The Collector Of Vellore ... v. The Collector Of Vellore

1. The petitioner prays for the issue of a writ of mandamus forbearing the respondent, the District Collector, Vellore, from taking any coercive steps for collection of the award amount levied on the petitioner-company by award dated 27.3.2000 passed by the Loss of Ecology (Prevention and Payment of Compensation) Authority for Tamil Nadu pending proceedings before the BIFR in No. 81 of 2001 in view of the enquiry having been admitted under Section 16(1) of The Sick Industrial Companies (Special Provisions) Act, 1985, as any such coercive action by the respondent against the petitioner-company is protected under Section 22(1) of The Sick Industrial Companies (Special Provisions) Act, 1985.

2. This Court heard Mr. Muralikumaran, learned counsel appearing for the petitioner and Mr.Kumaresh Babu, learned Government Advocate appearing for the respondents.

3. Concedingly, the petitioner-company as per the award dated 27.3.2000 passed by the Loss of Ecology (Prevention and Payment of Compensation) Authority, is liable to pay a compensation determined by the Loss of Ecology Authority amounting to Rs.26,82,02,328/= to the affected individuals, directed the petitioner to pay Rs.43,75,720/= and another sum of Rs.5,97,129/= being the compensation recoverable for reversal of damaged environment. On the basis of the certificate issued by the said authority, the respondent herein issued a certificate for recovery under The Revenue Recovery Act.

4. While contending that all recoveries including damages payable, if any, pursuant to the award of the Loss of Ecology (Prevention and Payment of Compensation) Authority for Tamil Nadu is suspended or stayed statutorily under Section 22(1) of The Sick Industrial Companies (Special Provisions) Act, 1985 and, therefore, the mandamus is sought to forbear the respondent from realising the amount by way of enforcing the award under The Revenue Recovery Act.

5. The only point that arise for consideration in this writ petition is :-

"Whether Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985, operates as a stay with respect to recovery of the damages payable by the petitioner to various residents and agriculturists in the locality to whom the Loss of Ecology (Prevention and Payment of Compensation) Authority has already directed payment of compensation ?"

6. It is contended that Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985, is a statutory bar and, therefore, there could be no recovery at all against the petitioner so long as an application under Section 16 of the said Act is pending before the BIFR. Per contra, it is contended that it is not a commercial transaction or a credit or loan outstanding or any sum payable by the petitioner to third party, but it is damages, which the petitioner is required to pay as per the award passed by the authority constituted under the Loss of Ecology (Prevention and Payment of Compensation) Rules. The determination by the said authority, namely, Loss of Ecology, is also a quasi-judicial determination and it is also towards compensation, which the agriculturists have suffered.

7. The learned counsel for the petitioner relied upon the judgment of the Apex court in MAHARASHTRA TUBES LTD., VS. STATE INDUSTRIAL INVESTMENT CORPORATION in support of his contention that recovery of the amount from the petitioner is suspended by operation of Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985. The learned counsel also relied upon the order of K.Govindarajan, J., in KIRAN OVERSEAS EXPORTS LTD., VS. COMMERCIAL TAX OFFICER REPORTED IN 2002 (2) CTC 26, wherein the learned Judge held that the action of the Sales Tax Commissioner in demanding tax outstanding under the Tamil Nadu General Sales Tax Act cannot be continued as Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985 operates as a stay.

8. Such a contention advanced by the counsel for the petitioner is attractive. The learned counsel also relied upon the judgment of the Supreme court in TATA DAVY LTD., VS. STATE OF ORISSA & OTHERS reported in 1998 (3) SCC 462 where the Supreme Court following the earlier decision in Vallabha Glass Works reported in 1992 (82) STC 41 held that even the arrears of tax being a liability is also stayed.

9. It is rightly pointed out by the learned Government Advocate that the persons, who had moved the Loss of Ecology Authority for compensation are very poor persons. They have already been deprived of their livelihood, in that their entire habitation and the lands have been destroyed by the activities on the part of the petitioner and other identical factories and as a result of this, the agriculturists and the residents in the locality neither have drinking water facility nor they could raise cultivation since the entire soil in the area is polluted by chemicals.

10. It is to be pointed out that the amount awarded against the petitioner has not been included in the schedule of payments due and payable by the petitioner before the BIFR and it is not the subject matter of an investigation or an enquiry before the BIFR.

11. Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985, provides for suspension of legal proceedings, contracts, etc. Section 22(1) reads thus:-

"Where in respect of an industrial company, an inqury under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for winding-up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof (and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans, or advance granted to the industrial company) shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority."

12. While considering the scope of Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985, the Apex Court in MAHARASHTRA TUBES LTD., VS. STATE INDUSTRIAL INVESTMENT CORPORATION held that where an inquiry is pending under Sections 16/17 or an appeal is pending under Section 25 of The Sick Industrial Companies (Special Provisions) Act, 1985,, there should be cessation of coercive activities of the type mentioned under Section 22(1) to permit the BIFR to consider what remedial measures it should take with respect to the sick industrial company.

13. However, the learned counsel for the petitioner relied upon the pronouncement in ANDHRA CEMENTS LTD., VS. ANDHRA PRADESH STATE ELECTRICITY BOARD , where the Andhra Pradesh High Court held that non-supply of further goods under a contract cannot in its view be equated with the kind of proceedings contemplated by Section 22(1) of The Sick Industrial Companies (Special Provisions) Act, 1985. The Andhra Pradesh High Court also held that non-supply of goods in future cannot amount to action proposed against the property of the company.

14. In INDIAN MAIZE AND CHEMICALS VS. STATE OF UTTAR PRADESH , while considering the scope of Section 22 viz-a-viz Section 24 of the Indian Electricity Act, the Apex Court held that in respect of non-payment of consumption charges, a sick company is not entitled to invoke of Section 22(1) of the Act. In this context, the Apex Court held thus :-

"5. A reading of the above section would indicate that when the proceedings are pending before the BIFR in respect of any matter referred to therein for inquiry by the Board, the proceedings or order of execution, distress or the like would be stayed until the proceedings get concluded before the BIFR or would not be proceeded without the leave of the Board or Appellate Authority. It is seen that under the Indian Electricity (Supply) Act, 1948 one of the conditions is that continued payment of the price of electrical energy supplied by the Board is a condition for the continued supply and the default committed in the payment thereof entails disconnection of the supply of electrical energy, except in accordance with the procedure prescribed under the contract or the regulation issued under the Indian Electricity (Supply) Act, 1948. Execution connotes pre-existing decree. It is true that any action for realisation etc. pending decision by BIFR or without its permission is prohibited. Enforcement of compliance of the obligation under the contract or regulation for supply of electrical energy by ordering payment of electrical energy is not and cannot be considered to be execution of a decree. Execution of the decree presupposes the existence of a decree of a competent court and the decree-holder should take steps to have it executed pending proceeding before BIFR. There is no decree of court. Since the petitioner had committed default and as a condition for reconnection, agreed to pay the amount in instalments, he is liable to comply with the undertaking given for supply of electrical energy. The petitioner committed default in that behalf. So, it is not entitled to seek any declaration or direction from the Court that since the matter is pending before the BIFR, he would be entitled to the supply of electrical energy without the compliance of the corresponding obligation of payment under regulations or of the contract under the Indian Electricity (Supply) Act, 1948. It is, therefore, not correct to say that since the proceedings are pending before the BIFR, the electricity is required to be supplied to the consumer without compliance of the conditions. It is then sought to be contended that the authorities may take coercive steps to recover the arrears. At this stage, we need not go into the question."

15. Factually in the present case, application was filed for compensation under The Environment Protection Act, 1986, by the individual claimants for the loss caused before The Loss of Ecology (Prevention and Payment of Compensation) Authority. After holding an enquiry, the said Tribunal awarded compensation. The said award of compensation has become final. In respect of recovery of such compensation, action has been taken and, therefore, the petitioner has approached this Court invoking Article 226 on the sole ground that so long as the proceedings are pending before the BIFR, the present action for recovery of compensation awarded under The Environment Protection Act, 1986, stands stayed.

16. Section 22 of The Environment (Protection) Act confers exclusive jurisdiction on the Tribunal. The Act mandatorily provides that amount of compensation when ordered to be paid shall be recovered as arrears of land revenue.

17. The important statutory provision with which we are concerned at this stage is Section 24. Section 24 reads thus :-

"Subject to the provisions of Sub-section (2) of the provisions of this Act and the Rules or orders made therein shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act."

18. The Sick Industrial Companies (Special Provisions) Act, 1985, is a special provision. The provisions of the Environment (Protection) Act, 1986 is also a special enactment. The Sick Industrial Companies (Special Provisions) Act, 1985, is earlier in point of time, while The Environment (Protection) Act, is of the year 1986, is latter in point of time. The provisions of the two Acts applies or operates in their specific area or subject or operation.

19. It is well settled rule of interpretation that when there are two laws, the latter will normally prevail over the former if there is a provision under the latter special Act giving it over-riding effect. The maxim generalia specialibus non derogant therefore will have no application.

20. In MAHARASHTRA TUBES LTD., VS. STATE INDUSTRIAL INVESTMENT CORPORATION the Supreme Court had occasion to examine the very provisions of The Sick Industrial Companies (Special Provisions) Act, 1985, and in particular to Sections 16, 17, 22, 25 and 32 of the said Act, viz-a-viz, The State Financial Corporations Act, 1951, and it has been held thus:-

"9) Having reached the conclusion that both the 1951 act and the 1985 act are special statutes dealing with different situations - the former providing for the grant of financial assistance to industrial concerns with a view to boost up industrialisation and the latter providing for revival and rehabilitation of sick industrial undertakings, if necessary, by grant of financial assistance, we cannot uphold the contention urged on behalf of the respondent that the 1985 Act is a general statute covering a larger number of industrial concerns than the 1951 Act and, therefore, the latter would prevail over the former in the event of conflict. Both the statues have competing non obstante provisions. Section 46-B of the 1951 Act provides that the provision of that statute and of any rule or order made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force whereas Section 31(1) of the 1985 Act also provides that the provisions of the said Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law. Section 22(1) also carried a non obstante clause and says that the said provision shall apply notwithstanding anything contained in Companies Act, 1956 or any other law. The 1985 Act being a subsequent enactment, the non obstante clause therein would ordinarily prevail over the non obstante clause found in Section 46-B of the 1951 Act unless it is found that the 1985 Act is a general statute and the 1951 Act is a special one. In that event the maxim generalia specialibus non derogant would apply. But in the present case on a consideration of the relevant provisions of the two statutes we have come to the conclusion that the 1951 Act deals with pre-sickness situation whereas the 1985 Act deals with the post-sickness situation. It is, therefore, not possible to agree that the 1951 Act is a special statute vis-a-vis the 1985 Act which is a general statute. Both are special statutes dealing with different situations notwithstanding a slight overlap there and there, for example, both of them provide for grant of financial assistance though in different situations. We must, therefore, hold that in cases of sick industrial undertakings the provisions contained in the 1985 Act would ordinarily prevail and govern."

21. It is well settled that when there are two special enactments, the maxim "generaliabus specialia derogant" is the well accepted rule of interpretation. If a special provision is made on a certain matter, that matter is excluded from the general provision. These principles have also been applied in resolving conflict between two special enactments.

22. In ASHOKA MARKETING LTD., VS. PUNJAB NATIONAL BANK , a five Judges Bench of the Apex Court held thus :-

"55. The Rent Control Act makes a departure from the general law regulating the relationship of landlord and tenant contained in the Transfer of Property Act inasmuch as it makes provision for determination of standard rent, it specifies the grounds on which a landlord can seek the eviction of a tenant, it prescribes the forum for adjudication of disputes between landlords and tenants and the procedure which has to be followed in such proceedings. The Rent Control Act can, therefore, be said to be a special statute regulating the relationship of landlord and tenant in the Union territory of Delhi. The public premises act makes provision for a speedy machinery to secure eviction of unauthorised occupants from public premises. As opposed to the general law which provides for filing of a regular suit for recovery of possession of property in a competent court and for trial of such a suit in accordance with the procedure laid down in the Code of Civil Procedure, the Public Premises Act confers the power to pass an order of eviction of an unauthorised occupant in a public premises on a designated officer and prescribes the procedure to be followed by the said officer before passing such an order. Therefore, the public premises act is also a special statute relating to eviction of unauthorised occupants from public premises. In other words, both the enactments, namely, the Rent Control Act and the Public Premises Act, are special statutes in relation to the matters dealt with therein. Since, the public premises act is a special statute and not a general enactment the exception contained in the principle that a subsequent general law cannot derogate from an earlier special law cannot be invoked and in accordance with the principle that the later laws abrogate earlier contrary laws, the public premises act must prevail over the Rent Control Act."

61. The principle which emerges from these decisions is that in the case of inconsistency between the provisions of two enactments, both of which can be regarded as special in nature, the conflict has to be resolved by reference to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the relevant provisions therein. We propose to consider this matter in the light of this principle."

23. In ALLAHABAD BANK VS. CANARA BANK , while following the decision of the Supreme Court in MAHARASHTRA TUBES LTD., VS. STATE INDUSTRIAL INVESTMENT CORPORATION, MAHARASHTRA, the Apex Court held thus :-

"38. At the same time, some High Courts have rightly held that the Companies Act is a general Act and does not prevail under the RDB Act. They have relied upon Union of India v. India Fisheries (P) Ltd.4.

39. There can be a situation in law where the same statute is treated as a special statute vis-...-vis one legislation and again as a general statute vis-...-vis yet another legislation. Such situations do arise as held in LIC of India v. D.J. Bahadur5. It was there observed:

"... for certain cases, an Act may be general and for certain other purposes, it may be special and the court cannot blur a distinction when dealing with the finer points of law"

For example, a Rent Control Act may be a special statute as compared to the Code of Civil Procedure. But vis-...-vis an Act permitting eviction from public premises or some special class of buildings, the Rent Control Act may be a general statute. In fact in Damji Valji Shah v. LIC of India1 (already referred to), this Court has observed that vis-...-vis the LIC Act, 1956, the Companies Act, 1956 can be treated as a general statute. This is clear from para 19 of that judgment. It was observed:

"Further, the provisions of the special Act, i.e., the LIC Act, will override the provisions of the general Act, viz., the Companies Act which is an Act relating to companies in general."

Thus, some High Courts rightly treated the Companies Act as a general statute, and the RDB Act as a special statute overriding the general statute.

Special law v. special law

40. Alternatively, the Companies Act, 1956 and the RDB Act can both be treated as special laws, and the principle that when there are two special laws, the latter will normally prevail over the former if there is a provision in the latter special Act giving it overriding effect, can also be applied. Such a provision is there in the RDB Act, namely, Section 34. A similar situation arose in Maharashtra Tubes Ltd. v. State Industrial and Investment Corpn. of Maharashtra Ltd.6 where there was inconsistency between two special laws, the Finance Corporation Act, 1951 and the Sick Industries Companies (Special Provisions) Act, 1985. The latter contained Section 32 which gave overriding effect to its provisions and was held to prevail over the former. It was pointed out by Ahmadi, J. that both special statutes contained non obstante clauses but that the

"1985 Act being a subsequent enactment, the non obstante clause therein would ordinarily prevail over the non obstante clause in Section 46-B of the 1951 Act unless it is found that the 1985 Act is a general statute and the 1951 Act is a special one"

Therefore, in view of Section 34 of the RDB Act, the said Act overrides the Companies Act, to the extent there is anything inconsistent between the Acts."

24. In the light of the above pronouncements, the provisions of the Environment (Protection) Act, 1986, which is a later enactment, which will prevail and, therefore, The Sick Industrial Companies (Special Provisions) Act, 1985 will have to give way and the recovery under the Environment (Protection) Act has to be proceeded. The recovery being for persons who have already been subjected to heavy or violent disturbances of environment and sustaining damages and lost their livelihood requires more preference than a sick company, which tries to delay the reconstruction proceedings. Thus in any view of the matter, the contentions advanced by the petitioner deserves to be rejected.

25. In the result, this writ petition is dismissed, but without costs. Consequently, connected W.P.M.P. is also dismissed.