IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 9TH FEBRUARY 2011 / 20TH MAGHA 1932 WP(C).No. 7219 of 2008(H) -------------------------------------- PETITIONER(S): ------------------------ THE PEERMADE TEA COMPANY LIMITED, PATTOM PALACE, P.O.THIRUVANANTHAPURAM 695 004, REPRESENTED BY ITS DIRECTOR, SRI.S.RAMAKRISHNAN SARMA. BY ADVS. SRI.JOSEPH KODIANTHARA SRI.MATHEWS K.UTHUPPACHAN SRI.TERRY V.JAMES RESPONDENT(S): -------------------------- 1. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT MINISTRY OF COMMERCE, UDYOG BHAVAN, NEW DELHI. 2. THE TEA BOARD, 14 BTM SARANI, KOLKATTA- 700 001, REPRESENTED BY ITS DIRECTOR, (TEA DEVELOPMENT). 3. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, LABOUR & REHABILITATION DEPARTMENT SECRETARIAT, TRIVANDRUM. R1 BY ADV. SRI.ABRAHAM THOMAS, CGC R2 BY ADV. SRI.K.M.JAMALUDHEEN,SC, TEA BOARD R3 BY GOVERNMENT PLEADER SMT. RANI DIOTHIMA THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts 2/- -2- WP(C)NO.7219/2008 APPENDIX PETITIONER'S EXHIBITS: P1A) COPY OF THE INTERIM ORDER DATED 01/02/2001 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P1(B) COPY OF THE INTERIM ORDER DATED 6/2/2002 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P1(C) COPY OF THE INTERIM ORDER DATED 9/7/2002 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P1(D) COPY OF THE INTERIM ORDER DATED 19/6/2003 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P1(E) COPY OF THE INTERIM ORDER DATED 21/5/2004 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P1(F) COPY OF THE INTERIM ORDER DATED 9/8/2005 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P1(G) COPY OF THE JUDGMENT DATED 01/02/2007 IN O.P.NO.2430/2001 PASSED BY THIS HON'BLE COURT. P2 COPY OF THE RELEVANT PAGES OF THE REPORT OF THE FACT FINDING TEAM FROM THE CENTRE FOR EDUCATION AND COMMUNICATIONS,NEW DELHI. P3 COPY OF THE NOTIFICATION IN THE OFFICIAL GAZETTE DATED 24/1/2003. P4 COPY OF THE REPORT OF APRIL 2003 OF THE FACT FINDING TEAM. P5 COPY OF THE LETTER DATED 11/6/2003 OF THE EXECUTIVE DIRECTOR OF THE 2ND RESPONDENT ALONG WITH MINUTES REFERRED TO THEREIN OF THE MEETING OF 29/4/2003. P6 COPY OF THE LETTER DATED 5/2/2007 ISSUED BY THE BANK OF BARODA. P7 COPY OF THE INTERIM ORDER DATED 10/7/2006 IN WP(C)NO.34643/2005 PASSED BY THIS HON'BLE COURT. P8 COPY OF THE INTERIM ORDER DATED 20/3/2006 IN WP(C)NO.35527/2005 PASSED BY THIS HON'BLE COURT. P9(A) COPY OF THE LETTER DATED 12/6/2007 ISSUED BY THE PETITIONER TO THE MANAGER, INDIAN OVERSEAS BANK. P9(B) COPY OF THE LETTER DATED 12/6/2007 ISSUED BY THE PETITIONER TO THE INDUSLND BANK. sts 3/- -3- WPC.NO.7219/2008 P9(C) COPY OF THE LETTER DATED 12/6/2007 ISSUED BY THE PETITIONER TO THE INDIAN BANK. P9(D) COPY OF THE LETTER DATED 29/8/07 ISSUED BY THE PETITIONER TO INDIAN OVERSEAS BANK. P9(E) COPY OF THE LETTER DATED 29/8/2007 ISSUED BY THE PETITIONER TO THE INDUSLND BANK. P9(F) COPY OF THE LETTER DATED 13/9/2007 ISSUED BY THE PETITIONER TO THE CANARA BANK. P9(G) COPY OF THE LETTER DATED 13/9/2007 ISSUED BY THE PETITIONER TO THE STATE BANK OF INDIA. P9(H) COPY OF THE LETTER DATED 13/9/2007 ISSUED BY THE PETITIONER TO THE FEDERAL BANK. P9(I) COPY OF THE LETTER DATED 13/9/2007 ISSUED BY THE PETITIONER TO THE STATE BANK OF TRAVANCORE. P9(J) COPY OF THE LETTER DATED 13/9/2007 ISSUED BY THE PETITIONER TO THE FEDERAL BANK LTD. P9(K) COPY OF THE LETTER DATED 27/9/2007 ISSUED BY THE PETITIONER TO M/S. KOTAK MAHINDRA BANK. P9(L) COPY OF THE LETTER DATED 6/12/2007 ISSUED BY THE PETITIONER TO THE ICICI BANK. P9(M) COPY OF THE LETTER DATED 21/9/2007 ISSUED BY THE PETITIONER TO THE ASSISTANT DIRECTOR OF TEA DEVELOPMENT, KOTTAYAM. P10 COPY OF THE LETTER DATED 5/10/2007 FROM THE 2ND RESPONDENT TO THE PETITIONER. P11 COPY OF THE REPLY TO EXHIBIT P-10 VIDE ITS LETTER OF 15/10/2007 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT. P12 COPY OF THE LETTER DATED 16/10/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P13 COPY OF THE LETTER DATED 16/10/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P14 COPY OF THE LETTER DATED 14/11/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P15 COPY OF THE LETTER DATED 21/11/2007 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. sts 4/- -4- WPC.NO.7219/2008 P16 COPY OF THE LETTER DATED 23/11/2007 ISSUED BY THE PETITIONER TO THE ASSISTANT DIRECTOR OF TEA DEVELOPMENT, TEA BOARD,KOTTAYAM. P17(A) COPY OF THE LETTER DATED 3/11/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P17(B) COPY OF THE LETTER DATED 19/11/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P17(C) COPY OF THE LETTER DATED 29/11/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P17(D) COPY OF THE LETTER DATED 30/11/2007 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P17(E) COPY OF THE LETTER DATED 30/11/2007 ISSUED BY THE PETITIONER TO SRI.JAYARAM RAMESH, THE HON'BLE MINISTER OF STATE FOR COMMERCE. P17(F) COPY OF THE LETTER DATED 16/1/2008 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. P17(G) COPY OF THE LETTER DATED 23/1/2008 ISSUED BY THE PETITIONER TO SRI.JAYARAM RAMESH, THE HON'BLE MINISTER OF STATE FOR COMMERCE. P18 COPY OF THE PAPER PUBLICATION APPEARING IN THE HINDU OF 6/2/2008. P19 COPY OF THE PAGE 18 OF EXPERT COMMITTEE REPORT. RESPONDENT'S EXHIBITS: R2(A) COPY OF THE RELEVANT PORTION OF THE REPORT CONTAINING THE DETAILS OF THE PETITIONER TEA ESTATE. /TRUE COPY/ P.A.TO.JUDGE sts Certified for Reporting K.SURENDRA MOHAN, J --------------------------------------- W.P.(C).NO.7219 OF 2008 ------------------------------------------- Dated this the 9th day of February, 2011. JUDGMENT The petitioner has filed this writ petition challenging the vires of Ext.P18, a public notice issued by the 2nd respondent in exercise of the powers under Section 16E of the Tea Act, 1953 (hereinafter referred to as the Act, for short) on the ground that the notice was not preceded by a formal order of the competent authority under the said provision and that the proceedings were issued without complying with the principles of Natural Justice. 2. The petitioner is a Public Limited Company incorporated under the Companies Act, 1956. The petitioner owns two tea estates by name Peermede and Lone Tree Estates at Elappara, Idukki District. The petitioner is engaged in the cultivation and manufacture of tea. At the two estates, the petitioner employs about 1300 workers, 80 staff, and other managerial personnel. The workmen of the petitioner are residing within the estates, in separate living quarters allotted to them. The petitioner has been in management of the tea estates since 1938. W.P.(C).NO.7219 OF 2008 2 3. According to the petitioner, of late, the tea industry in general and within the State of Kerala in particular, has been facing acute financial crisis on account of various reasons including a drastic fall in the price of tea globally, and a steep increase in the cost of production. Due to a host of other problems, the tea industry is facing an unprecedented situation that could even lead to the liquidation of all the tea plantations and factories in the country. In the case of the petitioner, the situation took a turn for the worse during the year 2000 due to the non-co- operation of the workers in the two estates. They started resorting to various forms of agitations like reporting late for work and leaving early from the work spot. The management also detected several instances of theft. The managerial action to curb the illegal activities resulted in physical threats and even threat to the lives of the managers, forcing them to abandon the work spot. Consequently, the control of the Management over the estates diminished. The workers freely indulged in collection of the tea leaves, selling them to unauthorized buyers and collecting the money. In other words, the workers excluded the petitioner and its managers from the factory and plantations and took complete control of the estates. There are even allegations of felling of valuable timber trees and of encroachments. The electric W.P.(C).NO.7219 OF 2008 3 connection to the plantations were dismantled for non-payment of electricity dues. The workers took a militant attitude and completely paralyzed the administration of the two tea estates and prevented even the access of the petitioner to those estates. 4. The resultant situation forced the petitioner to stop all manufacturing activities. The factories and the machinery therein were damaged due to misuse and neglect. The managerial personnel of the petitioner were driven out and the workers indulged in theft of tea leaves as well as timber trees, besides causing damage to machinery. The petitioner therefore, approached this Court by filing O.P.No.2430/2001, which resulted in the passing of Ext.P1(a) to P1(f) interim orders and finally, Ext.P1(g) judgment. A reading of the above orders and the judgment of this Court shows that the right of the petitioner to resume possession and management of the plantations and its factories was recognized by this Court and that directions were issued to the Government as well as the Police to ensure that the petitioner's right of management was protected. However, it is not in dispute that the petitioner and its managerial staff were effectively prevented from resuming control of the estates or its management and that the stalemate continues to this date. The petitioner was even permitted by this Court to post its own W.P.(C).NO.7219 OF 2008 4 security men at the exit and entry gates with necessary directions to the Police to give protection to them. However, in spite of the above, the petitioner could not resume management of the plantations or the factory and therefore, the petitioner continues to be excluded from the management of the two estates to this date. 5. In the above circumstances, considering the general conditions prevailing in the tea plantations in Kerala and Tamil Nadu, an Expert Committee was appointed by the Central Government, to conduct a study of the situation and to submit a report regarding the same. Accordingly, the situation was gone into, analysed and elaborately considered by a team of experts who have submitted a report as evidenced by Ext.P2. The portion of the report of the Expert Committee relating to the petitioner's tea plantations is produced as Ext.P4. The said document has been produced by the second respondent in Ext.R2(a) also. Pursuant to Ext.P4 report, discussions were held at New Delhi with the petitioner and a course of action was agreed to as evidenced by Ext.P5. Accordingly, the petitioner agreed to sell an item of property at Trivandrum and to settle the dues that were remaining unpaid to its Bankers. It was further agreed that the said payment would be considered as promoters' contribution of the company, since they were hard pressed for funds. After W.P.(C).NO.7219 OF 2008 5 clearing the bank dues, the company was to explore the possibility of raising further finance for reviving the plantations. 6. According to the petitioner, though Ext.P5 was entered into no action was taken by the authorities in the matter, thereafter. The petitioner on the other hand, took necessary steps to liquidate its liability to the Bank of Baroda, worked out a settlement of the entire dues and discharged the liability by making a One Time Payment of Rs.120 lakhs, the receipt of which is evidenced by Ext.P6. 7. The petitioner also obtained Ext.P7 and P8 interim orders by which, the operation of orders issued by the Employees Provident Fund Authority seeking to recover amounts from the petitioner have been stayed by this Court. It is the case of the petitioner that the electricity dues payable by them have already been settled. However, though the petitioner has been trying to obtain finance from other banks, as evidenced by Ext.P9 series correspondence, their efforts have not been successful so far. Consequently, the petitioner has not been able to revive its operations. 8. In the above circumstances, as per Ext.P10 proceedings issued by the second respondent, the petitioner was directed to show cause why action under Section 16 E of the Act should not W.P.(C).NO.7219 OF 2008 6 be initiated in respect of the assets under its management. The second respondent also required the petitioner to give answers to the queries made therein. The petitioner replied to Ext.P10 by Ext.P11 letter informing the second respondent that the entire dues to the bank have been liquidated and that there were no dues payable by them to any bank. Though Ext.P11 reply was given on 15-10-2007, there was no further action in the matter thereafter. A series of correspondence, evidenced by Ext.P11 to P17 followed. In Ext.P13, the petitioner has particularly pointed out that no circumstance, justifying an invocation of the power under Section 16E of the Act exists in the present case. According to the petitioner, there was no voluntary act of closure of the estates on the part of the management. The estates had remained closed because the managerial personnel were driven out of management by the workers. In the above circumstances, the petitioner came across a newspaper advertisement issued by the second respondent in exercise of the powers under Section 16E of the Act, which is Ext.P18. As per Ext.P18, the second respondent has given a public notice inviting applications from persons interested in taking over the management of four tea gardens. Serial Nos.3 and 4 mentioned therein are the tea gardens of the petitioner. The applications were to be submitted W.P.(C).NO.7219 OF 2008 7 within 30 days from the date of publication of the notice. Various other conditions are also stipulated therein. It was in the above circumstances, that the petitioner filed the present writ petition challenging the proceedings of the second respondent, Ext.P18. The petitioner has also challenged the constitutional authority of the enabling provisions of the Act. 9. The above writ petition was admitted on 3-3-2008 and an order of interim stay of all further proceedings pursuant to Ext.P18 was granted by this Court. The said interim order has been in force, ever since. 10. According to the senior counsel, Mr.Joseph Kodianthara who appears for the petitioner, Ext.P18 is arbitrary and unsustainable in law. According to him there has been no wrongful act on the part of the petitioner at any time. The petitioner and his managerial staff were driven out of the estate and the management thereof was forcibly taken over by the workers who were agitating against them. According to the counsel, the tea gardens were not able to function only because of the fact that they were prevented from functioning by the agitating workers. The counsel submits that the petitioner had been voluntarily pursuing its efforts to resolve the situation, at all times. It had obtained protection orders from this Court by filing a petition for W.P.(C).NO.7219 OF 2008 8 Police protection. Various interim orders as evidenced by Ext.P1 (a) to P1(f) were passed. However, even the said orders could not help the petitioner resume management of the tea estates. The resultant situation forced it to discontinue operations. The factories in the tea estates suffered loss and damage due to neglect and misuse. However, acts of mischief committed by the workers caused much more severe loss to the petitioner. Therefore, it is contended that there are no circumstances justifying the conclusion that the petitioner had neglected the management of the tea estates or abandoned the same. 11. The counsel for the petitioner also contends that pursuant to Ext.P10 the petitioner has been making all earnest efforts to resume the functioning of the tea estates. The petitioner has already worked out a settlement of all their dues to the bank by making a one time payment of Rupees in 120 lakhs. The petitioner has also settled the dues to the Kerala State Electricity Board and has obtained interim orders staying recovery of the unjustified demands made by the Employees Provident Fund Organization. The counsel for the petitioner relies on the above circumstances to point out that there was no willful neglect or omission on the part of the petitioner. The closure of the tea plantations had been the result of an agitation carried on by the W.P.(C).NO.7219 OF 2008 9 workmen, which could not be resisted, controlled or contained by the petitioner in spite of orders obtained by the petitioner from this Court. 12. It is the further contention of the counsel for the petitioner that no circumstance justifying invocation of the power under Section 16E of the Act exists in the present case. Further, it is pointed out that no proceedings under the said provision could be initiated without first giving an opportunity of being heard to the petitioner. Since Section 16E involves deprivation of the petitioner of its property, very valuable assets admeasuring about 3,000 acres in extent, the action involved visitation of the petitioner with adverse civil consequences of great import. In any view of the matter, such action could be initiated only after considering the objections of the petitioner. It is also contended that Ext.P18 was not preceded by even a formal order or proceedings deciding to invoke the extraordinary power under Section 16E of the Act. For the above reasons, according to the counsel for the petitioner, Ext.P18 is liable to be set aside as being ultra virus and unsustainable. Therefore, he seeks the issue of proper directions or orders setting aside Ext.P18. 13. Though a number of reliefs have been claimed in the writ petition and though various contentions have been raised W.P.(C).NO.7219 OF 2008 10 questioning the constitutionality of the provisions of the Act, since the said contentions are not necessary to be considered for the disposal of the Writ Petition, I refrain from considering any of them. It is agreed by both sides that all other contentions in the Writ Petition could be left open for being agitated, if necessary, at a later point of time. Therefore, all the other contentions raised in the writ petition save those that are specifically considered hereunder, are left open. 14. I have heard the Counsel for the Central Government as well as Advocate K.M.Jamaludheen, the Standing Counsel for the Tea Board on behalf of respondents 1 and 2. A counter affidavit and an additional counter affidavit have been filed on behalf of the contesting respondents. According to the learned counsel for respondents 1 and 2, the averments in the writ petition clearly show that the petitioner is not in possession or in management of the tea estates. Particular reference is made to the averments in paragraphs 2 and 3 of the writ petition. Therefore, it is contended that the petitioner is not entitled to claim protection of any rights that are admittedly not available to it at present. Since the petitioner is neither in possession nor management of the tea estate it is contended that the petitioner is not in any way aggrieved by the taking over of the possession of the estate or by W.P.(C).NO.7219 OF 2008 11 entrustment of the management thereof to any other person. According to the counsel, in the present case an expert committee was appointed to study the conditions of the closed tea gardens in the State of Kerala. On the basis of the report submitted by the Expert Committee, most of the tea gardens in Kerala were revived and reopened by availing facilities that were extended to them by the Central Government as well as the Tea Board. The estates of the petitioner were not revived only due to the lack of interest and initiative on the part of the petitioner. It is further contended that discussions were held on many occasions at various levels for reopening the tea estates. The representatives of the petitioner took part in all such discussions. The State of Kerala exempted the estates of the petitioner from payment of Plantation Tax. The Kerala State Electricity Board also has given various concessions to the petitioner. The second respondent has extended the benefits of the rehabilitation package announced by the Central Government after receiving the report of the Expert Committee. Thereafter, discussions were held at various levels among the first and second respondents and the representatives of the petitioner. However, the discussions were not fruitful and therefore, the power under Section 16E of the Act was invoked and Ext.P18 was issued pursuant thereto. It is therefore, W.P.(C).NO.7219 OF 2008 12 contended that Ext.P18 has been issued after an elaborate consideration of all the issues involved and after finding that the petitioner was not interested in resuming the management of the estates. According to the counsel, the labourers were badly affected and their interests had to be protected. Therefore, invocation of the power under Section 16E of the Act was necessary and justified, in the circumstances. 15. The counsel for respondents 1 and 2 further submit that tea being a very valuable product and an important export commodity, it was necessary to ensure that its cultivation and production was suitably regulated. The cultivation of tea can be done only at particular altitudes, in certain climates and under certain specialised conditions which are not available in most parts of our country. The rising demand for tea and the lack of its production have serious economic overtones that have come to the notice of the Central Government and that was the reason why as early as in the year 1953, the Tea Act was enacted. The provisions of the Tea Act are intended to ensure that the tea industry is properly regulated and controlled so as to ensure that the economy benefits to the maximum extent from the activities in the said sector. It is pointed out that the tea plantations of the petitioner have not been functional for the past 8 years and W.P.(C).NO.7219 OF 2008 13 therefore, speedy action was required to the restore production in those estates. For the purpose, a proper management has to be installed first. It is contended that, Ext.P18 issued in exercise of the powers conferred by Section 16E of the Act is intended to achieve the above purpose. On the above ground, the counsel contends that Ext.P18 is perfectly warranted, in the circumstances, justified and legal. Therefore, he contends that the writ petition is liable to be dismissed. 16. I have heard the counsel on both sides. I have been taken through the record of the case and the dicta laid down by the Hon'ble Supreme Court in various decisions on the point. I have considered the rival contentions of the parties, anxiously. 17. The factual senario of this case is not seriously in dispute. The tea plantations of the petitioner have been remaining closed for the past about eight years. According to the counsel for the petitioner, the closure of the tea estates and the factories situate therein was a direct result of the high handed activities resorted to by the militant workmen of the estates. Therefore, the closure of the estates was not on account of any voluntary act on the part of the management. The tea plantations could not function due to circumstances beyond the control of the petitioner. Ext.P1(a) and P1(b) show that the petitioner had approached this W.P.(C).NO.7219 OF 2008 14 Court for Police protection by filing OP No.2430/2001. At various stages interim orders were issued by this Court for the purpose of ensuring that the plantations remained operational, as the agitation progressed. It is also seen that at various stages, interim orders had been issued by this Court to afford Police protection to the petitioner. However, in spite of the interim orders issued by this Court the fact remains that the plantations were not allowed to resume operations. At one stage as per Ext.P1(f) it has also been directed by a Division Bench of this Court that the petitioner could post its own security men, who would be provided Police protection, at the entry and exit gates of the estates. The above protection was given for the purpose of ensuring that ingress and egress to the petitioner's estates was maintained smoothly and without any obstruction. However, for various reasons, the orders failed to achieve the objective of ensuring that the tea estates remained operational. According to the petitioner, the workers indulged in theft of tea leaves, cutting and removal of timber trees and causing of damage to the machinery in the factories. In a situation where the