The petitioner has filed this writ petition challenging the vires
of Ext.P18, a public notice issued by the 2nd respondent in exercise
of the powers under Section 16E of the Tea Act, 1953 (hereinafter
referred to as the Act, for short) on the ground that the notice was
not preceded by a formal order of the competent authority under the
said provision and that the proceedings were issued without
complying with the principles of Natural Justice.
2. The petitioner is a Public Limited Company incorporated
under the Companies Act, 1956. The petitioner owns two tea
estates by name Peermede and Lone Tree Estates at Elappara,
Idukki District. The petitioner is engaged in the cultivation and
manufacture of tea. At the two estates, the petitioner employs about
1300 workers, 80 staff, and other managerial personnel. The
workmen of the petitioner are residing within the estates, in separate
living quarters allotted to them. The petitioner has been in
management of the tea estates since 1938.
3. According to the petitioner, of late, the tea industry in
general and within the State of Kerala in particular, has been
facing acute financial crisis on account of various reasons
including a drastic fall in the price of tea globally, and a steep
increase in the cost of production. Due to a host of other
problems, the tea industry is facing an unprecedented situation
that could even lead to the liquidation of all the tea plantations and
factories in the country. In the case of the petitioner, the situation
took a turn for the worse during the year 2000 due to the non-co-
operation of the workers in the two estates. They started resorting
to various forms of agitations like reporting late for work and
leaving early from the work spot. The management also detected
several instances of theft. The managerial action to curb the
illegal activities resulted in physical threats and even threat to the
lives of the managers, forcing them to abandon the work spot.
Consequently, the control of the Management over the estates
diminished. The workers freely indulged in collection of the tea
leaves, selling them to unauthorized buyers and collecting the
money. In other words, the workers excluded the petitioner and its
managers from the factory and plantations and took complete
control of the estates. There are even allegations of felling of
valuable timber trees and of encroachments. The electric
connection to the plantations were dismantled for non-payment of
electricity dues. The workers took a militant attitude and
completely paralyzed the administration of the two tea estates and
prevented even the access of the petitioner to those estates.
4. The resultant situation forced the petitioner to stop all
manufacturing activities. The factories and the machinery therein
were damaged due to misuse and neglect. The managerial
personnel of the petitioner were driven out and the workers
indulged in theft of tea leaves as well as timber trees, besides
causing damage to machinery. The petitioner therefore,
approached this Court by filing O.P.No.2430/2001, which resulted
in the passing of Ext.P1(a) to P1(f) interim orders and finally,
Ext.P1(g) judgment. A reading of the above orders and the
judgment of this Court shows that the right of the petitioner to
resume possession and management of the plantations and its
factories was recognized by this Court and that directions were
issued to the Government as well as the Police to ensure that the
petitioner's right of management was protected. However, it is not
in dispute that the petitioner and its managerial staff were
effectively prevented from resuming control of the estates or its
management and that the stalemate continues to this date. The
petitioner was even permitted by this Court to post its own
security men at the exit and entry gates with necessary directions
to the Police to give protection to them. However, in spite of the
above, the petitioner could not resume management of the
plantations or the factory and therefore, the petitioner continues to
be excluded from the management of the two estates to this date.
5. In the above circumstances, considering the general
conditions prevailing in the tea plantations in Kerala and Tamil
Nadu, an Expert Committee was appointed by the Central
Government, to conduct a study of the situation and to submit a
report regarding the same. Accordingly, the situation was gone
into, analysed and elaborately considered by a team of experts
who have submitted a report as evidenced by Ext.P2. The portion
of the report of the Expert Committee relating to the petitioner's
tea plantations is produced as Ext.P4. The said document has
been produced by the second respondent in Ext.R2(a) also.
Pursuant to Ext.P4 report, discussions were held at New Delhi
with the petitioner and a course of action was agreed to as
evidenced by Ext.P5. Accordingly, the petitioner agreed to sell an
item of property at Trivandrum and to settle the dues that were
remaining unpaid to its Bankers. It was further agreed that the
said payment would be considered as promoters' contribution of
the company, since they were hard pressed for funds. After
clearing the bank dues, the company was to explore the possibility
of raising further finance for reviving the plantations.
6. According to the petitioner, though Ext.P5 was entered
into no action was taken by the authorities in the matter,
thereafter. The petitioner on the other hand, took necessary steps
to liquidate its liability to the Bank of Baroda, worked out a
settlement of the entire dues and discharged the liability by making
a One Time Payment of Rs.120 lakhs, the receipt of which is
evidenced by Ext.P6.
7. The petitioner also obtained Ext.P7 and P8 interim orders
by which, the operation of orders issued by the Employees
Provident Fund Authority seeking to recover amounts from the
petitioner have been stayed by this Court. It is the case of the
petitioner that the electricity dues payable by them have already
been settled. However, though the petitioner has been trying to
obtain finance from other banks, as evidenced by Ext.P9 series
correspondence, their efforts have not been successful so far.
Consequently, the petitioner has not been able to revive its
operations.
8. In the above circumstances, as per Ext.P10 proceedings
issued by the second respondent, the petitioner was directed to
show cause why action under Section 16 E of the Act should not
be initiated in respect of the assets under its management. The
second respondent also required the petitioner to give answers to
the queries made therein. The petitioner replied to Ext.P10 by
Ext.P11 letter informing the second respondent that the entire
dues to the bank have been liquidated and that there were no
dues payable by them to any bank. Though Ext.P11 reply was
given on 15-10-2007, there was no further action in the matter
thereafter. A series of correspondence, evidenced by Ext.P11 to
P17 followed. In Ext.P13, the petitioner has particularly pointed
out that no circumstance, justifying an invocation of the power
under Section 16E of the Act exists in the present case.
According to the petitioner, there was no voluntary act of closure
of the estates on the part of the management. The estates had
remained closed because the managerial personnel were driven
out of management by the workers. In the above circumstances,
the petitioner came across a newspaper advertisement issued by
the second respondent in exercise of the powers under Section
16E of the Act, which is Ext.P18. As per Ext.P18, the second
respondent has given a public notice inviting applications from
persons interested in taking over the management of four tea
gardens. Serial Nos.3 and 4 mentioned therein are the tea
gardens of the petitioner. The applications were to be submitted
within 30 days from the date of publication of the notice. Various
other conditions are also stipulated therein. It was in the above
circumstances, that the petitioner filed the present writ petition
challenging the proceedings of the second respondent, Ext.P18.
The petitioner has also challenged the constitutional authority of
the enabling provisions of the Act.
9. The above writ petition was admitted on 3-3-2008 and an
order of interim stay of all further proceedings pursuant to Ext.P18
was granted by this Court. The said interim order has been in
force, ever since.
10. According to the senior counsel, Mr.Joseph Kodianthara
who appears for the petitioner, Ext.P18 is arbitrary and
unsustainable in law. According to him there has been no
wrongful act on the part of the petitioner at any time. The petitioner
and his managerial staff were driven out of the estate and the
management thereof was forcibly taken over by the workers who
were agitating against them. According to the counsel, the tea
gardens were not able to function only because of the fact that
they were prevented from functioning by the agitating workers.
The counsel submits that the petitioner had been voluntarily
pursuing its efforts to resolve the situation, at all times. It had
obtained protection orders from this Court by filing a petition for
Police protection. Various interim orders as evidenced by Ext.P1
(a) to P1(f) were passed. However, even the said orders could not
help the petitioner resume management of the tea estates. The
resultant situation forced it to discontinue operations. The
factories in the tea estates suffered loss and damage due to
neglect and misuse. However, acts of mischief committed by the
workers caused much more severe loss to the petitioner.
Therefore, it is contended that there are no circumstances
justifying the conclusion that the petitioner had neglected the
management of the tea estates or abandoned the same.
11. The counsel for the petitioner also contends that
pursuant to Ext.P10 the petitioner has been making all earnest
efforts to resume the functioning of the tea estates. The petitioner
has already worked out a settlement of all their dues to the bank
by making a one time payment of Rupees in 120 lakhs. The
petitioner has also settled the dues to the Kerala State Electricity
Board and has obtained interim orders staying recovery of the
unjustified demands made by the Employees Provident Fund
Organization. The counsel for the petitioner relies on the above
circumstances to point out that there was no willful neglect or
omission on the part of the petitioner. The closure of the tea
plantations had been the result of an agitation carried on by the
workmen, which could not be resisted, controlled or contained by
the petitioner in spite of orders obtained by the petitioner from this
Court.
12. It is the further contention of the counsel for the
petitioner that no circumstance justifying invocation of the power
under Section 16E of the Act exists in the present case. Further, it
is pointed out that no proceedings under the said provision could
be initiated without first giving an opportunity of being heard to the
petitioner. Since Section 16E involves deprivation of the petitioner
of its property, very valuable assets admeasuring about 3,000
acres in extent, the action involved visitation of the petitioner with
adverse civil consequences of great import. In any view of the
matter, such action could be initiated only after considering the
objections of the petitioner. It is also contended that Ext.P18 was
not preceded by even a formal order or proceedings deciding to
invoke the extraordinary power under Section 16E of the Act. For
the above reasons, according to the counsel for the petitioner,
Ext.P18 is liable to be set aside as being ultra virus and
unsustainable. Therefore, he seeks the issue of proper directions
or orders setting aside Ext.P18.
13. Though a number of reliefs have been claimed in the
writ petition and though various contentions have been raised
questioning the constitutionality of the provisions of the Act, since
the said contentions are not necessary to be considered for the
disposal of the Writ Petition, I refrain from considering any of
them. It is agreed by both sides that all other contentions in the
Writ Petition could be left open for being agitated, if necessary, at
a later point of time. Therefore, all the other contentions raised in
the writ petition save those that are specifically considered
hereunder, are left open.
14. I have heard the Counsel for the Central Government as
well as Advocate K.M.Jamaludheen, the Standing Counsel for the
Tea Board on behalf of respondents 1 and 2. A counter affidavit
and an additional counter affidavit have been filed on behalf of the
contesting respondents. According to the learned counsel for
respondents 1 and 2, the averments in the writ petition clearly
show that the petitioner is not in possession or in management of
the tea estates. Particular reference is made to the averments in
paragraphs 2 and 3 of the writ petition. Therefore, it is contended
that the petitioner is not entitled to claim protection of any rights
that are admittedly not available to it at present. Since the
petitioner is neither in possession nor management of the tea
estate it is contended that the petitioner is not in any way
aggrieved by the taking over of the possession of the estate or by
entrustment of the management thereof to any other person.
According to the counsel, in the present case an expert committee
was appointed to study the conditions of the closed tea gardens in
the State of Kerala. On the basis of the report submitted by the
Expert Committee, most of the tea gardens in Kerala were revived
and reopened by availing facilities that were extended to them by
the Central Government as well as the Tea Board. The estates of
the petitioner were not revived only due to the lack of interest and
initiative on the part of the petitioner. It is further contended that
discussions were held on many occasions at various levels for
reopening the tea estates. The representatives of the petitioner
took part in all such discussions. The State of Kerala exempted
the estates of the petitioner from payment of Plantation Tax. The
Kerala State Electricity Board also has given various concessions
to the petitioner. The second respondent has extended the
benefits of the rehabilitation package announced by the Central
Government after receiving the report of the Expert Committee.
Thereafter, discussions were held at various levels among the
first and second respondents and the representatives of the
petitioner. However, the discussions were not fruitful and
therefore, the power under Section 16E of the Act was invoked
and Ext.P18 was issued pursuant thereto. It is therefore,
contended that Ext.P18 has been issued after an elaborate
consideration of all the issues involved and after finding that the
petitioner was not interested in resuming the management of the
estates. According to the counsel, the labourers were badly
affected and their interests had to be protected. Therefore,
invocation of the power under Section 16E of the Act was
necessary and justified, in the circumstances.
15. The counsel for respondents 1 and 2 further submit that
tea being a very valuable product and an important export
commodity, it was necessary to ensure that its cultivation and
production was suitably regulated. The cultivation of tea can be
done only at particular altitudes, in certain climates and under
certain specialised conditions which are not available in most parts
of our country. The rising demand for tea and the lack of its
production have serious economic overtones that have come to
the notice of the Central Government and that was the reason why
as early as in the year 1953, the Tea Act was enacted. The
provisions of the Tea Act are intended to ensure that the tea
industry is properly regulated and controlled so as to ensure that
the economy benefits to the maximum extent from the activities in
the said sector. It is pointed out that the tea plantations of the
petitioner have not been functional for the past 8 years and
therefore, speedy action was required to the restore production in
those estates. For the purpose, a proper management has to be
installed first. It is contended that, Ext.P18 issued in exercise of
the powers conferred by Section 16E of the Act is intended to
achieve the above purpose. On the above ground, the counsel
contends that Ext.P18 is perfectly warranted, in the
circumstances, justified and legal. Therefore, he contends that the
writ petition is liable to be dismissed.
16. I have heard the counsel on both sides. I have been
taken through the record of the case and the dicta laid down by
the Hon'ble Supreme Court in various decisions on the point. I
have considered the rival contentions of the parties, anxiously.
17. The factual senario of this case is not seriously in
dispute. The tea plantations of the petitioner have been remaining
closed for the past about eight years. According to the counsel for
the petitioner, the closure of the tea estates and the factories
situate therein was a direct result of the high handed activities
resorted to by the militant workmen of the estates. Therefore, the
closure of the estates was not on account of any voluntary act on
the part of the management. The tea plantations could not
function due to circumstances beyond the control of the petitioner.
Ext.P1(a) and P1(b) show that the petitioner had approached this
Court for Police protection by filing OP No.2430/2001. At various
stages interim orders were issued by this Court for the purpose of
ensuring that the plantations remained operational, as the
agitation progressed. It is also seen that at various stages, interim
orders had been issued by this Court to afford Police protection to
the petitioner. However, in spite of the interim orders issued by
this Court the fact remains that the plantations were not allowed to
resume operations. At one stage as per Ext.P1(f) it has also been
directed by a Division Bench of this Court that the petitioner could
post its own security men, who would be provided Police
protection, at the entry and exit gates of the estates. The above
protection was given for the purpose of ensuring that ingress and
egress to the petitioner's estates was maintained smoothly and
without any obstruction. However, for various reasons, the orders
failed to achieve the objective of ensuring that the tea estates
remained operational. According to the petitioner, the workers
indulged in theft of tea leaves, cutting and removal of timber trees
and causing of damage to the machinery in the factories. In a
situation where the management was not permitted to enter the
premises, the workmen freely indulged in various, acts of
sabotage which brought the functioning of the tea plantations to a
standstill. The fact that the petitioner had been pursuing its legal
remedies to ensure that the tea estates remained functional shows
that the petitioner had no intention to close down the estates at
any point of time. The report of the expert team in Ext.P4 shows
that about 60% of the area can be put to plucking immediately.
With respect to the rest of the area, it is reported that shade trees
would have to be established and the overgrown jungle growth
would have to be cleaned up. The conditions of the factories are
also stated to be capable of rectification. Therefore, the expert
committee found that the tea estates are capable of being
revived. It was in the light of Ext.P4 that discussions were held
and after discussions, a course of action was agreed to as
evidenced by Ext.P5. The conditions stipulated in Ext.P5 required
the petitioner to clear off its bank liabilities by selling an item of
property at Trivandrum that belonged to it. The petitioner was to
have raised the necessary capital for revival by approaching some
other banks, after clearing off its liabilities to its bank. Other
stipulations providing for a periodic review of the functioning of the
plantations are also included in Ext.P5.
18. Pursuant to Ext.P5, the petitioner worked out a
settlement with its bank and cleared off the entire bank dues by
making a one-time payment of Rs.120 lakhs to the Bank of Baroda
as evidenced by Ext.P6. The petitioner also settled its dues to
the Kerala State Electricity Board. Ext.P7 and P8 interim orders
show that the petitioner has challenged the demands for payment
of Employees Provident Fund Contribution made on it by the
Provident Fund Authority and has obtained interim orders staying
the recovery thereof. Ext.P9 series correspondence evidences the
fact that the petitioner has been approaching various banks for
obtaining the necessary finance to revive its operations. The
above facts have also been intimated to the second respondent as
per Ext.P11. Thereafter, a series of correspondence as evidenced
by Ext.P12 to Ext.P17 appears to have taken place. Various
discussions also appear to have been conducted. It is thereafter,
that Ext.P18 public notice has been issued in purported exercise
of the power under Section 16E of the Act.
19. It is not in dispute before me that Ext.P18 was issued
without any preceding order under Section 16E of the Act.
According to the counsel for respondents 1 and 2 a number of
meetings had been held, discussions at the highest level were
conducted and the matter had been gone into by the first and
second respondents as required by Section 16E of the Act.
Therefore, there has been proper application of mind to the
situation at hand and it was only thereafter that Ext.P18 was
issued. For the said reason, according to the counsel, in the
circumstances of the present case, a separate order invoking the
power under Section 16E was not necessary to be issued before
the issue of Ext.P18 public notice.
20. The tea industry undoubtedly occupies a very important
position in the economy of our country. Tea produced by our
country is considered to be the best, universally and earns
precious foreign exchange for our country. However, the tea
industry has been facing problems in the recent past due to
various factors. In order to help the industry tide over the crisis,
various measures have been introduced by the Central
Government. However, the industry is still reeling under a lot of
problems. In order to clothe the Central Government with
sufficient powers to regulate the industry and to nurse it back to
health again, the Tea Act, 1953 has also been amended,
incorporating various additional provisions. Thus Chapter IIIA has
been incorporated into the Act by amendment in the year 1976
with the object of arming the Central Government with sufficient
regulatory powers to help the tea industry tide over the difficult
situation. Section 16E is one of the provisions in Chapter IIIA of
the Tea Act. The provisions of the Industries (Development and
Regulation) Act, 1951 have been specifically made applicable to
the Tea Industry also by Sub Section (2) of Section 16A of the
Act. Sub Section (2) of Section 16E contains a provision
specifically making Section 18AA of the Industries (Development
and Regulation) Act, 1951 applicable to the Tea Industry in the
same manner in which the said provision applies to an industrial
undertaking. The above provisions make it clear that the
provisions of the Tea Act as well as those of the Industries
(Development and Regulation Act), 1951 referred to above are
enacted with the same objective. Therefore, the scope and import
of the provisions of the Tea Act have to be understood in the
context of the scope and import of the provisions of the Industries
(Development and Regulation) Act, 1951 referred to above. It is
with the above perspective in mind that the controversy in the
present case has to be resolved.
21. Section 16E of the Act reads thus:
Power to take over tea undertaking or tea unit
without investigation under certain circumstances:-
(1) Without prejudice to any other provision of
this Act if from the documentary or other evidence in
its possession, the Central Government is satisfied,
in relation to a tea undertaking or tea unit, that-
(a) the persons in charge of such tea
undertaking or tea unit have, by reckless investment
or (by) creation of incumbrances on the assets of the
tea undertaking or tea unit, or by diversion of funds,
brought about a situation which is likely to affect the
production of tea manufactured or produced by the
tea undertaking or tea unit and that immediate action
is necessary to prevent such a situation or
(b) it has been closed for a period of not less
than three months (whether by reason of the
voluntary winding up of the company owning the tea
undertaking or tea unit or for any other reason) and
such closure is prejudicial to the concerned tea
undertaking or tea unit and that the financial
condition of the company owning the tea undertaking
or tea unit and the plant and machinery of such tea
undertaking or tea unit are such that it is possible to
restart the tea undertaking or tea unit and such
restarting is necessary in the interests of the general
public,
it may, by notified order, authorise any person or
body of persons to take over the management of the
whole or any part of the tea undertaking or tea unit or
to exercise in respect of the whole or any part of the
tea undertaking or tea unit such functions of control
as may be specified in the order.
[Explanation - For the purpose of this sub-
section, "incumbrances" includes any liability which
may be recovered or satisfied from the assets of the
tea undertaking or, as the case may be, tea unit or
the person owning the tea undertaking or tea unit]
(2) On the issue of a notified order under sub-
section(1) in respect of a tea undertaking or tea unit,-
(a) the provisions of sub-sections(2),(3) and (4)
of section 16D, and the provisions of section 16G,
shall apply to a notified order made under sub-
section (1) as they apply to a notified order made
under sub-section(1) of section 16D; and
(b) the provisions of sub-sections (3) and (4) of
section 18AA of the Industries (Development and
Regulation) Act, 1951, shall apply to the tea
undertaking or tea unit, as the case may be, to the
same extent as they apply to an industrial
undertaking.
As per sub-section (1) extracted above, "if from the documentary
or other evidence in its possession" the Central Government "is
satisfied" in relation to a tea undertaking or tea unit that the
persons in charge of such tea undertaking or unit by reckless
investment etc. have brought about a situation which is likely affect
the production of tea manufacture etc. and " immediate action" is
necessary to prevent such situation, it may by notified order
authorise any person or body of persons to take over the
management of a tea estate. Sub Clause (b) of Sub-Section (1)
provides for a second situation that is, where it has been closed
for a period of "not less than 3 months" and such closure is
prejudicial to the interests of the concerned tea undertaking or tea
unit and that the financial condition of the company owning the tea
undertaking or tea unit is such that it is possible to re-start the tea
undertaking and such restarting is necessary in the interests of
general public. Therefore, the authority that has been conferred
with the power under Section 16E is the Central Government.
Before invoking the power, the authority has to be satisfied on the
basis of documentary or other evidence in its possession that the
plantation had been closed for a period exceeding 3 months and
that such closure was prejudicial to the unit and the financial
condition of the company or the tea undertaking and the plant and
machinery are such that it is possible to restart the undertaking
and such restarting of the tea undertaking is necessary in the
interests of the general public.
22. It is clear from the wording of the provision that Section
16E contemplates two situations, firstly where the persons in
charge of a tea undertaking or tea unit by reckless investment
brings about a situation that is likely to affect the production of tea
manufacture and secondly where a tea undertaking or a tea unit
has been remaining closed for a period of not less than three
months. In both the above situations, for the purpose of invoking
the power under Section 16E the Central Government has to be
satisfied from the documentary or other evidence in its possession
that the conditions stipulated by the provision are in existence. In
other words, before invoking the power under Section 16E of the
Act, the Central Government has to be
(i) satisfied;
(ii) from the documentary or other evidence in its
possession;
iii) in relation to a tea undertaking or a tea unit that one of
the situations envisaged by Clauses (a) or (b) of Sub Section (1) of
Section 16E exists. If so, it may by notified order authorise any
person or body of persons to take over the management of the
whole or any part of the tea undertaking or tea unit or to exercise
in respect of the whole or any part of the tea undertaking or tea
unit, such functions of control as may be specified in the order. As
noticed above, Clauses (a) and (b) of Sub Section (1)
contemplates two different situations. Since there are no
allegations of reckless investment or creation of encumbrances
against the petitioner, it is clear that the said provision does not
apply to the facts of the present case. Ext.P18 also clearly shows
that the impugned proceedings in the present case have been
issued under Clause (b) of Sub Section (1) of Section 16E.
Therefore, in addition to the satisfaction that is to be arrived at by
the Central Government in accordance with the stipulations in the
body of Sub Section (1) referred to above, the further conditions
stipulated by Clause (b) of the said Sub Section have also to be
satisfied. In other words, in addition to the stipulations referred to
as (i) to (iii) above, the following further conditions would also have
to be satisfied;
(iv) That the tea undertaking or tea unit has been closed for
a period of not less than three months, whether by reason of the
voluntarily winding up of the company owning the tea undertaking
or tea unit or for any other reason;
v) That such closure is prejudicial to the concerned tea
undertaking or tea unit;
vi) That the financial condition of the company owning the
tea undertaking or tea unit and the condition of the plant and
machinery thereof are such that it is possible to restart the tea
undertaking or the tea unit ;
viii) That such restarting is necessary in the interests of the
general public.
Each of the ingredients of the provision set out above in
seriatum, has to be satisfied before invoking the power under
Section 16E of the Act. The legislative intent that is clearly
discernible is that the power under Section 16E is only to be used
sparingly. It is clear without any doubt that the provision confers a
drastic power on the Central Government, which has the effect of
depriving persons like the petitioner of their private property.
Therefore, the legislature has taken care to see that the power is
hedged in by proper safeguards with the object of ensuring that
the same is invoked only in exceptional circumstances where all
the conditions stipulated by the provision stand satisfied. The
power has been conferred in National Interest, in the interests of
our economy, with the object of nursing back the sick Tea Industry
to health and vitality.
23. Before the exercise of the power under Section 16E of
the Act therefore, the various conditions referred to above would
have to be satisfied on the basis of the evidence or documents in
the possession of the authority, the Central Government in the
present case. Needless to say that the satisfaction to be arrived
at by the authority would have to be objective and would have to
be borne out from the order or proceedings that is issued under
the said provision. In the present case, there is only a public
notice evidenced by Ext.P18 which does not spell out the
existence of the necessary ingredients of which the authority is
required to be satisfied. The mutual discussions that are stated to
have been conducted by the Government as well as the Tea
Board with the representatives of the petitioner and which are
stated to have been unsuccessful, cannot be a substitute for an
order that has to be formally issued by the Central Government in
exercise of the power under Section 16E. The authority would
certainly have to pass a formal order applying its mind to the
evidence and the documents in its possession, as well the
circumstances justifying the invocation of the power under Section
16E of the Act. In the absence of any such order by the
competent authority to support Ext.P18, the said notification is
unsustainable. It is contended by the learned counsel for the
petitioner that Section 16E being a drastic power that has the
effect of depriving a person of his rights in respect of a substantial
item of immovable property, in this case, tea plantations extending
to about 3000 acres in area, the principles of Natural Justice
mandate that the petitioner should have been heard before the
initiation of any such action. The counsel for the petitioner also
relies on the decision in Swadeshi Cotton Mills v. Union Of India AIR 1981 Supreme Court 818. While considering the
scope of Section 18-AA of the Industries (Development and
Regulation) Act, 1951 as amended by Act 72 of 1971, which is
similarly worded as Section 16E of the present Act, it has been
held by the Apex Court as follows:-
" 65. From a plain reading of S.18-AA, it is clear
that it does not expressly in unmistakable and
unequivocal terms exclude the application of the audi
alteram partem rule at the pre-decisional stage. The
question, therefore, is narrowed down to the issue,
whether the phrase "that immediate action is
necessary" excludes absolutely, by inevitable
implication, the application of this cardinal canon of
fair play in all cases where Section 18-AA (1) (a) may
be invoked. In our opinion, for reasons that follow, the
answer to this question must be in the negative.
66. Firstly, as rightly pointed out by Shri
Nariman, the expression "immediate action" in the
said phrase, is to be construed in the light of the
marginal heading of the section, its context and the
Objects and Reasons for enacting this provision.
Thus construed, the expression only means "without
prior investigation" under S.15. Dispensing with the
requirement of such prior investigation does not
necessarily indicate an intention to exclude the
application of the fundamental principles of natural
justice or the duty to act fairly by affording to the
owner of the undertaking likely to be affected, at the
pre-decisional stage, wherever practicable, a short-
measure fair hearing adjusted, attuned and tailored to
the exigency of the situation."
The majority has also considered the question as to how the
satisfaction that is contemplated by the provision has to be arrived
at. At paragraph 58 of the said decision, the Apex Court has
made the following observation:-
" 58. Section 18-AA (1) (a), in terms,
requires that the satisfaction of the Government
in regard to the existence of the circumstances or
conditions precedent set out above, including the
necessity of taking immediate action, must be
based on evidence in the possession of the
government. If the satisfaction of the
Government in regard to the existence of any of
the conditions, (i) and (ii), is based on no
evidence, or on irrelevant evidence or on an
extraneous consideration, it will vitiate the order
of 'takeover', and the Court will be justified in
quashing such an illegal order on judicial review
in appropriate proceedings. Even where the
statute conferring the discretionary power does
not, in terms, regulate or hedge around the
formation of the opinion by the statutory authority
in regard to the existence of preliminary
jurisdictional facts with express checks, the
authority has to form that opinion reasonably like
a reasonable person."
24. There is absolutely no evidence or material available in
this case to justify a conclusion that any 'satisfaction' as
contemplated by the section and as explained by the apex court
has been arrived at by the Central Government.
25. In the present case, no order has been passed by the
Central Government, which is the authority empowered to initiate
action under Section 16E of the Act. In the absence of an order
formally invoking the power under Section 16E of the Act, Ext.P18
has no foundation. A notification like Ext.P18 can be issued only
on the strength of an order passed by the Central Government
invoking the power under Section 16E of the Act. Such an order
can be passed only in compliance with the various stipulations
contemplated by the provision. If any such order had been issued
by the Central Government, the same would certainly have been
produced in these proceedings. In fact, not even a formal counter
affidavit has been filed on behalf of the Union of India. Section
16E does not authorize the second respondent to issue a
notification like Ext.P18 independently. The second respondent is
not conferred with any power by Section 16E of the Act. In view
of the above, Ext.P18 cannot be sustained in the absence of any
evidence to show that it was preceded by an order of the Central
Government, in exercise of the power under Section 16E of the
Act. Therefore, Ext.P18 is unsustainable and liable to be set
aside.
26. The counsel for the 2nd respondent has contended that
even if an opportunity of hearing had been given to the petitioner,
that would not have altered the situation in any manner for the
reason that the plantation had been remaining closed for the past
more than 8 years. It is also contended by the counsel that the
impugned proceedings, Ext.P18 has been issued in public interest
and that in a situation where private interest comes into conflict
with private interest, it is the public interest that has to be prevail.
Various precedents have also been pressed into service by the
counsel to support the above proposition. There can be no dispute
regarding the proposition that private interest would have to give
way to the public interest whenever there is a conflict between the
two. However, the fact remains that in the present case there has
not been any application of mind by the competent authority to any
supporting evidence that ought to have been available before it or
to the circumstances that necessitated the invocation of the power
under Section 16E of the Act. There was not even a formal order
preceding the issue of the public notice, Ext.P18. It is trite that a
right of hearing cannot be denied to a person on the ground that
the same would only be an empty formality. Since Ext.P18 cannot
be considered to be a proper exercise of the power under Section
16 E of the Act, the same is unsustainable. It is also to be borne
in mind that Ext.P11 submitted by the petitioner is still under
consideration of the authority. Therefore, in the absence of any
evidence or material to show that there has been application of
mind by the competent authority to Ext.P11, the exercise of the
power by the 2nd respondent, purportedly under Section 16E of the
Act, is absolutely without jurisdiction and illegal.
For the foregoing reasons, this writ petition is allowed:
(a) Ext.P18 is set aside in relation to the
two estates of the petitioner alone.
(b) The 1st and 2nd respondents are at
liberty to initiate fresh action in the matter from
the stage of Ext.P10, in accordance with law,
after considering the proposals of the petitioner
contained in Ext.P11 and all other relevant items
of evidence or materials available.
( c ) The petitioner shall also be afforded
an opportunity of being heard before any fresh
order is passed by respondents 1 and 2 as
indicated above.
K.SURENDRA MOHAN, JUDGE
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