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Smart Summary

Factual and Procedural Background

These miscellaneous proceedings arise out of three earlier writ petitions challenging the constitutional validity of the State of Jammu & Kashmir’s nationalisation policy relating to oleo-resin gum. Nationalisation was struck down, but during the pendency of the writ petitions the Court had passed interlocutory orders reserving and directing distribution of resin stocks, and the State had given an undertaking dated 25 September 1987 to supply the petitioners with their 1987-88 entitlements within one month of the final judgment.

After the main judgment, the Court’s order of 10 January 1990 dealt with distribution of 1986-87 stock. Subsequent orders dated 16 March 1990 and the present order address the outstanding question of how to allocate 7000 metric tons of resin collected in 1988-89, particularly in view of the admitted fact that the 1987-88 stock had already been given entirely to the State-owned Jammu & Kashmir Industries (JKI) in breach of the undertaking.

Legal Issues Presented

  1. Whether the 7000 metric tons of 1988-89 resin stock should be used to honour the State’s 1987-88 undertaking to private allottees.
  2. Whether allocation should be confined exclusively to the three writ-petitioning companies or distributed among all eligible medium-scale and small-scale industries within the State.
  3. What proportion of the available stock should be allotted to JKI, the three medium-scale units, and the twenty small-scale units, taking into account previous allocations and equities.
  4. Whether the reported fire loss of 137 metric tons should reduce the allocable quantity prior to verification by affidavit.
  5. Whether the Court should interfere with the State’s fixation of the resin price at Rs 10 per unit and correct an alleged typographical error in the March 16, 1990 order.

Arguments of the Parties

State of Jammu & Kashmir

  • Contended that the 6,500 metric-ton reservation order of 20 January 1987 covered the entire period of litigation, not merely the 1986-87 yield.
  • Reported orally that 137 metric tons of the 7,000-ton stock had been destroyed by fire on 14 April 1990 and sought to substantiate this with a newspaper clipping.
  • Supported the standing allocation ratio favouring JKI and maintained the selling price of Rs 10.

Writ-Petitioning Companies (Pine Chemicals, Prabhat Terpenes & Synthetics, and Dujodwala Resin & Terpenes)

  • Urged that the benefit of the 1987 undertaking be confined solely to the three petitioners, thereby entitling them to the entire 7,000-ton stock.
  • Pine Chemicals argued that its plant had shut down only because of previous non-allocation and could resume production if resin were allotted.

Small-Scale Units

  • Through Mr Thakur, complained that seven small-scale units had cornered most of the previous year’s allocation and sought equitable redistribution for the current year.

Jammu & Kashmir Industries (JKI)

  • Requested correction of an alleged typographical error in the Court’s 16 March 1990 order.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
(1990) 1 SCC 408, para 6 (earlier order in the same litigation) Clarified that the 6,500 metric-ton reservation order related only to the 1986-87 yield and not to subsequent years. Used to reject the State’s argument that the reservation covered the entire period of litigation and to justify reallocating 1988-89 stock to honour the 1987 undertaking.

Court's Reasoning and Analysis

The Court characterised the proceedings as a “summary” exercise ancillary to the writ petitions, aimed at giving “even-handed justice” rather than resolving disputed titles. Key steps in its analysis were:

  • Confirmed that the State’s 1987 undertaking remained unfulfilled because JKI had already appropriated the whole 1987-88 stock; therefore, the 7,000 tons from 1988-89 must be treated as the stock available for fulfilling that undertaking.
  • Rejected the petitioners’ request to confine distribution to the three writ petitioners, relying on its earlier 16 March 1990 order calling for allocations to all eligible units.
  • Declined to revisit last year’s allegedly inequitable distribution among small-scale units, holding that each production year must be considered independently.
  • Adopted the 1985-86 allocation ratios (prior to Pine Chemicals’ exclusion) as the best available guideline, with adjustments to account for JKI’s exclusive receipt of the previous year’s higher yield.
  • Calculated initial percentages: JKI 45%, Pine 15%, Dujodwala 10%, Prabhat 10%, other small-scale units 20%.
  • Imposed a 10-percentage-point reduction on JKI (in light of its prior monopoly), redistributing that amount as: Pine +3%, Dujodwala +2%, Prabhat +2%, small-scale units +3%.
  • Directed that any proven shortfall (up to 137 tons) be proportionately deducted after verification by the Principal Conservator of Forests.
  • Refused to interfere with the State’s fixed price of Rs 10 per unit and dismissed JKI’s plea about typographical error.

Holding and Implications

Final Allocation Ordered: out of 7,000 metric tons (subject to verified shortfall): JKI 35%; Pine Chemicals 18%; Dujodwala Resin 12%; Prabhat Terpenes 12%; twenty small-scale units 23% (to be divided based on assessed capacity of 600 tons each).

All miscellaneous applications concerning resin allocation are DISPOSED OF; the Registry is directed not to entertain any further allocation requests. Pending writ petitions of small-scale units are to be listed for final disposal.

Implications: The order finally resolves interim allocation disputes without creating broad precedent; it primarily impacts the immediate parties by fixing binding percentages and closes the Court’s supervisory role in future resin allocations.

    Vij Resins Pvt. Ltd. And Another v. State Of J & K And Others

    Ranganath Misra, J.— While disposing of these writ petitions finally in paragraph 26 (AIR) of the judgment it had been directed:

    “Connected proceedings had been taken for interim arrangement regarding provision of raw material to the petitioners and certain other parties. We do not propose to deal with those aspects in this judgment but liberty is given to parties to apply for such directions as they consider appropriate and such applications, when filed, will be dealt with separately.”

    2. Pursuant to the liberty given, petitions were filed and so far as the year 1986-87 is concerned, by an order dated January 10, 1990, distribution of the stock in hand was finalised. While doing so this Court pointed out: [(1990) 1 SCC 408, 410, para 6]

    “These proceedings are connected with four years, namely, 1985-86, 1986-87, 1987-88 and 1988-89. Parties agree that in respect of the very first year, namely, 1985-86, no interlocutory order had been made by this Court and, therefore, no further directions are necessary. Reservation was made pertaining to the yield of 1986-87 though Mr Ramaswamy, appearing for the State claims that the quantity was in respect of the entire litigation and, therefore, must be taken to cover all the years. From the various orders made by this Court which the parties have relied upon and placed before us we find it difficult to accept Mr Ramaswamy's submissions that the order of January 20, 1987, reserving 6500 metric tons of oleo resin gum related to the total period of litigation....”

    3. On March 16, 1990, the following order was recorded:

    “Counsel appearing for the State of Jammu and Kashmir has disclosed in an affidavit the exact stock of resin available in the hands of the State for the year 1987-88 and makes a statement that in the previous year the entire stock has been made over to the nationalised JKI respondent 4. It is contended before us by counsel appearing for the various parties/allottees that there was an undertaking given by the State of Jammu and Kashmir in this Court to hold the stock in terms of the order dated September 25, 1987 and to distribute the same to the allottees. Since the entire stock for the year 1987-88 has been given away to JKI and the stock available in the hands of the State is 7000 metric tons which is said to be the yield of 1988-89 collected during the months of March and October 1989 and in view of the fact that the undertaking given to this Court has not been followed the present stock would be available to be allocated to the parties in terms of their entitlement. We direct that the two officers being the Secretary of Industries and the Principal Conservator of Forests of Jammu and Kashmir should draw up a list of allocation of the stock to the different allottees such as a medium scale and small scale industries operating within the State. The two officers shall also consider allocation. The draft allotment should be placed before the court on April 17, 1990 but copies of the same should be circulated by April 10, 1990. .... Any unlifted stock in the hands of the Authority shall also be kept as reserved. The unlifted quota of 600 metric tons released to JKI by January 1990 shall be taken as reserved.”

    4. The undertaking referred to in the court's order dated September 25, 1987 and recorded by a Division Bench consisting of the Hon'ble Chief Justice and brother Kania, J. is thus recorded: [Quoted from (1990) 1 SCC 408, 410, para 6]

    “The respondents undertake that in the event of the writ petitions being allowed, they will supply resin to the petitioners in accordance with the terms of the agreement within one month from delivery of the judgment in the petitions for the year 1987-88 and will not express inability to so supply.”

    5. It is not in dispute before us that the entire stock for the year 1987-88 has been taken away by JKI and, therefore, this Court by its order dated March 16, 1990, directed that for the fulfilment of the undertaking referred to above, the stock of 7000 metric tons in the hands of the State relatable to the 1988-89 year will be adjusted and the unlifted stock shall be taken as covered by the undertaking.

    6. Counsel for the State has reported to us orally that 137 metric tons out of the stock of 7000 metric tons have been damaged by a fire on April 14, 1990. She wanted to support her statement by a clipping from a newspaper. We, however, did not accept the press report as the supporting material and have called upon her to support the allegation by filing an affidavit of a responsible officer. Until such affidavit is filed we take it that the stock in hand is 7000 metric tons.

    7. Counsel appearing for the writ petitioners Pine, Prabhat and Dujodwala contended before us that the benefit of the undertaking should be confined to the petitioners in their respective writ petitions. A similar contention had been advanced for the previous year and we did not accept the same. We do not think that it will be appropriate to accept the contention of the counsel for this year in the setting in which the matter has proceeded. We accordingly overrule the stand that the entire stock is to be distributed among the writ petitioners in the three cases. In fact our order dated March 16, 1990, is itself an answer to this submission as, instead of confining the allocation to the three writ petitioners, we have called upon the two public officers to make draft allocation appropriately keeping the prevalent guidelines.

    8. We are not handling a case involving disputed title; nor is this a civil action where perhaps the claims have to be meticulously examined. The present proceedings are a fall-out of the three writ petitions. The constitutional validity of nationalisation was examined and for the reasons indicated in the main judgment, nationalisation was struck down. Ordinarily, consequential relief should have been worked out in different proceedings but since some reservation of stock had been ordered and certain interlocutory directions had been given followed by an undertaking during the pendency of the writ petitions, the Court thought it appropriate to deal with this aspect. In this background these proceedings must be taken to be of summary nature and a rough and ready method has to be adopted for ordering, distribution in order to do even-handed justice to the parties before the court. It is in that spirit that we proceed to deal with these proceedings.

    9. JKI, the State owned industry is the largest; besides it, there are three medium scale industries and 20 small scale industries. To the report of the two public officers details of proposed allocation have been appended. Pine Chemicals, one of the medium scale industries is said to have closed down production. Last year it does not appear to have been allotted any raw material. Its counsel during the course of hearing of these miscellaneous applications has maintained that it had closed down on account of non-allocation of raw-material but the factory is in working condition and if allocation is made it would work. In the circumstances we consider it appropriate to hold that apart from JKI there are three medium scale industries and 20 small scale units which have to be taken into consideration in the matter of allocation.

    10. Mr Thakur, appearing for some of the small scale units had voiced the dissatisfaction that in the previous year 7 out of 19 small scale units (Vijaya having been separately considered) had taken the major share for the small scale units and, therefore, in ordering allocations of this year that fact should be taken into account. Similar contentions have been advanced by counsel for some other left over groups. We do not think this consideration should be taken into account by way of equity. Last year is certainly different from the succeeding year and we do not carry considerations in the matter of allocation during the year so as to affect the allocation of the following year.

    11. We have the allotment ratio indicated by the State Government on April 22, 1986 on the basis of 1985-86 production where little over 46 per cent had been given to JKI; Pine Chemicals, Dujodwala Resin and Prabhat had each been given 23.68 per cent, 10.53 per cent and 10.53 per cent respectively and other small scale units had been given altogether 9.21 per cent. We have information of the later years also but those are the figures when Pine Chemicals had been left out and above 60 per cent allocation had been made in favour of JKI. That would not represent the correct state of affairs for evolving a guideline. In the circumstances, we are of the view that keeping the guidelines of 1985-86 for purposes of distribution but taking into consideration the intervening facts and circumstances, the allocation should be done in the following way:

    1. JKI Ltd. 45 per cent

    2. Pine Chemicals Ltd. Jammu 15 per cent

    3. Dujodwala Resin & Terpenes (P) Ltd. Jammu 10 per cent

    4. Prabhat Terpenes & Synthetics (P) Ltd. Jammu 10 per cent

    5. Other small scale units. 20 per cent

    12. We cannot overlook the fact that the entire stock in the previous year where yield was about 1500 metric tons more than available this year was appropriated by JKI. JKI has, therefore, to suffer a reduction of 10 per cent on that account and has to content itself by getting 35 per cent in all of the current stock of 7000 metric tons. A reduction of 10 per cent from JKI shall be allocated by giving extra allocation of 3 per cent to Pine Chemicals, 2 per cent each to Dujodwala Resin and Prabhat Terpenes and 3 per cent to the small scale units. The distribution for the small scale units should be on the basis of assessed capacity of 600 metric tons for each one. We have taken into account the monopoly situation in the previous year in favour of JKI as a special situation to be noticed.

    13. The allegation of the shortfall of 137 metric tons as reported by counsel for the State in the event of the affidavit being filed within ten days from today, shall be enquired into by the Principal Conservator of Forests and reported to the State Government. The allocation as ordered by us shall suffer appropriate proportionate reduction to the extent of the actual shortfall of the stock from 7000 metric tons.

    14. We do not interfere with the State's fixation of the rate at Rs 10. Nor do we accept the plea of counsel for JKI that there was a typographical error in our order of March 16, 1990 which required to be corrected.

    15. These proceedings shall be taken to have finally terminated. No question of further allocation shall be dealt with by this Court. Therefore, the Registry shall not entertain any application in the matter of allocation of oleo resin gum. We gather that the writ petitions of the small scale units which were directed to be listed for hearing are still pending. The Registry should take steps to list all such pending writ petitions for final disposal.

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    Vij Resins Pvt. Ltd. And Another v. State Of J & K And Others
    (Apr 26, 1990)