1998 (9) TMI 657 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the Notification No. S.O. 309(E) dated 30th May, 1986.
2. Legality of the approval granted to YKK for setting up integrated plants for manufacturing zip fasteners.
3. Impact of the approval on small scale industries and employment.
4. Compliance with the Industrial Policy of 1991.
5. Imposition of export obligations on YKK.

Detailed Analysis:

1. Validity of the Notification No. S.O. 309(E) dated 30th May, 1986:
The petitioners challenged the validity of the Notification No. S.O. 309(E) which dereserved the manufacturing of zip fasteners (metallic and non-metallic) for integrated plants from the small scale sector. The Court noted that the notification was issued based on the recommendations of the Advisory Committee constituted under Section 29-B(2B) of the Industries (Development and Regulation) Act, 1951. The Court held that the notification was not violative of any provisions of the Act and was valid, as it aimed to improve the quality of zip fasteners and compete in the international market.

2. Legality of the approval granted to YKK for setting up integrated plants:
The approval granted to YKK by the Central Government was challenged as being ultra vires the provisions of Section 29-B(2B) of the Act. The Court observed that the approval was granted following the recommendations of the Advisory Committee and was in line with the notification dated 30th May, 1986. The approval was deemed neither illegal nor contrary to the Industrial Policy of 1991, as it aimed to enhance the quality and competitiveness of zip fasteners in the global market.

3. Impact on small scale industries and employment:
The petitioners argued that the approval to YKK would adversely affect small scale industries and render thousands of workers jobless. The Court found that the integrated plant set up by YKK would only cover a small percentage of the local market, leaving a significant portion for small scale manufacturers. The apprehension of job loss was considered unfounded, as the market demand for zip fasteners was substantial enough to accommodate both small scale units and the integrated plant.

4. Compliance with the Industrial Policy of 1991:
The petitioners contended that the approval to YKK violated the Industrial Policy of 1991, which promoted foreign investment in high technology and world market access areas. The Court noted that YKK had a worldwide reputation for high-quality zip fasteners and the integrated plant would provide access to world markets. The approval was consistent with the Industrial Policy, as it aimed to improve the quality of zip fasteners and enhance competitiveness.

5. Imposition of export obligations on YKK:
The petitioners argued that YKK should have been subjected to export obligations, as suggested by the Minister of State for Industry. The Court noted that the approval granted on 7th July, 1995, did not include export obligations and the subsequent note by the Minister of State dated 5th September, 1995, could not alter the approval. The Court held that imposing such conditions after the approval would be legally impermissible and could lead to complications. The approval granted to YKK was found to be in line with the government policy and not irrational or for extraneous considerations.

Conclusion:
The Court dismissed the writ petition, holding that the petitioners failed to make a case for any of the reliefs claimed. The approval granted to YKK was found to be legal, valid, and in compliance with the Industrial Policy of 1991. The concerns regarding the impact on small scale industries and employment were considered unfounded, and the imposition of export obligations post-approval was deemed impermissible.