wp2177-10.doc 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2177 OF 2010 M/s.Formac Engineering Ltd & Anr .. Petitioners Versus Municipal Corporation of Greater Mumbai & Ors .. Respondents Mr.Aspi Chinoy, Sr.Advocate a/w Mr.M.P.S.Rao, Sr.Advocate, L.A.Rubens, Ms.Savita Sadananda & Mr.Sujit Suryavanshi i/by Vigil Juris for the petitioners. Mr.S.U.Kamdar, Sr.Advocate a/w Mrs.Trupti Puranik i/by V.K.Khatu & Ors for respondent Nos.1 to 3. Mr.Virag Tulzapurkar, Sr.Advocate a/w F.Palkhiwala i/by Mahernosh Humranwala for respondent Nos.4 to 7. CORAM : S.C.DHARMADHIKARI, J. RESERVED ON : 25th JANUARY 2011. PRONOUNCED ON : 10th MARCH 2011. JUDGMENT: . By this petition under Article 226 of the Constitution of India, the petitioners have claimed the following reliefs: wp2177-10.doc 2 “(a) that this Hon’ble Court be pleased to issue a writ of certiorari or a writ, direction or order in the nature of certiorari or any other appropriate writ, direction or order under Article 226 of the Constitution of India, calling for the records of the petitioner’s case and after considering the same, quashing and setting aside the impugned order dated 21st September 2010; (b) that this Hon’ble Court be pleased to issue a writ of mandamus or a writ, direction or order in the nature of mandamus or any other appropriate writ, direction or order under Article 226 of the Constitution of India, this Hon’ble Court be pleased to order and direct: (i) the respondent Nos.1, 2 and 3 from in any manner implementing the impugned order dated 21st September 2010; (ii) restraining the respondent Nos.1,2 and 3 from in wp2177-10.doc 3 any manner acting in furtherance of the impugned order dated 21st September 2010; (iii)the petitioners from continuing the working and running of the factory in accordance with the factory permit dated 20th May 2008.” 2 At the outset, it is clarified that if the Court sets aside the impugned order dated 21st September 2010, the necessary corollary would be that the request which has been turned down would have to be re-considered by the Authorities. 3 A preliminary objection has been raised by Mr.Kamdar, learned senior counsel appearing on behalf of the respondent Nos.1 to 3 and it is that the impugned order can be questioned by filing an Appeal under section 394(5) of the Mumbai Municipal Corporation Act, 1888. His submission is that by the impugned order what has been done is to reject the application for renewal of the factory permit bearing No.V-537. If that application for renewal is rejected, then, that order can be challenged by filing appeal before Chief wp2177-10.doc 4 Judge, Court of Small Causes, Bombay. 4 On the other hand, Mr.Chinoy, learned senior counsel appearing on behalf of the petitioner submits that the remedy of appeal is not available to challenge this order. The petition is filed by alleging that the factory permit dated 20th May 2008 has been revoked. The petitioners have pointed out that the order has been passed under section 479(3) of the Mumbai Municipal Corporation Act, 1888. The petitioners have pointed out in para 4 the nature of their business and have stated that the petitioners were carrying on business of treating of metal under a licence which was valid up to 31st March 1975. Annexures I and J are referred to in this behalf. The petitioners pointed out as to how their factory has been located in the premises in their possession, namely, in the area of 18218 sq.ft. The petitioners have pointed out that the permissions have been granted by the Director of Industries. It has also been pointed out as to how various other approvals have been obtained. There was a factory permit granted in the name of the petitioner No.1 on 5th December 1970. It was renewed from time to time up to 31st wp2177-10.doc 5 March 1988. It was also in force till the date mentioned in the application for renewal dated 23rd January 2008. This is an application for renewal, a copy of which is annexed as Annexure Z. It is this application pursuant to which various inspections were undertaken. It is pointed out as to how from the year 1968 the business has been carried out. It is in such circumstances that the action of the authorities has been impugned and by alleging that the same is taken at the instance of the private respondents with whom the petitioners have a on going dispute. 5 Section 390 of the Mumbai Municipal Corporation Act, 1888 falls under the sub-heading “Regulation of Factories, Trades etc”. It states that no person shall newly establish in any premises any factory, work-shop or work place, in which it is intended that power shall be employed without the previous written permission of the Commissioner, nor shall any person work, or allow to be worked any factory, work-shop or work place without such permission. Sub-section 2 confers a discretion on the Commissioner to refuse such permission for the reasons mentioned therein. Sub- wp2177-10.doc 6 section 3 of section 390 reads thus: “390. Factory, etc not to be newly established without permission of the Commissioner:- (1) ...... (2) ...... (3) If any written permission for the establishment of factory, workshop or workplace granted under sub-section (1) be revoked by the Commissioner in the exercise of his powers under sub-section (3) of section 479, no person shall continue or resume the working or use of such factory, work shop or work place until such written permission is renewed or a fresh written permission is granted by the Commissioner.” 6 Mr.Kamdar has invited my attention to sub-section 5 of section 394 and submits that the provision of appeal therein would apply to the present case. It is not possible to agree with him because section 394 deals with a distinct situation. It deals with a wp2177-10.doc 7 case where certain articles or animals are being kept and certain trades, processes and operations are being carried on. They shall not be carried on without a licence. The various schedules that are referred to in section 394(1) regarding which a licence will be necessary and can be granted does not deal with a licence that is contemplated for establishment of any factory, work-shop or work place within the meaning of section 390(1). Therefore, the provision of an appeal which is provided to challenge any action withholding a licence under section 394(1) cannot be extended and applied in a distinct situation and to a distinct activity. Unless and until the provision itself is specifically referred to in section 390, by interpretative process, the same cannot be read into it. For these reasons, the preliminary objection raised by Mr.Kamdar is without any substance and it is over ruled. 7 In the above circumstances, this petition is maintainable and can be entertained. Hence, Rule. The respondent Nos.1 to 7 waives service. By consent, Rule is made returnable forthwith. wp2177-10.doc 8 8 By this petition under Article 226 of the Constitution of India, the decision or order passed by the Assistant Commissioner, S-Ward of the Brihanmumbai Mahanagar Palika dated 21st September 2010 is under challenge. By this order the factory permit of the petitioners has been revoked and the application for renewal thereof submitted by the petitioners has been rejected. 9 The brief facts leading to the filing of the petition may be narrated now. 10 The petitioners have stated that the petitioner No.1 was incorporated and granted registration certificate on 16th December 1968 as a private limited company. The promoters of the petitioner No.1 were one Edul J. Havaldar and the petitioner No.2. In the year 1968 it was represented to the petitioner No.1 by Mr.Nadirsha Phirozsha and Mr.Fali Bomanjee, the partners of M/s.Nardirsha Phirozsha & Co that they were the owners of a certain structure, namely, Bharthania Industrial Estate. The petitioner No.1 states that it commenced business on the ground floor of the said structure. wp2177-10.doc 9 11 It is the case of the petitioners that in November 1968, the partnership firm leased 3000 sq.ft of the ground floor of the structure alongwith open enclosed plot, open canteen shed and the sub-electrical transformer and that is evidenced by a rent receipt dated 1st September 1972. On 1st January 1971, the Firm entered into a leave and licence agreement with respondent No.4 for a area of 2400 sq.ft on the ground floor of the structure contiguous to the 3000 sq.ft already in occupation of petitioner No.1 since 1968. Simultaneously on the very day the respondent No.4 executed a leave and licence agreement for the same area of 2400 sq.ft on the ground floor in favour of the petitioner No.1. 12 The subsequent arrangement with regard to construction of the first floor has been then set out in the petition and the writings in that behalf are also referred to. The various portions that were acquired by the petitioners are set out and it is then stated that the following area constituted the factory of the petitioners: wp2177-10.doc 10 Date Area Cumulative area Square feet Names Floor 01.11.1968 3000 Nadirsha Phirozsha & Co Ground 01.01.1971 2400 5400 Piloo Fali Bomanjee Ground 01.01.1973 5275 10675 Dadi Dorabjee First 01.06.1974 3564 14249 Philoo Falli Bomanjee Ground 01.06.1974 4402 18641 Nadirsha Phirozsha & Co First 13 The petitioners state that there is a no objection certificate for setting up of the factory which has been issued by the land lord. The payment of the property taxes as late as up to February 2009 are referred to and the Beat Officers report so also approval of 1975-76. 14 Thus, it is alleged that respondent Nos.2 and 3 were well aware of the fact that the petitioner No.1 has always been occupying the entire structure. In these circumstances, the acts of one E.J.Havaldar are, then referred to, so also facts of filing of civil suits and appointment of Court Receiver therein are set out. wp2177-10.doc 11 15 In para 4, clause (G), pages 14 and 15 of the petition, this is what is alleged: “(G) The land on which the factory structure stands was purchased on 25th February 1964 by late Mr.P.B.Bharthaniya. For the purposes of the business of the petitioners, the petitioner No.1 had applied to the Bombay Municipal Corporation under section 390 of the M.M.C Act for a factory permit in the year 1968. By a letter dated 23rd October 1968, addressed by M/s.J.P.Parekh & Son, the then Architects of the said firm Nadirsha Phirozsha & Co addressed to the Ward Officer, N Ward, Bombay Municipal Corporation, on behalf of the petitioner No.1 through the promoter Director, Mr.E.J.Havaldar, an application to establish factory in Bharthania Industrial Estate at S.No.26, H.No. 4, Kanjur, Bhandup. The said Architect of Nadirsha Phirozsha & Co alongwith the application submitted copies of site plan, location plan for establishing a wp2177-10.doc 12 mechanical workshop and the No Objection Certificate from the Municipal Corporation dated 25th April 1964. It was recorded therein that the Under Secretary, Industry & Labour Department had issued No Objection Certificate dated 17th October 1968. It was also recorded therein that on behalf of then the landlords i.e Shri.P.B.Bharthania a No Objection Certificate has been issued for establishing and running the proposed factory. In the said letter the petitioner No.1 through its promoter Director requested for 95.5 kilowatts of power and also pointed out that the necessary application was made to the Director of Industries and as soon as the sanction was received the same would be forwarded to the Ward Officer to peruse and grant the factory permit to the petitioner No.1” 16 The reference then made is to the application for transfer of no objection certificate of the Director of Industries in favour of the petitioner No.1. Even the electric supply was sought to be wp2177-10.doc 13 transferred and applications made in that behalf are pointed out. The case of the petitioners is that the factory permit was renewed by respondent No.1 up to 31st March 1988. The use of power supply and the provision of meter for the same, so also the no objection certificate for use of additional power by the Director of Industries dated 8th January 2008 has been referred to. 17 In para 4(M) of the petition, the petitioners have set out the details of the application date 23rd January 2008 for renewal of their factory permit. The area mentioned therein is set out together with the necessary no objection certificates and in the same narration, reference is made to the note prepared by the Assistant Engineer, S-Ward dated 16th April 2008 duly approved by the Assistant Commissioner on 23rd April 2008 recording the no objection to grant additional load, additional activity restoration of permit etc. The no objection certificate of the Chief Fire Officer is then referred to together with the further inspection carried out on 9th February 2008 by the Sub-Engineer (Factories), S-Ward of the Municipal Corporation. There is a detailed reference to the wp2177-10.doc 14 approvals and clearances and payment of the requisite charges. The petitioners, therefore, believed that the factory permit would be renewed as per the applicable policies for five years. However, it is the case of the petitioners that despite being in uninterrupted possession and carrying on business from 1968, on 21st July 2009 the petitioner No.2 was summoned by the Assistant Engineer (Buildings and Factories) in connection with the enquiries made on behalf of the respondent Nos.4 to 7. The enquiry appeared to be about the use and occupation of 4402 sq.ft of the structure which is subject matter of a suit being Suit No.1385 of 1984. The petitioners in their letter dated 28th July 2009 have set out complete facts with regard to the creation of tenancy rights. By a letter dated 25th August 2009, the Assistant Engineer called upon the petitioner No.2 to submit certain documents relating to factory permit granted to the petitioner No.1. The petitioner No.1 was called upon to submit the documents of ownership, the agreement with the owner, a copy of the approved plan from the Executive Engineer, B and P (E.S.) for the area mentioned in the factory permit issued to the petitioner NO. 1 and the no objection certificate from the owner of the premises wp2177-10.doc 15 together with a photocopy of the assessment bill of the building. This was required to be submitted within fifteen days. These documents were forwarded by the petitioner No.1 on 9th September 2009. 18 The petitioners, therefore, proceeded on the basis that the authorities are satisfied with the clarifications and, therefore, were surprised to receive a letter dated 23rd November 2009 addressed by the respondent No.3 to the petitioner No.1 alleging that the contents of the letter dated 9th September 2009 were not convincing. It was alleged that the leave and licence agreements were all for the period 1st January 1971 to 1st April 1974 and were old and that the no objection certificate from the owner was not submitted and that in the application for the renewal of permit, the name of Edul J. Havaldar has been wrongly incorporated, although the said E.J.Havaldar has passed away. It was in these circumstances stated that if the documents mentioned in the letter were not furnished, action under section 390(3) of the Mumbai Municipal Corporation Act would be taken. A copy of this letter is marked as Annexure HH wp2177-10.doc 16 to this petition. Before the petitioners could respond to this letter, on 1st January 2010 the respondent No.3 issued a show cause notice based upon the complaint of the respondent No.4. The show cause notice reproduced the same objections contained in the letter dated 23rd November 2009 and alleged that the petitioner No.1 ought to comply with the requests for production of documents within thirty days of the receipt of the letter/show cause notice failing which the respondent No.3 would initiate necessary action including revocation of factory permit without any further intimation to the petitioner No.1. The petitioners sent reply and sought opportunity of being heard by the respondent No.3 for placing their version before him. The petitioners were called for hearing by letter dated 18th February 2010 and the hearing was scheduled on 3rd March 2010. By a letter dated 3rd March 2010, the petitioners pointed out as to how they came in possession, how the factory was set up and how they have all the necessary permissions and approvals. It was pointed out that there is no question of any objectionable matter or detail being included because E.J.Havaldar has resigned and the resignation was intimated to the Assistant Commissioner, S-Ward, wp2177-10.doc 17 Licence Department by a letter addressed as far back on 23rd April 1991. All statutory compliances under the Companies Act, 1956 have also been made. Therefore, there was no intention to mislead the department, nor any details with regard to E.J.Havaldar have been incorporated deliberately. Therefore, the show cause notices be withdrawn. There are various objections raised with regard to the manner in which the hearing has been held. Ultimately, an order dated 17th May 2010, Annexure LL to the petition came to be passed. There was correspondence pursuant to the said order as well. Ultimately, on account of the said order and the further orders passed allegedly at the behest of respondent Nos.4 to 7, the petitioners approached this Court by filing writ petition being Writ Petition No.1524 of 2010. This writ petition was filed on 21st July 2010. It challenged the order dated 13th April 2010 revoking the petitioner No.1’s factory permit and the actions in relation thereto. That writ petition was placed before a learned single Judge of this Court and by order dated 25th August 2010 the learned single Judge disposed off the same in the following terms: wp2177-10.doc 18 “ The following order is passed by consent of the petitioners and respondent Nos.4 to 7:- i. The petitioners shall file an application seeking renewal of the factory permit with the respondent No.1 on or before 2nd September 2010. ii. Respondent Nos.4 to 7 shall file their written submissions and/or documents, if any, on or before 9th September 2010. iii. The application filed by the petitioners shall be disposed of by the Corporation after offering a hearing to the petitioners was well as respondent Nos.4 to 7. iv. Pending disposal of the said application and for a period of ten days from the receipt of the order by the petitioners, in the event of the order being adverse to the petitioners, the petitioners are allowed to carry on their business. 2. Mr.Kamdar, learned senior advocate appearing wp2177-10.doc 19 for the Corporation on instructions states that if the said application is filed by the petitioners, the same shall be disposed of on or before 23rd September 2010. The statement is accepted. 3. Writ petition is accordingly, disposed of, with no order as to costs. 4. Parties to act upon an authenticated copy of this order.” 19 In compliance with the orders and directions of the Court as reproduced above, the petitioners on 31st August 2010 made an application seeking renewal of the factory permit. In this application all details pertaining to obtaining of permissions, sanctions, no objection certificates have been set out including the area in occupation by the petitioner No.1. It was also pointed out that the larger area has been occupied by the petitioners to the knowledge of the authorities, so also respondent Nos.4 to 7. In these circumstances, the renewal be granted, was the request made by the petitioners. The respondent Nos.4 to 7 filed their response to this wp2177-10.doc 20 application by their letter dated 9th September 2010 and raised various false and untenable pleas. 20 Pursuant to the orders of this Court, the written submissions were also forwarded and ultimately the impugned order dated 21st September 2010 was passed. 21 It is this order which is challenged in this petition. 22 Mr.Chinoy, learned senior counsel appearing on behalf of the petitioners submitted that the entire action culminating in passing of the impugned order is taken at the instance of the respondent Nos.4 to 7. He submits that once the authorities are satisfied that the factory permit can be granted, there is no question of any power of review or revision by the Assistant Municipal Commissioner. Once the permit was granted on 20th May 2008, the only remedy available for the authorities is to revoke it in terms of section 479, that is only if there is any breach of the said provisions and not otherwise. Admittedly, there is no breach committed wp2177-10.doc 21 inasmuch as the suits filed in relation to trespass and the allegations therein so also complaints of respondent Nos.4 to 7 are not relevant and material for the purposes of the decision of the authorities. The authorities are required to consider only the requirements and conditions specified for grant of factory permit as prescribed in the Mumbai Municipal Corporation Act, 1888. Once that satisfaction is reached, then, the permit cannot be withheld, nor can the renewal be objected on some other grounds. 23 Mr.Chinoy has invited my attention to the terms and conditions based upon which the licence was issued to the petitioner No.1. He submits that all the terms and conditions specified relate to the safety and related factors such as avoidance of nuisance and annoyance by use of power and electric meters. A proper sanitation is required to be maintained. At no stage there was any insistence on production of no objection certificate of landlord. 24 Mr.Chinoy submits that wholly irrelevant and unconnected matters have been taken into account and particularly wp2177-10.doc 22 about the documents of resignation of Mr.Edul J. Havaldar. There is no question of any misleading or false statement being made because the Corporation was intimated about the resignation by the Board of Directors. There may have been some error, but merely because the factum of his death has not been mentioned cannot be construed as a deliberate or malafide attempt on the part of the petitioners to mislead the Corporation. On the other hand, the exercise of the power to renew the licence has been carried out contrary to law and only because of the insistence of the respondent Nos.4 to 7 and at their behest the request has been rejected. In these circumstances, this Court should set aside the orders and direct that the running of the factory should not be interfered with. 25 Mr.Chinoy has pointed out that in the grounds mentioned in the petition, the petitioners have elaborated as to how the Corporation has been shifting its stand so as to assist the respondent Nos.4 to 7. It is submitted that merely because the enquiries were made by respondent Nos.4 to 7 that the 1st respondent summoned the petitioners on 21st July 2009 and directed production of records wp2177-10.doc 23 of the respondent Nos.1 to 3 showing the petitioner No.1 as user of entire Bhuthania Estate. Even that aspect was clarified by pointing out the necessary and relevant material including the Agency Agreement with the Court Receiver. The claim of tenancy has been asserted and it has been pointed out that, it cannot be an issue in the present proceedings. The question of no objection certificate from the owner is raised as an afterthought and with a view to assist the respondent Nos.4 to 7 in the pending legal proceedings. It is pointed out by the petitioners that all three reasons viz., absence of ownership document and/or no objection certificate from the owner, misrepresentation by quoting the name of Mr.Edul J. Havaldar as one of the Directors and carrying out additions and alterations and increasing the factory area being the basis for rejection of request for renewal, are totally untenable and devoid of any substance. In this behalf, he has invited my attention to the fact that the factory permit was granted in the year 1968 on the basis of application in “Form A” forwarded to respondent No.3 with various annexures which included no objection certificate by Fali Bomanjee. That certificate refers to