1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.3370 OF 2003 1. The Tata Power Company Limited ) (Formerly known as Tata Electric ) Companies) a Company registered ) under the Indian Companies Act, ) 1913, having its registered office ) at Bombay House, Homi Modi Street, ) Mumbai - 400001. ) ) 2. Rameshkumar Tilakraj Choudhary, ) of Mumbai Indian Inhabitant, residing ) at 28/1329, Saptarshi Co-op. Housing ) Society, Sardar Nagar, No.3, Koliwada, ) Sion, Mumbai - 400 022. ) ....... Petitioners. V/s 1. State of Maharashtra, through ) Ministry of Rural Development and ) Water Conservation Department, ) Mantralaya, Mumbai - 400032. ) 2 ) 2. Patnus Gram Panchayat, ) at Post Patnus, Taluka, Mangaon, ) District Raigad, Maharashtra ) ) 3. Sarpanch, ) Patnus Gram Panchayat, ) at Post Patnus, Taluka Mangaon, ) District Raigad, Maharashtra ) ......... Respondents. ------- Shri R.A. Dada, Senior Counsel with Mr. C.S. Balsara & Mr. Anurag Gokhale i/b m/s Mulla & Mulla & Craigie Blunt & Caroe for the Petitioners. Mr. N.P. Deshpande, AGP for the Respondent No.1. Mr. S.M. Oka for Respondent Nos. 2 & 3. -------- CORAM : D.K. DESHMUKH & V.M. KANADE, JJ. DATE : 21st April, 2008 ORAL JUDGMENT: (Per V.M. Kanade, J.) 1. By this Petition filed under Article 226 and 227 of the 3 Constitution of India, the Petitioners are seeking the following reliefs. "(a) that this Hon' ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate, writ, order or direction under Article 226 of the Constitution of India calling for the papers and proceedings in respect of the impugned order dated 13th August, 2004 (Exh. "KK-14" hereto) and after going into the legality and validity thereof, to quash and set aside the same; (b) that this Hon' ble Court may be pleased to declare that under rule 35 Sub-Rule (8) of the Maharashtra Village Panchayat Taxes & Fees Rules, 1960, the Petitioner is exempted from levy of octroi duty; (c) that this Hon' ble court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India directing the Respondents to grant exemption to the Petitioner under Rule 35(8) of the Maharashtra Village Panchayat Taxes & Fees Rules, 1960;" 2. Brief facts in a nutshell are as under:- 4 3. The Petitioner No.1 is a Company incorporated and registered under the Companies Act 1 of 1956. The petitioner No.2 is a shareholder of the Petitioner No.1 - Company. Respondent No.1 is the State of Maharashtra. Respondent No. 2 is the Gram Panchayat of Village Patnus. The Government of Maharashtra through its Industries, Energy and Labour Department had set up a Committee known as Shastri Committee. This was done by Government Resolution dated 4th July, 1988. The Committee was set up to recommend the solution to the frequent instances of power failure in the City of Mumbai and its Suburban areas, which had taken place in 1986, 1987 and 1988. The Committee made recommendation of pump storage plant. The Government accepted the recommendation of the Committee and decided to install Bhira Pump Storage Power Plant. 4. Petitioners prepared a project for installation of the said plant and necessary applications were made to the Maharashtra State Electricity Board under Sections 44 and 72 of the Electricity (supply) Act, 1948. The necessary approval was obtained from various authorities. The project was also cleared by the Government of India. 5 The necessary applications were also made to the World Bank and the International Finance Corporation and other Financial Institutions for funding the project. Petitioners obtained the necessary approval and permission under section 44 of the Electricity (supply) Act, 1944 from the Maharashtra Electricity Board. The application was made to the Government of Maharashtra which granted necessary permission by its letter dated 30/12/1988 through the Ministry of Industries, Energy and Labour Department for putting up the said Project. The Government of India also granted approval and granted environmental clearance. 5. The Government of India also furnished a guarantee to the World Bank Project for securing finance from the World Bank and other international financial institutions. The Central Government also granted specific exemption from payment of various taxes in respect of equipment and machinery which were required to be installed for setting up the plant. The exemption was also granted under the Indian Stamp Act. The said plant of generating 150 MW of electricity and also pumping back water was established. A new building for installing various imported new plants and machineries from foreign countries was erected. The plant was set up for 6 generation of electricity and distribution and was admittedly in the public interest and larger public welfare to get over the problem of frequent electrical break down in the city of Mumbai. It is the case of the Petitioners that the said plant was a New Industrial Undertaking and was exempted from octroi duty. It is the case of the Petitioners that the Petitioners' New Industrial Undertaking was exempted from levy of octroi duty under Rule 35(8)(a) of the Maharashtra Village Panchayat Taxes & Fees Rules 1960. 6. It is an admitted position that the project started functioning and became operational some time in the year 1992. Respondent No.2, however, on or about 13/07/1992 issued a demand notice for a sum of Rs 67,584.92, claiming octroi duty. Thereafter, several letters were sent and, finally, on 31/10/1992 the Petitioners were once again reminded to pay the octroi duty of the sum of Rs 67,584.92 in respect of the construction material arrived for the purpose of construction work which was to be carried out at the site of the project. Several meetings were held between the Petitioners and Respondent No.2 and, finally, on 14/12/1992 Respondent No.2 threatened to take legal action in respect of recovery of the said amount outstanding in respect of the octroi duty. By letter dated 03/12/1993, the Government 7 informed the petitioner that they had granted sanction for the recovery of octroi to all the Gram Panchayats which were in existence prior to 01/10/1965. 7. Petitioners made a representation by letter dated 01/02/1994, seeking exemption of payment of the octroi duty in view of sub-rule (8) of Rule 35. The Government granted temporary stay to the order of recovery on 03/03/1994. Thereafter, again, several meetings were held in the Government Department and the Petitioners and correspondence was exchanged between the parties. In the meantime, some time in or about 1995-96, the project was commissioned for generation of electricity. Thereafter, again, several correspondence was exchanged and meetings were held between the parties. 8. In the meantime, an Ordinance was issued by the Government of Maharashtra, amending the provisions of Bombay Village Panchayats Act, 1958 and the levy of octroi was abolished by amending Ordinance No.XIV of 1999. The Government by its letter dated 25/02/2000 lifted the stay which was granted on 03/03/1994 without deciding the main issue. Respondent No.2 issued a letter 8 dated 18/03/2000 addressed to the Petitioners and again demanded payment of octroi duty. On 17/11/2000, Respondent No.2 issued a warrant of attachment in respect of the properties of the petitioner and claimed a sum of Rs 5,03,00,000/- as an outstanding amount towards payment of octroi duty from the petitioners. Petitioners, thereafter, filed a Writ Petition No.6723 of 2000. The Division Bench of this court set aside the order dated 18/03/2000 and the warrant of attachment dated 17/11/2000 was also set aside. A specific direction was given by this Court, directing the State Government to decide the issue raised by the Petitioners regarding exemption claimed by the Petitioners under Rule 35(8) of the said Rules and also exemption from payment of octroi under section 124(6) of the Bombay Village Panchayats Act. 9. After the matter was remanded to the State Government, it was heard by the Ministry for Rural Development on various dates. The written submissions were submitted by the Petitioners and on 10/09/2001, the Deputy Secretary of the Government of Maharashtra passed an order and he held that the Petitioners' Bhira Pump Storage Power Plant established by the Petitioners at Bhira was not a new company and, therefore, not eligible for exemption under Rule 35(8) 9 of the said Rules. He further held that in respect of exemption under section 124(6), the Divisional Commissioner would decide the said question after the application was made by the Petitioners. 10. Petitioners again challenged the aforesaid order vide Writ Petition No.4838 of 2001. The matter was heard by the Division Bench of this Court and the impugned order was set aside and, again, the matter was remanded to the Hon' ble Minister for deciding it afresh. After remand, the Hon' ble Minister fixed the matter for hearing. Petitioners again filed their written submissions and, finally, on 06/08/2002, the Deputy Secretary, Government of Maharashtra informed the Petitioners that the Hon' ble Minister had passed the order rejecting the Petitioners' application for exemption under Rule 35(8) of the said Rules and under section 124(6) of the Bombay Village Panchayats Act, 1958. 11. Petitioners again challenged the said order by filing Writ Petition No.5101 of 2002 in this court inter alia contending that no reasons were given by the Hon' ble Minister in spite of specific directions being given in the order passed in Writ Petition No.4838 of 2001. At the hearing of the third Writ Petition, the Additional 10 Government Pleader, who appeared on behalf of the State, submitted that the order dated 06/08/2002 and consequent demand notice would be withdrawn and the Government would pass a fresh reasoned order as directed by this Court. 12. Thereafter, again the matter was remanded to the Hon' ble Minister. After remand, no fresh hearing was given and the Hon' ble Minister substituted its earlier order by passing a speaking order dated 30/03/2003. Petitioners, being aggrieved by the said order filed the present Writ Petition. After this Petition was filed, this Court on 29/03/2004 gave oral directions to respondent No.1 to grant hearing to the Petitioners. Accordingly, hearing was granted to the Petitioners on 26/05/2004. Petitioners filed written submissions before the Hon' ble Minister and, thereafter, the Hon' ble Minister again passed an order dated 13/08/2004. Petitioners made an application for amendment of the Writ Petition and, consequently, the Writ Petition was allowed to be amended and the the Petitioners also challenged the impugned order dated 13/08/2004 passed by the Hon' ble Minister. 13. Shri Dada, the learned Senior Counsel appearing on behalf of 11 the petitioners firstly submitted that by order dated 13/08/2004, the Hon' ble Minister had not complied with the directions which were given by three Benches of this Hon' ble Court to compute the octroi in accordance with law. He submitted that these directions had not been followed by the Hon' ble Minister. He then submitted that the Petitioner No.1 - Company was a new industrial undertaking within the meaning of sub-rule (8) of Rule 35 of the said Rules and was exempted from payment of octroi. He submitted that on the conjoint reading of sub-rule (8) of Rule 35, it was abundantly clear that the requirement of registration of the undertaking with the Director of Industries was not a mandatory requirement but was a directory requirement. He submitted that the Petitioner No.1 - Company was registered with the Secretary of Industries and, therefore, the requirement of registration had been complied with. He submitted, therefore, that the decision of the Hon' ble Minister that the requirement was mandatory was patently illegal. He then submitted that the four conditions which were given below the explanation to Rule 35(8) had to be read disjunctively and, therefore, condition Nos (i) and (ii) would be read together and condition Nos. (iii) and (iv) had to be read disjunctively and separately. He submitted that the said interpretation was clear from the perusal of the said 12 provision. He submitted that after the first condition No.(i), there is a semi-colon followed by the word "and" and, thereafter, the condition No.(ii) is mentioned, after which there was a semi-colon and, thereafter, the condition No.(iii) was mentioned, which, again, ended with the semi-colon and the word "and" and, thereafter, condition No. (iv) was mentioned. He submitted that even assuming for the sake of argument that the provision of registration is mandatory even then in view of the disjunctive interpretation of the four conditions it was apparent that either condition Nos.(i) and (ii) had been complied with or condition Nos. (iii) & (iv) had been complied with. He submitted that the Petitioner No.1 - Company, in any case, had admittedly complied with condition Nos. (iii) & (iv) and, as such, were entitled to get exemption under Rule 35(8). He also invited our attention to clause (c) of sub-rule 8 of Rule 35 and more particularly the words in the said clause viz. "from the date of licence of registration of such new industrial undertaking"............... He submitted that the words "date of licence of registration" were meaningless and, therefore, the word "of", after the words "date of licence", had to be read as "or" and, if so read, it clearly indicated that in cases where the registration was compulsory, condition Nos. (i) and (ii) of the explanation would apply and in cases where the licence was 13 necessary, condition Nos. (iii) and (iv) became applicable. He submitted that the Petitioners had obtained necessary licence and, therefore, condition Nos. (iii) and (iv) would apply in the case of Petitioners and, therefore, the Petitioners were entitled to exemption. In support of the said submissions, he relied upon the judgment of the Apex Court in Tirath Singh Vs. Bachittar Singh and others reported in AIR 1955 S.C. 830. He also relied upon the judgment of the Apex Court in Modern School Vs. Union of India and others reported in AIR 2004 SC 2236. In support of the submission that the requirement of registration with the Directorate of Industries was a directory requirement, he relied upon the following judgments:- (i) AIR 1917 Privy Council 142 - Montreal St. Ry.Co. v. Normandin. (ii) (1955) Supreme Court Reports 1104 - Hari Vishnu Kamath v. Syed Ahmad Inshaque & Ors. (iii) AIR 1965 S.C. 895 - Raza Buland Sugar Co. Ltd. V. The Municipal Board, Rampur. He also invited our attention to the Manual of Departmental Functions and Procedures issued by the Government of Maharashtra, Directorate 14 of Industries. He submitted that from the said Manual it was apparent that the direction in respect of registration of industry with the Directorate of Industries was not statutory requirement but was a procedure prescribed under the Manual of the Departmental Functions and Procedures. 14. Mr. Deshpande, the learned Assistant Government Pleader appearing on behalf of the Government, on the other hand, submitted that the requirement of registration with the Directorate of Industries was mandatory. He submitted that only Small Scale Industries would be registered with the Directorate of Industries. He further submitted that exemption in respect of the new industrial undertaking was meant to be granted only to Small Scale Industries and as the Petitioners, admittedly, not being registered with the Directorate of Industries, were not entitled to get exemption. He submitted that the conditions which were mentioned below the explanation of sub-clause (8) of Rule 35 could not be construed disjunctively and all these conditions had to be read together and unless all conditions were complied with by any industry, exemption under the said provision would not be granted in its favour. He submitted that though there was no statutory provision in respect of registration of Small Scale 15 Industry with the Directorate of Industries, it was a tradition which had been followed for innumerable years and, therefore, in the present case, contemporary construction had to be applied and merely because the said requirement did not have any statutory force, it would not mean that the said provision is directory. In support of the said submission, he relied upon the judgment of the Apex Court in National and Grindlays Bank Ltd. Vs. The Municipal Corporation of Greater Bombay reported in 1969 (1) SCC 541. He submitted that the Hon' ble Minister had taken into consideration the letter dated 11/07/2003 written by the Directorate of Industries to the Government in which it is stated that only Small Scale Industry would be registered with the Directorate of Industries and had further observed that the said provision would not be said to be directory but was a mandatory provision. 15. Mr. Oka, the learned Counsel appearing on behalf of respondent Nos. 2 & 3 submitted that the said provision was mandatory. He relied upon the judgment of the Apex Court in the case of State of Jharkhand and others Vs. Ambay Cements and another reported in (2005) 1 SCC 368. 16 16. It is apparent that the present case has had a chequered history and the matter had to be remanded on four occasions to the Hon' ble Minister for one reason or the other. Perusal of the impugned order indicates that though on two/three earlier occasions specific directions were given to pass a speaking order, the said directions were not followed and, therefore, the matter had to be remanded back. On one occasion, after the remand, though matter was to be decided afresh, the order was passed without giving hearing to the Petitioners and merely an old order was substituted by a new reasoned order. Secondly, on third occasion specific directions were given to compute the octroi duty which was demanded on the face of factual material and, thereafter, issue a proper demand notice, indicating the manner in which the amount of demand was arrived at. In spite of these directions being given, even in the present impugned order, those directions had not been complied with. We have also noticed certain discrepancies in the present impugned order. In view of the above, therefore, we are of the opinion that the matter now will have to be decided by this Court and no useful purpose would be served by again remanding the matter to the Government. 17. From the letters which are annexed to the Petition, it is evident 17 that the project which is set up by the Petitioners is a public utility project. Even otherwise, this fact has not been disputed by the Government. Shastri Committee, consisting of experts on the subject, was set up to go into the question of frequent break down of electric supply to the City of Mumbai and its suburban areas in the years 1986, 1987 and 1988 and the said Committee was called upon to give its recommendations and, accordingly, it was unanimously recommended that the project be set up so that problem would be resolved. Petitioner No.1 - Company gave its proposal for setting up the Project at Village Patnus in view of the exemption which was granted by the Central and State Government in respect of various taxes so that electric supply would be made to the City of Mumbai and its adjoining areas at cheaper rate. 18. Rule 35 of the Maharashtra Village Panchayats Taxes and Fees Rules, 1960 is pertaining to the exemption which can be granted to Industries from levy of octroi. So far as the present Petition is concerned, we are concerned with sub-rule (8) of Rule 35 of the said Rules. Rule 35(8) reads as under:- "35. Exemption from octroi. - The following 18 articles shall be exempted from payment of octroi :- (1) ................................... (2) ................................... (3) .................................... (4) .................................... (5) ..................................... (6) .................................... (7) .................................... [(8) (a) Plant and machinery including spares and replacements [of a new industrial undertaking]" (b) Construction materials, that is to say, iron, steel, cement, bricks, wood and the like required for the construction of buildings [of a new industrial undertaking]; (c) Raw materials and tools for manufacturing finished articles imported by any new industrial undertaking. Provided that such exemption from payment of octroi on law materials and tools shall cease on the expiry of a period of thirteen years from the date of licence of registration of such new industrial undertaking unless the panchayat, having regard to its financial position otherwise decides. Explanation.- For the purposes of clause (8) "a new industrial undertaking" means any industrial undertaking (including an industrial undertaking run by a co-operative society)- 19 (i) which is registered with the Directorate of Industries, Maharashtra State, but is not located within the Bombay-Thane and Poona- Pimpri-Chinchwad areas specified in the Appendix to this Part ; and (ii) which is not formed by the splitting up or the re-construction of a business already in existence in the village; (iii) which is not formed by the transfer to new business of a building, machinery or plant previously used for any purpose at the village; and (iv) which has begun or begins to manufacture or to produce articles for the first time on or after the 1st day of May, 1963 or at any time within a period of five years immediately preceding that date.]" 19. Perusal of Rule 35 and sub-rule (8) of Rule 35 clearly indicates that various exemptions had been granted to certain industries. Sub- rule (8) of Rule 35 indicates that the purpose for granting exemption 20 to new undertaking was to ensure that such undertaking would be set up as new industry in backward areas, probably because it would generate employment and finance to the Gram Panchayat and residents of the locality. The idea being that the income would be generated by setting up of such new industry would be far greater than some collection of octroi on the plant and machinery, construction material, raw material and tools for setting up that industry and it would outweigh the mere collection of octroi. Though there is no material to indicate that, that was the object and purpose of granting exemption, since no material has been placed before us to the contrary, that would be the obvious inference that can be drawn if the said Rule 35(8) is construed in its proper perspective. 20. In any event, the Petitioner No.1 - Company admittedly was set up for the project which was a public utility project and it was set up at the instance of the Central and State Government in order to give benefit to the large number of individuals in Mumbai and its suburban areas to meet the requirement of providing essential electricity services. Further, perusal of sub-rule (8) indicates that the exemption has been granted only to new undertaking which has not been defined under Rules but has been specifically defined below the explanation to 21 the said sub-rule. Further, it indicates that exemption is granted to category (a) Plant and machinery, (b) Construction materials used for setting up an industry and category (c) Raw materials and tools which would be imported for the purpose of manufacturing product. So far as plant and machinery in category (a) and construction materials in category (b) are concerned, exemption is granted obviously because the plant and machinery and construction material, under normal circumstances, would be used only once for the purpose of setting up the industry or at the time when there has to be an expansion of the industry. The category (c), on the contrary, viz. raw materials and tools would be required to be used for on going basis and, therefore, outer limit of 13 years had been put and discretion is given to the Gram Panchayat, depending on its financial status, whether exemption should be continued or not. In all these three categories, the essential requirement is that it should be a new industrial undertaking. Therefore, the words "new industrial undertaking" have been explained in the explanation. Since the explanation is relevant to the present problem, it would be fruitful to again reproduce the explanation which reads as under:- "Explanation.- For the