Difference between revisions of "M/S.METAL SEAM CO.OF INDIA (P)LTD V. M/S.AVADH DELICACIES SC 46"
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M/S.METAL SEAM CO.OF INDIA (P)LTD V. M/S.AVADH DELICACIES SC 46 Decided on 19 January 2016 In the Supreme Court of India Introduction The case arose out of Special leave petition filed before Supreme Court against the judgement delivered by High Court. High Court had allowed the writ of certiorari and had quashed the order of the State Government. In Supreme Court, judgement was delivered by a two judge bench namely Hon'ble Mr. Justice v. Gopala Gowda Hon'ble Mr. Justice Uday Umesh Lalit.
In 1956, a Shed and an open space situated in Talkatora Industrial Estate, Lucknow was allotted to M/s Surya Chemicals for establishment of a factory. Under the Hire Purchase agreement entered into between M/s Surya Chemicals and the Director of Industries on behalf of the Government of U.P., it was expressly stipulated in Condition No.4 as under:-“Not to sell, mortgage, assign or otherwise transfer the factory building except with the previous permission in writing of the Director of Industries, U.P. till the price has been fully paid and the transfer as aforesaid shall be as such conditions as the Director of Industries, U.P., may lay down while granting such permission.”
The Appellant was allotted the adjoining shed in the year 1968 and in due course of time it started manufacturing containers and drums. As the business of the Appellant expanded, it required additional premises. Around this time M/s Surya Chemicals was in arrears in making payment of instalments in respect of the concerned shed. At one stage the allotment in its favour was cancelled but on an assurance that it would start production, it was given time and the allotment was restored. The Appellant approached the Joint Director of Industries for allotment of the concerned shed on payment of entire cost.
Since M/s Surya Chemicals was in default, the Joint Director of Industries recommended cancellation of allotment of the concerned shed and wrote to the General Manager to take the appropriate steps after taking legal opinion in the matter. The General Manager however recommended transfer of the concerned shed in favour of Avadh Delicacies, Respondent. Respondent was a new firm provisionally registered as a Small Scale Industries unit with the General Manager. The order was passed on an application moved by M/s Surya Chemicals for transfer of the concerned shed to respondent.
After a few years the Joint Director of Industries accepted the transfer application moved by M/s Surya Chemicals permitting the transfer of the concerned shed in favour of Respondent. This led to the filing of Writ Petition by the Appellant in the High Court. It was submitted that the application for transfer ought to have been considered along with other pending applications and when the application of the Appellant was pending there was no question of accepting the transfer as proposed by M/s Surya Chemicals. That writ petition was allowed by the High Court.
Judgement by High Court
It was observed By High Court that “In the case, it is obvious that the allotment which has been permitted without considering other applications, is unreasonable and lacks good faith and could not be said to be in public interest. The order passed by the State Government effecting the order of transfer in favour of opposite party is unreasonable and invalid. In these circumstances, the allotment order passed in favour of opposite party cannot be allowed to stand. The writ petition was accordingly allowed and a writ of certiorari was issued quashing the order passed by the Joint Director of Industries and the order passed by the State Government to the writ petition. Thus the order of transfer in favour of opposite party was quashed. The authorities were directed to consider the merits of the case of the Appellant and Respondent and in case the claim of Respondent was to be accepted, its claim could inter-alia be considered in respect of any other shed.
Appeal in Supreme Court
The judgment and order was challenged by Respondent in Supreme Court. Supreme Court held that the observation of the High Court that the order was issued without any public auction or inviting tenders and as such was completely unsustainable is absolutely correct. SC also held that the appeal thus stands allowed and the judgment of the High Court under appeal stands modified to certain extent.