Case: Khet Singh Vs. Union Of India

Captive Power Plant-II and steam generating capacity of 660 MThour at the Bokaro Steel Plant.(b) Oxygen Plant-2 of Bhilai Steel Plant.(c) Salem Steel Plant (SSP), Salem.(d) Ally Steel Plant [ASP, Durgapur.(e) Visvesvaraya Iron and Steel Limited (VISL), Bhadrawati.(f) Fertilizer Plant at Rourkela.5. Conversion of IISCO into a joint venture with SAIL holding minority shareholding.The Government noted that this is one of the largest restructuring proposals considered by it involving an amount of over Rs. 8000 crore and financial restructuring alone was not a long term solution, Government has directed that Ministry of Steel sign on MOU with SAIL for implementation of a business restructuring plan with detailed milestones it has been further decided that a COMMITTEE OF Secretaries must examine and review at appropriate intervals the business restructuring plan with reference o detailed milestones and submit a progress report on a six-month basis to the Cabinet Committee on Economic Affairs (CCEA)." 7. As seen above, SDF was created by notification issued under clause 17(B) of the Control Order. Main steel plants form the primary units of the Joint Plant committee. It were only the member steel plants or the main steel plants who were subjected to add an element of their ex-works-price and remit the same towards the SDF. SAIL and TISCO were the member steel plants. SAIL was having four plants at Bhilai, Bokaro, Durgapur and Rourkela. India Iron and Steel Company Ltd. subsequently got merged with SAIL. By Notification dated January 16, 1992 the Central Government withdrew the price restrictions under the Control Order and thereafter by Notification dated April 21, 1994 contributions by the member steel producers towards the SDF was also discontinued. It is the Central government, which Exercises control over SDF though there is no backing of any statutory provision for creation of the SDF. The primary object of SDF was to enable the main steel producers for modernisation, research and development with the object of ensuring the production of iron and steel in the desired categories and grades by the main steel plants. Other steel producers who were known as secondary producers were not members of the Joint Plant committee. They were not subjected to add an element of ex-works price of steel but could add any element of their choice and not to make remittance of the same to the SDF. It does not stand to reason as to how these secondary producers are entitled to claim any amount from the corpus of SDF or to get some directions issued respecting the use of SDF. The petitioner started production only in April 1998 when four years prior to that remittance to SDF had been discontinued. It is not disputed that the petitioner was not a member of the Joint Plant Committee and did not remit any amount towards the corpus of SDF. The question is if in these circumstances the petitioner could advance a claim or exercise a right on the SDF in any manner.8. It were the members of the Joint Plant Committee who were made bound to add and element of ex-works price and to remit that amount for the constitution of SDF. It has been stated by the first respondent, Union of India, through the affidavit filed by the fourth respondent, Joint Plant Committee, that funds out of SDF were disbursed to the members Steel Plants by the SDF Managing Committee as per directions issued by the Central Government from time to time. It is then submitted that since early 1990s there has been a general recession in the steel industry. SAIL had approached the Central Government for its financial and business restructuring. SAIL had taken over Indian Iron and Steel Company Ltd., a sick company in the year 1978. Indian Iron and Steel Company Ltd. is wholly owned subsidiary of SAIL. The proposal give by SAIL to the Central Government contained various components and measures including waiver of loans from the SDF made over the members Steel Plants which were under SAIL. It will be noticed that the amount of SDF was not in fact remitted to the Central Government but was shown as credit to the Central Government in the books of SAIL and its members steel plants. This proposal of SAIL, it would appear, has since been accepted by the Central Government by its letter dated February 18, 2000 which we have reproduced above.9. While there was price control under the Control Order during the period 1978-1994 when the remittance to SDF were made by main steel producers, the petitioner was nowhere in the picture and was not subjected to any price control like the main steel producers. The petitioner and other steel producers were free to produce and sell the iron and steel products in the market on the prevailing prices. It has been pointed that price fixed by the petitioner of its products was much higher than the control price which included elements of SDF. While the collection and remittance to SDF has been discontinued w.e.f April 1994, the petitioner made its claim for the first time in 1999 which would appear to be rather incongruous. It is submitted that the claim made by the petitioner is not bona fide and writ petition has been filed with ulterior motives, which are not difficult to fathom. SAIL had stressed immediate need for restructing and modernizing all the main steel plants. Due to recession, SAIL has been passing through severe financial position and has to suffer a loss of Rs. 1574 crores in 1998-99. It has further to suffer burden of interest to the tune of Rs. 2017 crores per annum for modernisation. In the aforesaid circumstances, the petitioner does not have any right to claim any relief in the writ petition pertaining to utilisation of SDF. It is quite apparent that from the very nature of the creation of SDF, manner of remittance to SDF and purpose of its utilisation, it is a fund created ultimately for the utilisation by the member steel producers only. 10.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. As seen above, SDF was created by notification issued under clause 17(B) of the Control Order. Main steel plants form the primary units of the Joint Plant committee. It were only the member steel plants or the main steel plants who were subjected to add an element of theirand remit the same towards the SDF. SAIL and TISCO were the member steel plants. SAIL was having four plants at Bhilai, Bokaro, Durgapur and Rourkela. India Iron and Steel Company Ltd. subsequently got merged with SAIL. By Notification dated January 16, 1992 the Central Government withdrew the price restrictions under the Control Order and thereafter by Notification dated April 21, 1994 contributions by the member steel producers towards the SDF was also discontinued. It is the Central government, which Exercises control over SDF though there is no backing of any statutory provision for creation of the SDF. The primary object of SDF was to enable the main steel producers for modernisation, research and development with the object of ensuring the production of iron and steel in the desired categories and grades by the main steel plants. Other steel producers who were known as secondary producers were not members of the Joint Plant committee. They were not subjected to add an element ofprice of steel but could add any element of their choice and not to make remittance of the same to the SDF. It does not stand to reason as to how these secondary producers are entitled to claim any amount from the corpus of SDF or to get some directions issued respecting the use of SDF. The petitioner started production only in April 1998 when four years prior to that remittance to SDF had been discontinued. It is not disputed that the petitioner was not a member of the Joint Plant Committee and did not remit any amount towards the corpus of SDF. The question is if in these circumstances the petitioner could advance a claim or exercise a right on the SDF in any manner.8. It were the members of the Joint Plant Committee who were made bound to add and element ofprice and to remit that amount for the constitution of SDF. It has been stated by the first respondent, Union of India, through the affidavit filed by the fourth respondent, Joint Plant Committee, that funds out of SDF were disbursed to the members Steel Plants by the SDF Managing Committee as per directions issued by the Central Government from time to time. It is then submitted that since early 1990s there has been a general recession in the steel industry. SAIL had approached the Central Government for its financial and business restructuring. SAIL had taken over Indian Iron and Steel Company Ltd., a sick company in the year 1978. Indian Iron and Steel Company Ltd. is wholly owned subsidiary of SAIL. The proposal give by SAIL to the Central Government contained various components and measures including waiver of loans from the SDF made over the members Steel Plants which were under SAIL. It will be noticed that the amount of SDF was not in fact remitted to the Central Government but was shown as credit to the Central Government in the books of SAIL and its members steel plants. This proposal of SAIL, it would appear, has since been accepted by the Central Government by its letter dated February 18, 2000 which we have reproduced above.9. While there was price control under the Control Order during the periodwhen the remittance to SDF were made by main steel producers, the petitioner was nowhere in the picture and was not subjected to any price control like the main steel producers. The petitioner and other steel producers were free to produce and sell the iron and steel products in the market on the prevailing prices. It has been pointed that price fixed by the petitioner of its products was much higher than the control price which included elements of SDF. While the collection and remittance to SDF has been discontinued w.e.f April 1994, the petitioner made its claim for the first time in 1999 which would appear to be rather incongruous. It is submitted that the claim made by the petitioner is not bona fide and writ petition has been filed with ulterior motives, which are not difficult to fathom. SAIL had stressed immediate need for restructing and modernizing all the main steel plants. Due to recession, SAIL has been passing through severe financial position and has to suffer a loss of Rs. 1574 crores inIt has further to suffer burden of interest to the tune of Rs. 2017 crores per annum for modernisation. In the aforesaid circumstances, the petitioner does not have any right to claim any relief in the writ petition pertaining to utilisation of SDF. It is quite apparent that from the very nature of the creation of SDF, manner of remittance to SDF and purpose of its utilisation, it is a fund created ultimately for the utilisation by the member steel producers only.