1984 (4) TMI 248 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the writ petition before the High Court of Calcutta.
2. Legality of the order issued under section 18AA of the Industries (Development and Regulation) Act, 1951.
3. Procedural fairness and opportunity to be heard.
4. Extension of management beyond the initial period.
5. Alleged improper management by the Bihar State Sugar Corporation Ltd.

Detailed Analysis:

1. Maintainability of the Writ Petition Before the High Court of Calcutta:
The primary issue raised by the respondents was the maintainability of the writ petition before the High Court of Calcutta. The respondents contended that no part of the cause of action had arisen within the jurisdiction of this court. They argued that the decision to take over the management under the Industries (Development and Regulation) Act, 1951, was made by the Ministry of Industry in Delhi, and the Motipur Sugar Factory as well as its registered office were located in Bihar. The publication of the order in the Gazette of India, which is published from New Delhi, further supported their argument that the cause of action did not arise within the jurisdiction of the Calcutta High Court.

In response, the petitioners argued that the order under section 18AA could not be given effect until published in the Official Gazette, which is available throughout India, including Calcutta. They contended that a part of the cause of action arose in Calcutta as the petitioners received the notice at their Calcutta address, where the company also had a sales office.

The court, after considering the arguments, held that the publication of the Gazette in different parts of India does not alter the character of the order passed in New Delhi. The existence of branch offices in different parts of India is not a decisive factor for conferring jurisdiction. Therefore, the court concluded that the writ petition was not maintainable before the High Court of Calcutta.

2. Legality of the Order Issued Under Section 18AA of the Industries (Development and Regulation) Act, 1951:
The petitioners challenged the order dated November 3, 1980, issued under section 18AA, authorizing the Bihar State Sugar Corporation Ltd. to take over the management of the Motipur Sugar Factory. They contended that the order was issued without any notice or opportunity to be heard, and they only became aware of it when a copy was forwarded to them in Calcutta. They argued that the Central Government issued the order without proper application of mind and consideration of relevant materials.

The court did not delve into the merits of this issue due to its decision on the preliminary objection regarding jurisdiction.

3. Procedural Fairness and Opportunity to be Heard:
The petitioners argued that they were not given any opportunity to present their case before the order under section 18AA was issued. They contended that the Central Government was obligated to consider whether the conditions laid down in section 18AA were satisfied and to provide an opportunity for the petitioners to make effective representations.

The court did not address this issue on its merits, as it dismissed the writ petition on the preliminary objection of jurisdiction.

4. Extension of Management Beyond the Initial Period:
The petitioners contended that even if the initial takeover under section 18AA was legal, the extension of management beyond the initial period of two years was done without giving them a reasonable opportunity to be heard. They argued that such an extension was illegal and void.

Again, the court did not consider this issue on its merits due to the jurisdictional decision.

5. Alleged Improper Management by the Bihar State Sugar Corporation Ltd.:
The petitioners alleged that the respondents, during their management, were not taking appropriate steps to run the factory properly. They claimed that the plants and machinery were not being maintained or repaired, resulting in heavy losses and serious prejudice to the petitioner company.

The court did not examine this issue on its merits, as the writ petition was dismissed on the preliminary objection of jurisdiction.

Conclusion:
The High Court of Calcutta dismissed the writ petition on the grounds of lack of jurisdiction, stating that no part of the cause of action had arisen within its territorial limits. The court did not address the substantive issues raised by the petitioners regarding the legality of the order under section 18AA, procedural fairness, extension of management, and alleged improper management by the respondents. The operation of the order was stayed for a period of four weeks to allow the petitioners to seek appropriate relief from the competent court.