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TMI Blog1989 (8) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents in the writ petition, for the sake of convenience, we will refer to the appellants as the petitioners and respondents as original respondents in the later part of this judgment. In order to highlight the grievance of the petitioners, in the present proceedings, it is necessary to note a few introductory facts. Introductory facts.-The petitioner-company was initially incorporated as Gohilwad Sugar Mills (Private) Limited under registration No. 2058 dated 29th March, 1972. Subsequently, its name was altered into Yeast Alco Enzymes (Private) Limited. The said company came to be converted into a public limited company under a certificate issued on 9th July, 1973. The registered office of the company is at Ahmedabad but it carries on its works near Shetrunjaya Dam Site, Palitana in the district of Bhavnagar. The company when it was Gohilwad Sugar Mills (P.) Ltd., purchased the assets of M/s. Patel Sugar Mills at the cost of Rs. 21 lacs. The said assets consisted of khandsari unit with the land at village Moti Paniali in Palitana taluka of Bhavnagar District. When the company was running khandsari unit at Moti Paniali, it decided to have new project of industrial alcohol a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials for construction of the plant but also in respect of machinery and other equipments for the project, the estimated cost increased to Rs. 1.40 crores. It required the new management to increase capacity of the new alcohol project from 30,000 litres per day to 50,000 litres per day. The petitioner-company thereupon approached the Industries Commissioner for enhancement of the quota in the allotment of molasses and the Industries Commissioner approved the increased capacity to 50,000 litres per day and registered the requirement of molasses of 64,000 M.T. The company made all efforts to get necessary finance from the financial agencies so that new project of industrial alcohol could be commissioned at village Nani Paniali. The respondent-State of Gujarat in the Industries, Mines and Power Department had issued resolution dated 27th August, 1980, offering package of new incentives and enhancement of available incentives to new industrial units. It envisaged a scheme which was styled as New Sales Tax Incentives Scheme for Industries. It is the case of the petitioners that as they wanted to establish a new large scale industrial unit in the backward area of Palitana taluka of Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 7 of the resolution were concerned, they would not be available to the petitioners' unit of industrial alcohol. In view of that conclusion, as noted above, the learned single judge partly allowed the petition and partly rejected the same, and that is how, the present appeal has seen the light of the day. Mr. Zaveri for the appellants-petitioners raised the following contentions in support of the appeal: 1.. That the action of the respondents in not giving the benefit of resolution to the petitioners was actuated by mala fides of respondent No. 3 and hence, it must be held that the petitioners were entitled to the benefit of all the relevant paras of the said resolution. 2.. It was alternatively contended that in any case, the learned Judge has committed a patent error of law in holding that benefit of para 7 of the resolution cannot be made available to the petitioners' unit and consequently, the petitioners were entitled to the reliefs as prayed for in prayer (A) of para 31 of the petition. The learned Advocate-General for the respondents has resisted these contentions and submitted that there is no substance in any of these contentions and the appeal is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er para 7 of the resolution at annexure B. We may, in the first instance, turn to the relevant provisions of the resolution in the light of which the petitioners' contention will have to be appreciated. As stated earlier, it is a resolution dated 27th August, 1980, issued by the Government of Gujarat in Industries, Mines and Power Department. It deals with the topic of enhancement of package of new incentives to industries. Its preamble provides that the Government have introduced a package of incentives for promotion of industries in rural and backward areas to achieve a more balanced growth and avoid further congestion of developed areas and large cities effective from 1st November, 1977, vide Government resolution dated 22nd December, 1977. Under the said resolution of 1977, package of twofold incentives was given (1) cash subsidy on fixed capital investment and (2) sales tax benefit in terms of either exemption from sales tax or interest-free sales tax loan (to be referred to as Old Sales Tax Incentives Scheme). Retaining the cash subsidy on fixed capital investment, further scheme of incentive by way of sales tax benefit was sought to be offered by this resolution. The scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould involve investment in fixed assets of atleast Rs. 50 lakhs or should give an employment to 100 workers on a permanent basis. (ii) The locations could be anywhere in the 10 backward districts or the 21 underdeveloped talukas suggested by the committee of nonbackward districts. (Please see annexure A to the Government resolution.) (iii) Such units should be 1st, 2nd or 3rd in such location, i.e., at the particular location (i.e., town or village) and areas 8 kms. around it, not more than two units having fixed assets of Rs. 50 lakhs or more should be existing. (iv) This location should be beyond 24 kms. of municipal limits of Ahmedabad and Baroda and 10 kms. of Surat, Rajkot, Bhavnagar and Jamnagar and not having population of more than one lakh." It would be profitable to look at this stage to certain later developments in connection with the aforesaid resolution. By resolution dated 13th March, 1981, of the State of Gujarat in the same department, earlier limits on the available special incentives under para 7 of the resolution dated 27th August, 1980, to pioneer units were enlarged and it was decided to give full sales tax incentives to these pioneer units without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone into commercial production before 1st June, 1980. Consequently, these clarificatory circulars are not relevant so far as the present case is concerned. The last circular at annexure M is dated 8th February, 1983, whereby it is clarified that pioneer units should not be expansion, diversification or modernisation or renovation of an existing unit. It should also not be revival of a sick unit whether by the existing or new management or whether the rivival involves expansion, renovation, modernisation or diversification or not. Even this circular has no application to the facts of the present case for the simple reason that earlier khandsari unit which was a small unit was already closed and had gone out of production by the year 1978. So far as alcohol project is concerned, it was not an expansion, diversification or modernisation or renovation of an existing unit by the petitioners nor would it amount to revival of a sick unit as the earlier khandsari unit which was sick had gone dead in the year 1978. Industrial alcohol project for which benefits under the Government resolution at annexure B were claimed was entirely a new project having no connection whatsoever with the ol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-backward districts or in area as per later extension of coverage by the Government resolutions of 13th March, 1981 and 31st March, 1981. 4.. Such units should be 1st, 2nd or 3rd in such location, i.e., at the particular location (i.e., town or village) and areas 8 kms. around it, not more than two units having fixed assets of Rs. 50 lakhs or more should be existing. 5.. This location should be beyond 24 kms. of municipal limits of Ahmedabad and Baroda and 10 kms. of Surat, Rajkot, Bhavnagar and Jamnagar and not having population of more than one lakh. So far as the above conditions are concerned, conditions Nos. 2 to 5 are satisfied by the petitioner-company and there is no dispute on this aspect. It has to be kept in view that new industry was to be established by the petitioners at village Nani Paniali which was admittedly situated in a backward district as suggested by the Hathi committee on nonbackward district, even, leaving aside the expansion of area by subsequent modificatory resolutions. It is not in dispute that new project had investment of more than Rs. 50 lakhs and it was also true that it was to give employment to 100 workers on a permanent basis. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it can be said that it was not going to a completely new location for the first time. The learned judge has posed the question as under: "The important aspect to be considered is whether the new industrial unit is going to a completely new location in backward areas." And, then, he has observed that it is not completely answered in favour of the petitioners. With respect, posing of the question by the learned single Judge is not accurate. So far as the first condition for applicability of para 7 of the resolution is concerned, it is to the effect that the new large industrial unit should be going to a completely new location in the backward area. Therefore, the correct question which could have been posed on the facts of the present case was, as to whether new large industrial unit was going to a completely new location in the backward area or not. Unfortunately, the learned judge missed the word "large" and unduly emphasised the aspect of the new industrial unit going to a completely new location in the backward area. If the learned judge has posed the above question in the proper perspective, the answer would have been in affirmative in favour of the petitioners. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners' large-scale unit of industrial alcohol had gone to this backward area of village Nani Paniali for the second time or it had gone for the first time. In fairness to him, he could not submit that it had gone for the second time. In that view of the matter, the first condition of applicability of para 7 of the resolution at annexure B must be held to have been satisfied by the petitioners. We must, therefore, hold disagreeing with the learned single Judge, that the petitioners had satisfied also the first condition for applicability of para 7 of the resolution at annexure B. Once that conclusion is reached, the result is obvious. The petitioners would be entitled to succeed in this petition. Final relief prayed for in the main petition at para 25(A) will stand granted to the petitioners by issuing appropriate writ, order or direction to the respondents directing them to effect registration of the petitioners' industrial alcohol project as a pioneer unit within the meaning of Government resolution at annexure 'B' and as subsequently modified by Government resolution dated 13th March, 1981, lifting the ceiling of benefit in connection with this pioneer unit. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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