are permitted to proceed against the assets and the products of the undertaking, that would be detrimental to the heavy investment made by the State and other financial institutions.
The concern of the Government in enacting this law is thus in the interest of the large 263 number of workmen employed in these undertakings and in the revival, if possible, of a sick unit.
It is to protect them and not to render them unemployed that such relief undertak ings are financed by the State.
A contention was raised that Section 5 cannot apply to post notification liabilities.
In other words, suits and other proceedings in relation to the debts incurred prior to the notification under Section 3 alone are barred and debts incurred subsequent to the notification under Section 3 are not barred under Section 5.
In our view, the reading of the Sections does not permit such an interpretation.
The object of Section 5 is to protect the relief undertakings from all suits and legal proceedings.
This protection is to end on 18 11 1987.
We hold that the High Court was in error in allowing execution to proceed.
Before parting with this case, we wish to observe that the powers that be will have to evolve a more acceptable procedure while dealing with sick units.
We share the con cern expressed in high places about the loss that Government incurs in trying to rescue sick units.
Invariably, the amounts pumped in are ultimately lost.
The machineries of the unit in question are as old as 1920.
One can easily imagine the nature of the products that come out of a unit like this.
What purpose will be served by giving life to such units by providing artificial respiration The concern for workers must be matched with the concern for modernisa tion also.
The labour should not be left to the mercy of such sick units.
The Government will have to evolve a more acceptable and intelligent policy, to help the labour and for modernisation of industry.
These units like "flaring tapers brightening as they waste" with temporary financial blood transfusion must, in the interest of all concerned, be subjected to euthanasia.
The situation created must be met boldly.
Such units with decrepit and antiquated machineries must be got rid of and public money must be saved.
In their places new units must come into existence.
We know that this would involve heavy financial liability.
But in the long run, it would save public interest more.
If Government find it difficult to pump enough money, at least a trial must be undertaken to entrust such units to the labour to test how they work with their cooperative efforts.
In such a situa tion.
there will not be siphoning of the funds of the unit by the entrepreneurs for self aggrandisement, for, more often than not, sickness in such units sets in, because the funds of the units are diverted to defeat both the Govern ment and the labour and only to benefit the owners of such units.
264 With these observations, we set aside the order of the High court and allow this appeal, but with no order as to costs.
P.S.S. Appeal allowed.

dataset_name: IN-Abs

summary/full:
Section 3 of the Madhya Pradesh Sahayata Upkram (Vishesh Upbandh) Adhiniyam, 1978 provides for the declaration of a State industrial undertaking as a relief undertaking and section 5 for suspension of suits or other legal proceedings against such relief undertakings and bars institution or commence ment of suits or other legal proceedings against such an industrial undertaking during the period in which it remains a relief undertaking notwithstanding any law, usage, custom, contract, instrument, decree, order, award, or settlement.
The appellant, a textile undertaking at Ujjain, M.P. was declared a 'relief undertaking ' by notification dated 15.11.1980 issued by the State Government under section 3 of the Act and the time extended by subsequent orders till 15.11.1987.
The respondent filed a summary suit against the appellant in the Bombay High Court for a certain sum with interest and costs, which was decreed ex parte.
He then got the decree transferred for execution to the Court of Dis trict Judge, Ujjain, Madhya Pradesh on 26.9.1986.
The appel lant resisted execution on the ground of the bar contained in section 5 of the Act.
The respondent while admitting that the appellant was a relief undertaking contended that the Dis trict Judge had no jurisdiction to entertain any objection to the execution of the decree validly passed by the High Court as it could not 248 go behind the decree, and the decree mandated execution on its terms.
The District Judge held that the appellant could not take advantage of the notifications under the Act because the rights and liabilities of the parties had to be deter mined by the transferee court in accordance with the sub stantive law bearing on the question in the court that passed the decree, and that the execution of the decree could not be challenged before the transferee court unless it was shown that the transferor court had no jurisdiction to pass the decree.
The High Court took the view that the executing court could not go behind the decree even if it was erroneous on law or on facts and after considering the effect of section 5 on the general law governing decrees and their execution as provided in the Civil Procedure Code held that there was no bar against execution of the decree, and consequently rejected the revision and affirmed the order of the District Judge.
In this appeal by special leave it was contended for the respondent that the expression 'other legal proceedings ' would not take in execution proceedings and the execution court could not, therefore, refuse to execute a valid de cree, that if such a wide construction was given to that expression institution of even claims of workers under the Industrial Disputes Act and other similar beneficial legis lation would be barred, that the execution court could not, while executing decrees, adopt a procedure under any special law available in the State in which the execution court was situate in relation to decrees obtained outside the States, and finally that section 5 could not apply to post notification liabilities.
Allowing the appeal, the Court, HELD: 1.
The High Court was in error in allowing execu tion to proceed.
It has completely overlooked the purpose of the Madhya Pradesh Sahayata Upkram (Vishesh Upbandh) Adhini yam, 1978 and the limited period of operation of section 5.
The bar contained in the section by way of suspension of suits or other legal proceedings against relief undertakings is an absolute one for the period contemplated in the Act.
[263C; 253B; 262F] 2.
The section is not happily worded.
What it intends to convey if the words are re arranged, would be: "Notwith standing any law, usage, custom, contract, instrument, decree, order, award, settlement or other provisions, no suit or other legal proceedings shall be instituted or commenced or if pending shall be proceeded against the industrial undertaking as from the date specified in the notification under sub section
249 (1) of section 3 during the period in which it remains a relief undertaking".
So, read, the object of the section becomes clear.
[257BD] 3.
The section has to be construed and interpreted as it stands.
It iS unambiguous and full import has to be given to its words and its intent.
The expression 'other legal pro ceedings ' in the section includes execution proceedings also.
The non obstante clause contained therein takes within its ambit all the decrees passed against relief undertak ings.
The bar of 'institution or commencement ' takes within its ambit suits or 'other legal proceedings ', which include execution petitions also.
The inclusion of the expression 'decree ' in the section further shows that a decree validly obtained against a relief undertaking cannot be executed during the period the declaration is in force.
[2S8C; 261E; 257DE] The Governor General in Council vs Shiromani Sugar Mills Ltd., , referred to.
State Bank of India vs Jaipur Udyog & Ors., (AIR 1986 Delhi 357), distinguished.
Section 5 has a free field of operation unfettered by any limitation.
It is independent and uncontrolled by sections 4, 6 and 7 which deal with suspension or modification of cer tain remedies, rights etc., stay of proceedings, their revival and continuance.
It does not make any reference to section 4.
It had been enacted with a definite object and that is to protect the relief undertakings from litigations and consequent actions during the period the declaration is in force.
[257B; 261F] 5.
Section 5 operates even against execution of decrees obtained against the relief undertaking by its creditors outside the State of Madhya Pradesh.
To direct execution of such decrees would be to encourage filing of suits in courts situated in areas where the Act is not in operation, secure decrees and then try to circumvent the operation of the Act by getting those decrees transferred under sections 40 and 42 of the Civil Procedure Code and defeat the purpose of the Act.
Such an abuse is not permissible in the face ors.
5 of the Act.
[262A; 258B; 253F; 257G] 6.
The transferee court has to execute the decree in accordance with the law obtaining in the court that passed the decree and determine the rights and liabilities of the parties in accordance with the substantive law obtaining in the State where that court is situate.
That being so, the judgment debtor cannot move the execution court and get the benefit of the procedure available in the State in which the transferee court is situated.
[262D] 250 In the instant case the decree obtained from the Bombay High Court was a valid decree.
No court in Madhya Pradesh could question its validity, nor could refuse to execute it.
All that is sought to be done by section 5 of the Act is to suspend its animation for the period mentioned in the noti fication.
It is not a permanent relief.
Section 5, there fore, does not come into conflict either with section 40 or 42 of the Civil Procedure Code.
[257FG; 258AB; 261FG; 262EF] 7.
It cannot be said that the debts incurred prior to the notification under section 3 alone are barred and debts incurred subsequent to the notification under section 3 are not barred.
Section 5 does not permit such an interpretation.
[263BC] 8.
There is need to evolve a more acceptable procedure while dealing with sick units.
Invariably, the amounts pumped in in trying to rescue sick units are ultimately lost.
No purpose will be served by giving life to such units.
The concern for workers must be matched with concern for modernisation also.
The labour should not be left to the mercy of such sick units.
The Government will have to evolve a more acceptable and intelligent policy.
Units with decrep it and antiquated machineries must be got rid of and public money must be saved.
In their places new units must come into existence.
If Government finds it difficult a trial must be undertaken to entrust such units to the labour to test how they work with their cooperative effort.
[263DH]


judgement:
it Petition No. 1753 of 1986 etc.
(Under Article 32 of the Constitution of India).
271 K.K. Venugopal, Gauri Shankar, Kapil Sibal, Ms. Lira Goswami, D.N. Misra, D.P. Mohanty and R.K. Mehta for the appearing parties.
The Judgment of the Court was delivered by BALAKRISHNA ERADI, J.
M/s Indian Metals and Ferro Alloys Ltd. the petitioner in Writ Petition No. 1753 of 1986 and in S.L.P. (C) Nos 14923 14924 of 1986 is a public limited company incorporated under the Indian Companies Act which is engaged, inter alia, in the manufacture of ferro silicon and silicon metal which are said to be a valuable raw material used by the Defence establishments in India and also export ed out of the country.
The second petitioner in the afore said Writ Petition and the Special Leave Petitions is the Managing Director of the company.
The company has installed three units namely, 11 KV, 33 KV and 132 KV furnaces in which it is manufacturing ferro alloys and silicon metal in a composite industrial complex in a place called Therubali in the State of Orissa.
The company has also a subsidiary by name M/s Indian Metal and Carbide Ltd. engaged in the manu facture of silicon carbide and its factory is also situated in the same industrial complex.
All the four units utilise electricity as raw material and they are, therefore, classi fied as 'power intensive industrial units ' the four units shall hereinafter referred to as "11 KV IMFAL", "33 KV IMFAL", "11 KV IMCL" and "132 KV IMFAL".
The company has entered into separate agreements with the Orissa State Electricity Board (hereinafter called the 'Board ') for supply of electric energy to these four different units and the rates of tariff to be charged for such supply.
The agreement in respect of 11 KV IMFAL was entered into ini tially on 3.4.1967 and subsequently renewed on 1.8.1983, that in respect of 33 KV IMFAL on January 2, 1974 and the agreement for supply of 11 KV IMCL was entered into on January 28, 1975.
The agreement in respect of supply of energy to 132 KV IMFAL was entered into on 4.12.1982.
These agreements show that the Board had agreed to supply 78.8 MU for 11 KV IMFAL unit for the manufacture of silicon metal/charge chrome by the company, 197.1 MU for the 33 KV IMFAL unit for the manufacture of ferro silicon/ silicon metal, 15.8 MU for the 11 KV IMCL for the manufacture of silicon carbide and 262.8 MU for the 132 KV IMFAL unit for the manufacture of charge chrome/ferro silicon/silicon metal.
As already indicated, all the above furnaces of the company are located in the same complex and are adjacent to one another.
The tariff fixed for supply of the energy to the first three units is the same and that for the KV IMFAL is 0.5 paise less per unit.
272 Supply of energy was made to the company regularly as per the agreements in respect of the first three units till the year 1979 80.
The unit of time for supply of electricity adopted by the Board is the 'water year ' which commences on the 1st of July of a year and ends with 30th June of the succeeding year.
In the year 1979 80, the State of Orissa resorted to power cuts on account of non availability of sufficient power in the State to meet in full the require ments of the various categories of consumers.
It accordingly passed orders allocating restricted quotas of power to the four units of the company for the water year 1979 80.
This order, however, permitted the clubbing of the electricity supplied to the 11 KV IMFAL, 33 KV IMFAL IMCL furnaces of the company.
The 132 KV IMFAL furnace of the company had not been commissioned at that time.
The aforesaid position continued for the water years 1981 82 and 1982 83.
The company 's 132 KV IMFAL furnace was commissioned on 20th February, 1983 but the agreement of supply of energy to this unit had been executed on December 4, 1982 itself.
On July 16, 1983, the company addressed a letter to the Board requesting the facility of clubbing of the power allocated to its four furnaces for the water year 1983 84.
By a tele printer message dated August 4, 1983 sent by the Chief Engineer of the Board to the Superintending Engineer, Teach er, it was intimated that IMFAL and IMCL may be permitted to draw the power allotted to the four units taken together as requested by the company in its letter dated July 17, 1983, subject to the condition that the company 's drawal of power at its 132 KV IMFAL furnace in excess of the allotment of the said unit shall be made at the tariff applicable to the supply at 132 KV IMFAL .
It was also made clear that the said order will be effective from July 16, 1983, that being the date of the company 's letter of request.
Pursuant to the above permission the company clubbed the supply of power to all its units for the water year 1983 84.
On July 23, 1984, the Chief Engineer addressed a letter to the company inform ing the latter that with effect from July 1, 1984 the drawal of power by the company against the different units will be regulated separately and as such the company was requested to limit its drawal for the different units as per the allotment indicated in that letter with effect from July 1, 1984; in other words, the facility of clubbing was withdrawn by the said letter with effect from July 1, 1984.
On July 2, 1984, the company wrote to the Board pointing out the hard ship involved in the denial of the facility of clubbing and requesting for permission to club the energy for all the four units for the water year 1984 85.
In reply thereto the Chief Engineer of the 273 Board sent a communication dated July 12, 1984 informing the company as follows: "ORISSA STATE ELECTRICITY BOARD BHUBANESHWAR No. Com V /4238 Dated 12.7.1984 From: Sri N.K. Das, Chief Engineer and Member (TDC) To: M/s Indian Metals and Ferro Alloys Ltd., Bomikhal, P.O. Rasulgarh, Bhubaneshwar 75 10 10 Sub: Restriction in power supply.
Ref: Your letter No. 82/12/01 Exp.
130 dated 2.7.1984.
Dear Sirs, As requested in your letter cited above, you are permitted to draw 22.64 MW average and 27.75 MW peak from 1 7 84 to 31.7.84 for IMFAL (11 KV, 33 KV and 132 KV) and IMCL, Theruvalli taken together subject to the condition that drawal at 162 KV in excess of 10.80 MW average and 13.501 MW peak shall be billed at the tariff applicable to power supply at 11 KV/33 KV.
This will be revised in October, 1984.
In case your drawal exceeds the energy and/or the demand as indicated above, you will be liable to pay at double the normal tariff rate.
Yours faithfully, Sd/ CHIEF ENGINEER AND MEMBER (TDS).
" One of the points raised before this Court relates to the correct construction to be placed upon this letter.
We shall advert to that 274 aspect later on.
For the present, it is sufficient to men tion that on the basis of the said letter the company was permitted to club the power supply made to its four units from July, 1984 onwards and the bills for the period from July, 1984 to December, 1984 were drawn up by the Board and served on the company on the basis that the company was entitled to the benefit of clubbing in respect of the power allotted to the four units.
Though the letter stated that the position would be subject to revision in October, 1984, no revision was effected till December, 1984 and the company continued to enjoy the benefit of clubbing till the end of the calendar year.
However, on December 11, 1984, the Chief Engineer of the Board wrote to the company stating inter alia that the combined drawal of power for purposes of flexibility of operation had been permitted to the company at its request only for the month of July, 1984 by the Board 's letter dated July 12, 1984 and the clubbing could no longer be permitted since power supply to 132 KV IMFAL which was a 100% 'export oriented industry ' was to be regulated separately for pur poses of energy allocation.
It may be mentioned at this stage that in the agreement entered into regarding supply of power to the 132 KV IMFAL unit, there was no mention whatev er of the fact that the said unit was a 100% export oriented industry.
It was treated only as, a 'power intensive indus try ' just like the other three units of the company.
The aforesaid letter was followed by another communication addressed by the Chairman of the Board to the Company stat ing inter alia as follows: "Since it has been decided by the Government to treat allotment of power to 100% export oriented industries separately, allotment of power to your 100% export oriented unit at 132 KV cannot be permitted to be utilised for other purposes unless specific Government permission is necessary for the same.
As you are aware, the allocation of power for IMFAL 11 KV, IMFA1 33 KV and IMCL had been combined together for the purpose of flexibil ity in operation and hence you should have no difficulty regarding the same.
" It will thus be seen that the sole reason given for refusing the facility of clubbing to the company was that the State Government had taken a decision that 100% export oriented industries should be treated separately for the purposes of power allocation Significantly, no statutory order of the State Government incorporating such a policy 275 decision has been placed on record either before the High Court or before this Court.
It is worthy of note that the scheme of according spe cial priority and preferential treatment to 100% export oriented industries in the matter of supply of electric energy was evolved by the Government of India for the first time only in June, 1983 and it was implemented only in 1984 85, All that the said scheme envisaged was to provide for supply of additional power to such export oriented industries in the event of their satisfying certain condi tions relating to their export performance.
On January 22, 1985, the State of Orissa issued an order under Section 22B of the Indian Electricity Act (hereinafter called the 'Act ') directing the Board to reduce supply of energy so as to allow the consumers to avail of the supply only to the extent specified in the Annexure to the said order.
All the four units of the company were shown in the Annexure under the classification "power intensive indus tries.
" The 11 KV IMFAL, 33 KV IMFAL and 11 KV IMCL were together allotted 57.60 million Kwh and the 132 KV IMFAL was separately allotted 52.56 million Kwh.
There was a note to the order which was in the following terms: "Every hundred percent export oriented unit will, however, be provided additional supply of energy if: (i) It exported not less than 95% of its entire production during the preceding year or made no internal sale during the same period.
(ii) It has export commitment from foreign buyers for at least 95% of the produc tion during the current year.
(iii) It obtains specific recommenda tion of the Union Commerce Ministry regarding its export performance during the previous year and export commitment during the current year.
" The aforesaid order was to be effective from the com mencement of the water year 1984 85, i.e. from July 1, 1984.
As already stated, the petitioner company had been permitted to enjoy the benefit of clubbing from July, 1984 till the end of December, 1984 on the basis of the permission granted as Board 's letter dated July 12, 1984 and the bills 276 issued to the company for the said period were all on the basis that it was entitled to club the supply allotted to it in respect of the four different units.
After the promulga tion of the order dated January 22, 1985, grouping together only the three units of the company other than 132 KV IMFAL unit, the Board served revised bills on the company on July 8, 1985 demanding payment at the higher tariff rate for the period from October, 1984 to June, 1985 on the basis that there had been alleged excess drawal by the company due to clubbing.
Aggrieved by the said action taken by the Board the company filed Writ Petition No. OJC 1549 of 1985 in the High Court of Orissa challenging the order dated January 22, 1985 passed by the State Government in purported exercise of its powers under Section 22B of the Act, as also the letter dated January 24, 1985 of the Board refusing clubbing for the entire water year 1984 85.
Besides seeking the quashing of the aforesaid letter as well as the revised bills of the higher tariff issued to the company on July 8, 1985, the company also sought a writ of mandamus directing the Board and the State Government to permit clubbing for the water year 1984 85 as well as the future years.
In the counter affidavit filed by the State of Orissa the stand taken by the State was that clubbing had been allowed to the company by the Board temporarily for the month of July, 1984 only during the water year 1984 85.
It was further contended that the power allotted to the 132 KV IMFAL furnace could not be allowed to be clubbed with that allotted to the other three units since the 132 KV IMFAL furnace was a 100% export oriented unit and, therefore, it had to be treated separate ly for the allocation of power.
While the aforesaid Writ Petition was pending, the State Government passed another order dated August 31, 1985, effecting allocation of power under Section 22B of the Act for the water year 1985 86.
On October 11, 1985, the company was served with a notice of disconnection by the Board for non payment of the bills prepared at the higher tariff rate for the month of August, 1985.
It may be mentioned at this juncture that the High Court of Orissa by an interim order passed in the Writ Petition No. OJC 1549 of 1985 had stayed the demand made by the Board as per the revised bills for the months of October, 1984 to June, 1985 and had directed the Board not to take any action to disconnect power supply to the petitioner company.
The notice dated October 11, 1985 was apparently issued by the Board on the basis that it was in respect of the subsequent water year covered by the Government order dated August 31, 1985.
277 Aggrieved by the said notice dated October 11, 1985, the company filed another Writ Petition OJC No. 2496 of 1985 in the High Court of Orissa challenging the Government 's order dated August 31, 1985 passed for the water year 1985 86 and praying for identical reliefs in the previous Writ Petition regarding directions to allow clubbing for all the four furnaces.
In the counter affidavit filed by the State of Orissa in this Writ Petition also the only reason given for refusal to allow the benefit of clubbing to the company 's 132 KV IMFAL furnace was that the said unit being a 100% export oriented unit had to be treated separately for the purpose of power allocation.
On December 12, 1985, the High Court passed an interim order in the aforesaid Writ Petition directing the State Government to dispose of the company 's application dated November 9, 1985 wherein the company had requested for being allowed the benefit of clubbing of the power allotted for all the four furnaces for the water year 198586.
On December 18, 1985, the State Government through its Deputy Secretary wrote a letter to the company stating as follows: " Sir, In inviting a reference to your letter No. Proj.
4103/ 1920 dated 9.11.1985 on the subject noted above I am directed to say that after due consideration, Government have been pleased to reject your request for club bing of power allocation during the water year 1985 86. 2.
You are allowed to draw only 57.60 Million K.W.H. of energy of 11 KV and 33 KV and 52.66 Million KW of energy on 132 KV as allotted in this department order No. 37477 dated 31.8.1985 for the period from 1 7 1985 to 30 6 1986.
Yours faithfully, Sd/ DEPUTY SECRETARY TO GOVT.
" It will be noticed that no reason whatever was given by the Government in this order for/rejecting the company 's request for clubbing of power allocation.
After receipt of the said communication, the company moved the High Court by a miscel laneous petition for amending the Writ Petition OJC No. 2496 of 1985 by incorporating a challenge against the said letter of the State Government refusing clubbing for 278 the water year 1985 86.
That prayer for amendment was al lowed by the High Court.
Ultimately the two Writ Petitions O.J.C. No. 1549 of 1985 and O.J.C. No. 2496 of 1985 were disposed of by the High Court by a common judgment dated August 7, 1986.
The High Court held that under Section 22B of the Act the State Government had the power to grant or refuse the request of a consumer for being allowed the facility of clubbing.
The High Court negatived the contention of the company that it was beyond the power of the State Government to impose special tariff in case the allotted quoa of energy is ac ceeded.
It however upheld the contention of the company that the State Government and the Board had no power under the Act to impose restrictions on the use of the electric energy with retrospective effect.
The demands made under the re vised bills impugned in the first Writ Petition were, there fore, quashed by the High Court.
The High Court further held that the orders passed by the State Government under Section 22B of the Act did not show that there was any application of mind by the Government on the question as to whether clubbing should be allowed or not with reference to relevant considerations.
In the opinion of the High Court the plea raised in the counter affidavits filed by the State Govern ment and the Board that the 132 KV IMFAL should be treated separately from the other three units since the former was an export oriented unit was without any substance.
The High Court held that the only classification which appeared from the record was of "power intensive industries" and others.
Since all the units of the company had been classified under the heading "power intensive units" and the only privilege available to an export oriented unit as indicated in the note to the Government 's order passed under SeCtion 22B of the Act was that such unit would be entitled to additional power, if it satisfied the conditions laid down therein, there was no justification at all for refusing the benefit of clubbing in respect of the 132 KV IMFAL unit on the mere ground that it was an export oriented unit.
Accordingly, the Writ Petitions were allowed to the extent of quashing the demands for additional tariff made in the revised bills produced as Annexure II series in O.J.C. No. 1549 of 1985 and it was declared that the company will be liable to pay tariff only at the contractual rate for the supply made during the water year 1984 85.
In respect of the water year 1985 86, which formed the subject matter of O.J.C. No. 2496 of 1985, the High Court directed that the company shall enjoy the benefit of clubbing till the State Government in exercise of its power under Section 22B of the Act passed an appropriate statutory order rejecting its request.
The Writ Petitions were disposed of by granting the aforesaid reliefs to the company.
279 Subsequent to the judgment of the High Court, the State Government passed an order dated October 31, 1986 in pur ported exercise of its power under Section 22B of the Act effecting an allocation of power supply for the water year 1986 87.
The allocation followed the same pattern as was adopted for the previous year by making a joint allotment in respect of the three units of the company other than the 132 KV IMFAL unit and a separate allotment in respect of the 132 KV IMFAL unit.
The order also contained a note in terms identical with the note that was contained in the order relating to the water year 1985 86, the text of which has been already reproduced supra.
By its letter dated November 22, 1986, the company made a request to the State Government to allow clubbing of the power allotted to its four units for the water year 1986 87 and requested also for a personal hearing before a decision was taken in the matter.
The State Government refused the said request by its letter dated December 8, 1986, which reads as follows: "Government of Orissa Irrigation and Power Department No. 53250/IP Dated 8th December, 1986.
299/86 To The Executive Vice President, M/s Indian Metals and Ferro Alloys Ltd., Bomikhal, Bhubaneshwar.
Sir, Please refer to your letter No. OSEB/ELECT/IMFA/ BBSR/86/025 dated 22nd Novem ber, 1986 enclosing your letter dated November 15, 1986 to Superintending Engineer (Commer cial) O.S.E.B.
It is found from your letter that you have assumed that power allotted to IMFAL (11 and 33 KV) and IMCL can be availed in a clubbed manner with power allotted to IMFAL (132 KV).
This is to inform you that Government after careful consideration of the difficult power situation during the current water year and also in view of the fact of IMFAL (132 KV) unit being a 280 100% export oriented unit, for which special provisions have been made in the power cut order No. 46885/EL.111115/85, dated 31st October, 1986, there is no merit in your request for clubbing.
Accordingly, it is clarified that you are eligible to receive power in terms of the order dated 31.10.1986 as aforesaid sepa rately for IMFAL (11 KV and 33 KV) and IMCL to the extent of 57.60 M.Us and separately for IMFAL (132 KV) to the extent of 52.56 M.Us during the current water year.
Please note therefore that club bing as assumed in your letters has not been allowed.
Please also note that your re quest for allocation of additional power for IMFAL (132 KV) can only be considered upon your fulfilment of the conditions specified in the order dated 31.10.1986.
Yours faithfully, Sd/ Commissioner cum Secretary to Government." No personal hearing was afforded to the company before the decision incorporated in the said letter was taken by the Government.
It will be seen that despite the clear pro nouncement by Government regarding invalidity of the said reason, the sole ground stated by the State Government in the said letter for denying the benefit of clubbing to the company is that IMFAL 132 KV unit being a 100% export ori ented unit for which special provisions had been made in the ,power cut order dated October 31, 1986, there was no merit in the company 's request for dubbing.
Aggrieved by the said action taken by the State Government rejecting the request for clubbing, the company has filed Writ Petition No. 1753 of 1986 in this Court seeking to quash the said order.
S.L.P. (C) Nos.
13848 13849 of 1986 have been filed by the State of Orissa challenging the correctness of the above mentioned judgment of the High Court in O.J.C. No. 1549 of 1986 and O.J.C. No. 2496 of 1985.
S.L.P. (C) Nos.
14173 14174 of 1986 have been separately filed 281 by the Board challenging the very same judgment.
The company has filed S.L.P.(C) Nos.
14923 14924 of 1986 questioning the correctness of the High Court 's judgment in so far as the High Court has turned down its contentions regarding the competence.
of the State Government to pass orders under Section 22B of the Act making allocation of power supply to individual consumers and to deny the benefit of clubbing and to prescribe for levy of higher tariff for excessive drawal.
It was submitted before us by Counsel appearing for the company that the four electrical submerged arc furnaces of the company producing ferro alloys cannot be run at a low capacity and they require continuous and uninterrupted supply of energy to sustain production and also to ensure that the furnaces do not sustain damage.
It is electric power that is used as a raw material in the manufacture of ferro alloys.
The electrical energy is converted to heat energy which generates the requisite temperature for reduc tion of the ore to the metal and unless that temperature is attained the necessary reaction will not take place and the desired product will not be obtained.
According to learned Counsel for the company, in view of the unsatisfactory power situation in the State and the consequent drastic power cuts imposed on the industrial units, the extension of the facil ity of clubbing becomes very vital because that would render possible for the multiple unit industries concerned which are having more than one unit to decide to operate a reduced number of furnaces with the available allocation of power by diverting the quota allotted to some of the units to those which are to be continuously worked.
By this process alone, it is said, it will be possible for such industries to avert damage to the furnaces and to avoid large scale retrenchment of the labour force.
The petitioner company has averred both before the High Court and before this Court that on account of frequent interruptions and the undependable nature of supply of power, the company 's 132 KV IMFAL furnace had suffered very serious damage causing a loss of about Rs. 16 crores to the company.
But this averment has been seriously controverted by the Board and the State Government.
For the purposes of this case it is not necessary for this Court to enter into the merits of this controversy and to determine which version is correct.
It would suffice merely to state that the denial of clubbing to such industrial units has very serious implications and repercussions, both economic and otherwise, on the viable functioning of the industry.
We shall first proceed to deal with the contentions raised by the 282 State Government and the Board in their Special leave peti tions.
Section 22B of the Act is in the following terms: "22B(1) If the State Government is of opinion that it is necessary or expedient so to do, for maintaining the supply and securing the equitable distribution of energy.
it may by order provide for regulating the supply, distribution, consumption or use thereof.
(2) Without prejudice to the general ity of the powers conferred by sub section (1) and order made thereunder may direct the licensee not to comply, except with the per mission of the State Government with (i) the provisions of any contract, agreement or requisition whether made before or after the commencement of the Indian Electricity (Amendment) Act, 1959, for the supply (other than the resumption a supply) or an increase in the supply of energy to any person, or (ii) any requisition for the resumption of supply of energy to consumer after a period of six months, from the date of its discontinu ance, or (iii) any requisition for the resumption of supply of energy made within six months of its discontinuance, where the requisitioning consumer was not himself the consumer of the supply at the time of its discontinuance.
" It is also necessary to refer to Section 49 of the as amended in 1967.
That Section reads "49.
(1) Subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.
283 (2) In fixing the uniform tarrifs, the Board shall have regard to all or any of the following factors, namely (a) the nature of the supply and the purposes for which it is required; (b) the co ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee; (c) the simplification anti standardi sation of methods and rates of charges for such supplies; (d) the extension and cheapening of supplies of electricity to sparsely developed areas.
(3) Nothing in the foregoing provi sions of this section shall derogate from the power of the Board, if it considers it neces sary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographic al position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.
(4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person.
" It appears to us to be clear on a reading of Section 22B of the Act that what is contemplated by it is that the State Government should only lay down policy guidelines to be adopted by the Board for regulating, supply, jurisdiction, consumption or use of energy.
The implementation of the policy after working out the details is a matter to be carried out by the Board.
It is therefore somewhat strange that the State Government has taken upon itself the task of allocating the quantum of power that may be consumed by the different industrial units mentioned in the Annexures to the Government Orders passed in respect of the years 1984 85, 1985 86 and 1986 87 under Section 22B of the Act.
However, the High Court is in our opinion right in holding that under the aforesaid section, the Government may for the pur 284 poses of securing equitable distribution of energy regulate its consumption or use and decide as a matter of policy whether the benefit of clubbing should be allowed to the consumers of energy.
The immediate consequence of dental of the facility of clubbing will be to restrict the quantum of permissible consumption of energy by each of the respective units to the quota allotted to it singly or jointly and this necessarily involves serious financial implications because excessive drawals of energy by resort to clubbing would necessarily invite liability for payment at a higher tariff for the energy so drawn.
It was contended before us by the Counsel appearing for the State and the Board that the power availability position in respect of each water year can be reasonably ascertained with some degree of precision only after the peak monsoon period and hence the High Court was not right in holding that the orders under Section 22B of the Act cannot be passed with retrospective effect in the middle of a water year.
We find there is some force in this argument and we hold that the High Court was not right in observing that the orders under Section 22B of the Act imposing restrictions on consumption of power could not legally and validly be passed by he Government "with retrospective effect" in the middle of a water year.
But the position regarding disallowance of clubbing stands on an entirely different footing.
If a consumer had been allowed the benefit of clubbing previous ly, that benefit cannot be taken away with retrospective effect thereby saddling him with heavy financial burden in respect of the past period where he had drawn and consumed power on the faith of the orders extending to him the bene fit of clubbing.
The High Court was, therefore, perfectly right in holding that the benefit of clubbing which the company had enjoyed pursuant to the order dated July 12, 1984 during the water year 1984 85 till the end of December, 1984 could not be taken away by the letter of the Board dated January 24, 1985.
We find no merit at all in the stand taken by the said Electricity Board that by the letter dated July 12, 1984, the Board had permitted clubbing only for a limited period of one month i.e. the month of July, 1984.
It is to be remembered that right from the inception of the power cut in the State of Orissa, the benefit of clubbing had been allowed to the company in respect of the three units which were classified as "power intensive units".
The same position continued in the year 1983 84 after the com missioning of the company 's fourth unit namely, 132 KV IMFAL and the benefit of clubbing was allowed in respect of all the four units during that year as is clear from the tele printer message sent by the Chief Engineer of the Board to the Superintending Engineer, Teacher granting the request for clubbing made by the company in respect of its 285 four units by its letter dated July 16, 1983.
It was there after that the Board issued order as per its letter dated July 12, 1984 in reply to the company 's request for being given the benefit of clubbing for the year 1984 85.
The text of this letter has been reproduced by us.
In our opinion the correct construction to be placed on this letter is that it only makes an allocation of power to all the four units on a monthly basis commencing from 1st July, 1984 with permission accorded to the company to club the drawal subject to the condition that the whole position will be reviewed in Octo ber, 1984.
In actual point of fact however, no such review was made in October, 1984 and it was only on January 24, 1985 that the Board addressed a letter to the company incor porating its decision not to permit clubbing.
This decision taken on January 24, 1985, even if it is assumed to be valid, could not operate retrospectively during any period prior to the date of issue of the said letter, because during the said period the company had been enjoying the benefit of clubbing under the permission validly granted to it by the order dated July 12, 1984 which had not been revised till then.
We accordingly uphold as correct the conclusion reached by the High Court that the demands for additional tariff made by the Board as per the revised bills issued to the company produced in the High Court as Annex ure Il series in O.J.C. No. 1549 of 1985 were illegal and were liable to be guashed.
We are in complete agreement with the view expressed by the High Court that the sole reason stated by the Board in its letter dated January 24, 1985 for refusing the facility of clubbing to the company is not valid or tenable.
On a reference to the Orissa State Electricity Board (General Conditions of Supply) Regulations, 1981, it is seen that the Regulation 28 which deals with classification of service to consumers, classifies consumers under 15 differ ent categories namely, domestic lighting and power, commer cial lighting and power, cinema, theatre etc., street light ing, railway traction, irrigation pumping and agriculture, public water works and sewerage pumping, general purpose tariff, small industries, medium industries, large indus tries, power intensive industries, heavy industries and temporary supply.
There is no separate categorisation of 'export oriented industries '.
Under the scheme of the Regu lation, industries have to fall under one or other of the five categories small, medium, large, power intensive and heavy.
This position is further confirmed by the fact that in the orders passed by the State Government under Section 22B of the Act for the years 1984 85, 1985 86 and 1986 87 also there is no separate categorisation of export 286 oriented industries.
The only categories mentioned are heavy industries and power intensive industries and all the four units of the company had been included under the category "power intensive industries.
" It is admitted in the counter affidavit and it is not disputed before us at the time of heating the arguments that clubbing has been allowed by the Board and is being allowed even now in respect of power intensive industries other than export oriented indus tries.
We see no justification at all for this differential treatment meted out to export oriented industries.
The note appended to the Government 's orders passed under Section 22B of the Act for the years 1985 86 and 1986 87 does not in any way support the contention of the State and the Board that an export oriented industry is to be made a separate alloca tion of power and is to be denied the benefit of clubbing merely on account of its being engaged in an export oriented venture.
It continues to be classified as a power intensive industry for purposes of allocation of power.
The only effect of the note is that in case such export oriented industry fulfils the conditions mentioned in the note, it will be entitled to additional allocation of power on the ground of its being entitled to preferential treatment as an incentive for export promotion.
This is only an enabling provision which would entitle an 100% export oriented indus try to claim additional allotment of power if it is able to satisfy the Board and the State Government that the condi tions mentioned in the note are fulfilled by it.
The only consequence of said condition not being satisfied by an export oriented industry is that it will be treated only as an ordinary "power intensive industry" and will not be entitled to any additional allocation of energy.
For the mere reason that it has not fulfilled the conditions pre requisite for claiming additional allocation of power, a power intensive industry which is export oriented cannot be subjected to treatment otherwise than at a par with other power intensive industries.
If additional allocation of power has been granted to an export oriented industry, it may well be that to the extent of such additional allocation which is specifically granted for the purpose of promotion of export, diversion of supply to the other units may not be permitted.
So long as no additional power allocation has been made and no preferential treatment has been given to the particular power intensive industry on the ground that it is a 100% export oriented industry, it cannot be meted out a prejudicial treatment different from what is given to other power intensive industries which are termed as "demos tic units".
We have therefore, no hesitation to uphold the conclusion reached by the High Court that the reason stated by the Board in its letter to the company dated January 24, 1985 for refusing the benefit of clubbing to the company for the year 1984 85 was fallacious, illegal and untenable.
We have already 287 held that the High Court was not right in observing that orders under Section 22B of the Act imposing restrictions on consumption of power could not legally and validly be passed by the State Government in the middle of a water year.
There is no merit in the rest of the contentions raised in S.L.P. (C) Nos.
13848 13849 of 1986 filed by the State Government of Orissa and S.L.P.(C) Nos. 14173 14174 of 1986 filed by the Board.
Subject to our above observation regarding the competence of the State Government to pass orders under Section 22B of the Act even after the commencement of the water year these four Special Leave Petitions will stand dismissed.
In Writ Petition No. 1753 of 1986, the company has challenged the action of the State Government in refusing the company 's request for clubbing as per the State Govern ment 's letter dated December 8, 1986.
It appears to us rather strange that inspite of the express pronouncement by the High Court to the effect that the reason stated by the Board in its communication to the company dated January 24, 1985, namely that the company 's 132 KV IMFAL unit being a 100% export oriented unit it had to be treated separately for the purpose of power allocation and hence the benefit of clubbing could not be allowed was illegal and untenable, the State Government has merely reiterated the very same reason in its impugned letter dated December 8, 1986.
This clearly indicated lack of due care and proper application the mind of the Government to relevant aspects of the matter before the order was passed.
We have already indicated that we are in full agreement with the view expressed by the High Court that it is not legally permissible to refuse the facility of clubbing merely on the ground that a particular power inten sive unit is an export oriented unit so long as it had not been given any special allotment of power on the said ground on the basis of its fulfilment of the conditions specified for a 100% export oriented unit in the note appended to the Government 's order passed under Section 22B of the Act.
When all other power intensive units termed as "domestic units" are being allowed the benefit of clubbing, it would not be legally proper to deny the same facility to an industry classified as 'power intensive unit ' merely on the ground that being an export oriented unit, it has failed to fulfil the conditions pre requisite for allocation of additional power.
Such differential treatment would amount to arbitrary discrimination, violative of Article 14 of the Constitution and it cannot be permitted.
A power intensive unit which has not been extended any advantage in the nature of allocation of additional power on the ground that it is a 100% export oriented industry must be treated on the same footing as other power intensive industries called "domestic indus tries" and so long as 288 the benefit of clubbing is allowed to domestic 'power inten sive ' units, such benefit cannot be denied to an export oriented unit which has not been allocated any additional power on the basis of its export performance.
We make it clear that nothing contained in this judgment is to be construed as laying down as a general proposition that industrial consumers having more than one unit are, under all circumstances, entitled as of right to club the power allotted to their different units since we are not called upon to consider or pronounce upon the said question in this case.
The observations and the conclusions recorded in our judgment are based on the special facts and circum stances of the instant case before us where admittedly all power intensive industries in the State of Orissa other than export oriented industries had been allowed the benefit of clubbing by the Board and the limited question arising for consideration has been whether the denial of said benefit to some of the power intensive industries on the sole ground that they are export oriented industries which had not complied with the conditions specified in the note to the Government order issued under Section 22B of the Act for the three years in question was legally valid and permissible.
We accordingly quash the order of the State Government dated December 8, 1986 and direct the respondent to allow the petitioner company the facility of clubbing of the energy supply to 11 KV IMFAL unit, 33 KV IMFAL unit, 11 KV IMCL and 132 KV IMFAL unit.
We see no reason to grant the prayer of the company for quashing the order dated October 31, 1986 passed by the State Government under Section 22B of the Act in so far as it fixes the energy allocation for the different units but the said order shall not be treated or construed as denying the facility of clubbing to the company.
The Writ Petition is allowed to the limited extent indicated above.
The parties will bear their respective costs in all these petitions.
S.L.P. Nos. 14923 and 14924 of 1986 will also stand disposed of as above.

summary/full:
The petitioner company, engaged in manufacture of ferro silicon, silicon metal and silicon carbide, was per mitted clubbing of electricity for the water years 1979 80 to 1983 84 for its units in an industrial complex in the State of Orissa, which utilised electricity as raw material and which were classified as 'power intensive industries".
During the water year 1984 85, clubbing of power supply from July 1984 onwards was allowed and bills for the period from July 1984 to December 1984 were drawn up and served on the basis that the company was entitled to the benefit of club bing.
Though the position was subject to revision in October 1984 no revision took place.
In December 1984, the facility of clubbing was refused on the ground that one of the units being a lOO% export oriented industry, power supply to it had to he regulated separately for purposes of power alloca tion and that clubbing had been allowed for the month of July 1984 only.
Under Section 22B of the Indian Electricity Act, 1949, the State of Orissa issued an order on January 22, 1985, effective from July 1, 1984, directing the State Electricity Board to reduce supply of energy so as to allow consumers to avail of supply only to the extent specified in the Annexure to the order.
There was a note to the order prescribing certain conditions.
All the units of the petitioner company were shown in the 266 Annexure under the classification 'power intensive indus tries '.
The First three units were allotted energy together and the fourth unit separately.
After the promulgation of the above order, the Board served a revised bill on the company demanding payment at the higher tariff rate for the period from October 1984 to June 1985, on the ground that there had been alleged excess drawal by the company due to clubbing.
The company field a writ petition in the High Court challenging the aforesaid order and also the letter of the Board refusing clubbing for the entire water year 1984 85 and praying for quashing the same.
The company also sought a writ of mandamus directing the Board and the State Govern ment to permit clubbing for the water year 1984 85 as well as for the future years.
On behalf of the State it was contended that clubbing had been allowed to the company by the Board temporarily for the month of July 1984 only during the water year 1984 85 and that the power allotted to the fourth unit could not be allowed to be clubbed with that allotted to the other three units since the former was a 100% export oriented unit and, it had, therefore, to be treated separately for the allocation of power.
During the pendency of the writ petition the State Government passed another order effecting allocation of power under Section 22B of the Act for the water year 1985 86.
The company was served with a notice of disconnection for non payment of the bills prepared at the higher tariff rate for the month of August, 1985.
The company filed anoth er writ petition challenging the order and praying for identical reliefs as in the previous petition.
This petition was opposed by the State contending that the said unit, being a 100% export oriented unit, had to be treated sepa rately for the purpose of power allocation.
The High Court passed an interim order directing the State Government to dispose of the company 's request for clubbing of the power allotted for all the four units for the water year 1985 86.
The State Government, thereafter passed an order, rejecting the application without giving any reason.
The company 's application for amending the writ petition by challenging the Government 's refusal was allowed.
The High Court held that under Section 22B of the Act, the State Government had the power to grant or refuse the request of a consumer for being allowed the facility of clubbing, and upheld the power of the State Government to impose special tariff in case the allotted quota of energy was exceeded.
It however held that the State Government and 267 the Board had no power under the Act to impose restrictions on the use of electric energy with retrospective effect and quashed the demands made under the revised bills impugned in the first writ petition.
It also held that the orders passed by the State Government under Section 22B of the Act did not show that there was any application of mind by the Govern ment on the question as to whether or not clubbing should be allowed with reference to relevent considerations and that the plea raised by the State Government that the fourth unit should be treated separately from the other three units since the former was an export oriented unit was without any substance.
The High Court quashed the demands for additional tariff made in the revised bills challenged in the first writ petition and declared that the company would be liable to pay tariff only at the contractual rate for the supply made during the water year 1984 85.
In respect of the water year 1985 86, the High Court directed that the company shall enjoy the benefit of clubbing till the State Government passed an appropriate statutory order rejecting its request.
For the water year 1986 87 the State Government passed an order dated 8th December, 1986 effecting an allocation of power supply on the same pattern as was adopted for the previous year and rejecting the request of the company to allow the facility of clubbing to its fourth unit.
The company filed a writ petition in this Court challenging the said order.
In the Special Leave Petitions of the company it was submitted.
that the four electrical sub merged arc furnaces of the company producing ferro alloys cannot be run at a low capacity and they required continuous and uninterrupted supply of energy to sustain production and also to ensure that the furnaces did not sustain damage, as electric power was used as a raw material in the manufacture of ferro alloys, that on account of frequent interruptions and the undependable nature of supply of power, the fourth unit had suffered very serious damage causing a great loss and that the benefit of clubbing cannot be denied to the company under Section 22B of the Act.
It was contended in the Special Leave Petitions on behalf of the State and the Electricity Board that the power availability position in respect of each water year can be reasonably ascertained with some degree of precision only after the peak monsoon period and the High Court was, there fore, not right in holding that the orders under Section 22B of the Act cannot be passed with retrospective effect in the middle of a water year.
268 Allowing the writ petition to a limited extent and disposing of the Special Leave Petitions of the company and dismissing the Special Leave Petitions of the State and the Board, this Court, HELD:I.
It is clear from a reading of Section 22B of the Electricity Act that what is contemplated by it is that the State Government should only lay down policy guidelines to be adopted by the Board for regulating, supply, jurisdic tion, consumption or use of energy.
The implementation of the policy after working out the details is a matter to he carried out by the Board.
It is, therefore, strange that the State Government had taken upon itself the task of allocat ing the quantum of power that may he consumed by the differ ent industrial units in respect of the years 1984 85, 1985 86 and 1986 87 under Section 22B of the Act.
[283F H] 2.
The High Court was right in holding that under this Section, the Government may for purposes of securing equita ble distribution of energy regulate its consumption or use and decide as a matter of policy whether the benefit of clubbing should he allowed to the consumers of energy.
The immediate consequence of denial of the facility of clubbing will he to restrict the quantum of permissible consumption of energy by each of the respective units to the quota allotted to it singly or jointly and this necessarily in volves serious implications and repercussions, both economic and otherwise, on the viable functioning of the industry because excessive drawals of energy by resort to clubbing would necessarily invite liability for payment at a higher tariff for the energy so drawn.
[283H; 284A B] 3.
The High Court was right in holding that the benefit of clubbing which the company had enjoyed pursuant to the impugned order during the water year 1984 85 till the end of December, 1984 could not he taken away by the impugned letter of the Board dated 24 1 1985.
The earlier letter dated 12th July 1984 had made an allocation of power to all the four units on a monthly basis commencing from 1st July, 1984 with permission accorded to the company to club the drawal subject to the condition that the whole position would be reviewed in October, 1984.
There was no such review and it was only in the impugned letter of 24th January, 1985 that the Board had incorporated its decision not to permit clubbing.
This decision could not operate retrospectively so as to cover the period during which the company had been enjoying the benefit of clubbing under the permission valid ly granted to it by the Board and which had not been revised till then.
[284F; 285B D] 269 4.
The High Court was right in holding that the demands for additional tariff made by the Board as per the revised bills issued to the company for the year 1984 85, were illegal and were liable to be quashed and that the sole reason stated by the Board in its impugned letter for refus ing the facility of clubbing to the company was fallacious, illegal and untenable.
[285D E] 5.
The High Court was not right in observing that the orders under Section 22B of the Act imposing restrictions on consumption of power could not legally and validly be passed by the Government 'with retrospective effect ' in the middle of a water year.
[284D] 6.
If a consumer had been allowed the benefit of club bing previously, that benefit could not be taken away with retrospective effect thereby saddling him with heavy finan cial burden in respect of the past period where he had drawn and consumed power on the faith of the orders extending to him the benefit of clubbing.
[284E] 7.
Inspite of the express pronouncement by the High Court to the effect that the reason stated by the Board for refusing the benefit of clubbing for the year 1984 85 was illegal and untenable, the State Government merely reiterat ed the very same reason in its impugned order refusing benefit of clubbing for the year 1986 87.
This clearly indicated lack of due care and proper application of the mind of the Government to relevant aspects of the matter before the order was passed.
[287C] 8.
There was no separate categorisation of export ori ented industries under Regulation 28 of the Orissa State Electricity Board (General Conditions of Supply) Regulations 1981.
Under the scheme of the regulation, industries had to fall under one or other of the five categories small, medi um, large, power intensive and heavy.
In the orders passed by the State Government under Section 22B of the Act for the years 1984 85, 1985 86 and 1986 87, the only categories mentioned were heavy industries and power intensive indus tries and all the four units of the company had been includ ed under the category 'power intensive industries '.
Clubbing had been allowed by the Board and was being allowed even now in respect of all the power intensive industries, other than export oriented industries.
There is no justification at all for this differential treatment meted out to export oriented industries.
The note appended to the Government 's orders for the years 1985 86 and 1986 87 did not in any way lay down that an export oriented industry was to he made a separate allocation 270 of power and was to be denied the benefit of clubbing merely on account of its being engaged in an export oriented ven ture.
It continues to be classified as a power intensive industry for purposes of allocation of power.
[285G H; 286A C] 9.
So long as no additional power allocation had been made and no preferential treatment had been given to the particular power intensive industry on the ground that it was a 100% export oriented industry, it cannot be meted out a prejudicial treatment different from what was given to other power intensive industries, termed as "domestic units".
[286G] 10.
When all other power intensive industries were being allowed the benefit of clubbing it would not be legally permissible nor proper to deny the facility of clubbing to an industry classified as 'power intensive unit ' merely on the ground that the particular power intensive unit was an export oriented unit, so long as it had not been given any special allotment of power on the said ground on the basis of its fulfilment of the conditions specified for a 100% export oriented unit in the note appended to the Govern ment 's order passed under Section 22B of the Act.
Such differential treatment would amount to arbitrary discrimina tion, violative of Article 14 of the Constitution.
[287F] The Court quashed the impugned order of the State Gov ernment for the year 1986 87 and directed that: ,(a) the respondents allow the petitioner company the facility of clubbing of the energy supply to the four units; [288E] (b) the impugned order for the year 1986 87 passed by the State Government under Section 22B of the Act insofar as it fixes the energy allocation for the different units shall not be treated or construed as denying the facility of clubbing to the company; and [288F] (c) that nothing, contained in the judgment of this Court is to be construed as laying down a general proposi tion that industrial consumers of electrical energy having more than one unit are entitled, under all circumstances, as of right, to club the power allotted to their different units.
[288B]