Case: Zippers Karamchari Union Vs. Union of Inida and Others

industry is valid. It is quite clear that YKK was allowed primarily as a result of Ministry of Textiles intervention in emphasizing the need to supply an internationally acceptable brand for the export oriented Ready Made Garment Industry. This objective could be better served if YKK is allowed entry with a 75% export commitment as is normally done in clearing cases of 100% foreign equity where relatively low technology is involved. YKK could supply to domestic readymade garment units against their advance licences on a deemed export basis. In no circumstances should we permit the decimation of thee small scale sector in a low technology/low priority industry. It is therefore, recommended, that permission to YKK be amended to include a 75% export commitment." * (23) Admittedly, YKK was granted permission to set up integrated plant for manufacture by the Government of India on 7th July, 1995. It is thus clear that the note of the Minister of State is dated 5th September, 1995 after the permission was granted to YKK. The question is what is the effect of such a note. Shri Om Prakash, Deputy Secretary to the Government of India. Ministry of Industry, in his affidavit has stated: "........... A copy of a note allegedly signed by the then Minister of State for Industry, dated 5-9-1995 has been filed from which it appears that Shri M.Arunachalam on 5-9-1995 as the then Minister of State for Industry had recommended that the permission granted to MS. YKK Corporation be amended to include a 75% export commitment. In this connection, I submit that the file in which this note is said to have been written by the then Minister of State for Industry is not available in the concerned office, i.e. Office of the Development Commissioner for Small Scale Industries. I am making this submission on the basis of communication No. 9(10)/95-Chem. dated 22-7-1997 from the office of the Development Commissioner for Small Scale Industries." * (24) He further stated that the Industry Minister is a cabinet rank minister and a note made by the Minister of State can only be his viewpoint/recommendation to the Industry Minister who has to take a final decision on such recommendation. The grant of approval to MS YKK Corporation with the approval of the Empowered committee on foreign investment under the Chairmanship of Finance Minister (Dr. Manmohan Singh), preceded the said note of the then Minister of State for Industry. The approval letter was issued on 7th July, 1995 and the note of the Minister of State was made on 5th September, 1995. This note was considered in the department of Industrial Policy and Promotion which is the department dealing with the foreign investment violation as well as matters relating to approval of foreign and domestic investment. The department of Industrial Policy and Promotion expressed the view that the approval granted to MS YKK Corporation is in consenance with the notification dated 25th July, 1991 incorporating the list of items reserved for small scale sector. According to the guidelines for the Foreign Investment Promotion Board issued through press note No. 3(1997 series) dated 17th July, 1997, no conditions specific to the letter of approval issued to a foreign investor would be changed or additional condition be imposed subsequent to the issue of letter of approval. The stand of the central government contained in the affidavit in reply is that it would neither be desirable nor legally permissible to prescribe 75% export obligation on YKK. The industry Minister on 13th March, 1997 having considered all aspects of the matters and the note of the Department of International Policy and Promotion has granted approval to YKK Corporation and did not impose any export obligation on YKK.(25) Mr. Vaidyanathan, Learned Addl. Solicitor General appearing for the Union of India urged that since the said note of the Minister of State dated 5th September, 1995 was after letter of approval issued to the YKK corporation on 7th July, 1995 and that theere is no material on the record to indicate that such a note was approved by the Minister of Industry. He further stated that it would not be possible to impose such a condition after a lapse of such a long period. He, therefore, urged that no relief whatsoever could be granted to the petitioner on the basis of the said note. (26) Mr. Nariman, Learned Senior Counsel urged that noting made by the officer/Minister of State on the government file cannot be used to alter the situation and, therefore, a letter of approval granted to YKK Corporation on 7th July, 1995 cannot be varied. In support of his submission, he drew our attention to the decision of this Court in State of Bihar etc. etc. Vs. Kripalu Shanker etc. etc. In our considered view, it would not be possible to direct the first respondent to impose the condition in tune with the note dated 5th September, 1995 made by the Minister of State. The Minister of the cabinet rank holding the protfolio of Industry has granted the approval to YKK Corporation on 7th July, 1995. It is a matter of government policy and in our opinion no sustainable ground was urged before us to hold that the approval granted to YKK was contrary to the government policy. The Court would not be justified in inter ering in such matters when it is satisfied that a grant of approval to YKK was neither irrational, non for any extraneous consideration. Incidentally, it may also be mentioned that the third and fourth respondent have commenced the production of zippers in their factory at Bawal, Haryana on 21st March, 1997 with the investment of 90 crores. Any change in the terms and conditions of the approval at this stage may lead to several legal complications.(27) For the foregoing conclusions, we are of the considered view that the petitioner has made out no case for grant of any of the reliefs claimed in this petition under Article 32 of the Constitution of India.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds](8) From the preamble of the notification itself, it is quite clear that in view of the recommendations made by the Advisory Committee constituted under sub-section 2-B of Section 29(B) of the Act, the Government of India dereserved the integrated plant manufacturing all components. The concept of integrated plant is well known in the business circle to mean that all components needed for the end product are manufactured under one roof(9) Mr. shanti Bhushan, learned Senior Counsel urged that under Section 29-B (2B) of the Act, the Central Government thought it fit to reserve Zip Fasteners (Metallic and Non-Metallic) industry under Item 38 of Schedule I for small scale industry. Any change in the policy of dereservation by notification would be illegal and ultra vires Section 29-B(2B) of the Act. In our considered view, the rigidity of such a construction to section 29-B(2B) would not promote the object and spirit underlying the said section. The industry engaged in manufacture of zip fasteners (metallic and non-metallic) still continues to be in the province of small scale industry. The Notification dated May 30, 1986 however, dereserved only an integrated plant(10) It is, therefore, quite clear that even today manufacturing of zip fastener (metallic and non-metallic) would continue to be a small scale industry. What has been dereserved in an integrated plant. It is taken out from the purview of small scale industry. This change was made on the basis of the recommendation of the Advisory Committee constituted under sub-section 2(B) of Section 29-B of the Act.(11) A very identical question was raised before the Bombay High Court in Appeal No. 220 of 1988 decided on February 28, 1991 by the Division Bench. The Report of the Advisory committee was also tendered before the said courtIn our considered view, there is no substance in this submission because the integrated plant is a class by itself and totally different from the small scale industry which is engaged in manufacturing zip fasteners metallic and non-metallic. The submission raised on behalf of the petitioner must, therefore, fail(15) There is also another aspect which needs to be considered in the light of the expanding market of readymade garments, leather garments and other articles where zip fasteners metallic and non-metallic are used. Since 1983, the export of these goods gaining a good support in the international market and naturally if India wants to compete with other countries engaged in the said business will have to improve upon the quality of its goods. In 1983, the Directorate General of technical Development, Government of India and appointed a study team and the said team was entrusted with the work of finding out asto (1) whether small scale units manufacturing zip fasteners (metallic and non-metallic) have necessary machinery for the manufacture of zip colla/teeth or they are simply importing zip chain and components and assembling the same into finished zips; and (2) the quality of indigenous zips vis-a-vis the imported ones. The quality of indigenous zip fasteners would be an important factor. The study team during its survey found that zip fasteners were smuggled into India on large scale and they were being used by the manufacturers of readymade garments and leather garments and other allied articles. The Government of India accepted the report of the said study team and with a view to have quality zip fasteners (metallic and non-metallic) and in order to compete with the would market and also to generate employment in the field of readymade garments and leather industry, it thought fit to dereserve an integrated plant manufacturing zip fasteners. The object seems to be that all components of zip fasteners if manufactured in an integrated plant, the same will have a quality control which will compete with the world market in that behalf. It is in these circumstances we are of the considered opinion that the Notification dated May 30, 1986 is neither illegal, irrational nor discriminatory(17) Relying upon this policy statement, Mr. Shanti Bhushan urged that government policy is to promote 51% equity share holding by the foreign companies/nationals that too in a field where it would provide access to high technology and world markets. According to learned counsel, there is nothing on the record to indicate that the government while granting permission to YKK to set up an integrated plant for manufacturing zip fasteners (metallic and non-metallic) had considered that an integrated plant would be such which "would provide access to high technology and world markets". The integrated plant for manufacture of zip fasteners (metallic and non-metallic) does not involve an access to high technology and would markets. If this be so, Counsel urged that the above policy statement on Industrial Policy. He however, conceded that expression and used in Clause V "............. access to high technology and world markets" could be read as or yet the approval granted to YKK to start integrated plant for manufacture of zip fasteners (metallic and non-metallic) would be totally opposed to the Industrial Policy of Government of India. This submission again does not appeal to us. Because it has come on the record that YKK has acquired a world wide reputation in the manufacture of zip fasteners (metallic and non-metallic). Mr. Hiroshi Mitani, Managing Director of 4ht respondent in his affidavit dated July 31, 1997 has highlighted the salient features of YKK corporation in the field of manufacturing zip fasteners all over the world. It is stated "YKK have the would richest variety of items which are required by customers. YKK Zippers are produced by using high technology. The chart prepared with the nucleus technology along with new technology is annexed as Annexure "B"(18) After giving our careful thought to the pleadings of the parties before us, we are of the considered opinion that having regard to the quality and worldwise reputation carried by YKK zip fasteners, it would be reasonable to include that it would provide access to the world market which is indicated in the statement on Industrial Policy in paragraph V sub clause V quoted hereinaboveHaving considered the pleadings of the parties before us we are of the firm opinion that having regard to the quality and worldwide reputation earned by YKK zip fasteners, it would not be out of place to mention that it would provide access to the world market which is indicated in the Statement on Industrial Policy in paragraph 39 Clause V quoted hereinabove. Consequently we hold that approval granted to YKK is neither illegal non contrary to the Industrial Policy, 1991(20) Coming to the other limb of the argument of Mr. Shanti Bhushan Learned Senior Counsel that many workers of the present petitioner association would be rendered jobless has also no force. We are told that as of today, there are as many as 17 Indian companies which have been granted licences and are outside the purview of small scale units. This statement appearing in the affidavit of Shri Hiroshi Metani in paragraph 12 is contested on behalf of the petitioners contending that many of these Indian companies have been rendered non-functional because of variety of reasons. But, however, the fact remains that some of the Indian companies have started integrated plants for manufacture of metallic and non-metallic zip fasteners, Whether they are successful in their attempt Orr not is really not a devisive factor. In this behalf, it is really not a decisive factor. In this behalf, it is also necessary to highlight the ratio between the production and requirement of zip fasteners (metallic and non-metallic) in India. In paragraph 7, Shri Hiroshi Mitani has stated that in 1997, the production of YKK was 2.2 corer pieces. The said figure was calculated on the basis that Indian Market size is about 100 crore pieces. Therefore, YKK production was 2-3% of the Indian Market in the year 1997. In 1998 onwards the production of YKK is going to be 9.2 crore pieces i.e. 9-10% of the local market. There is no effective denial to this statement in the rejoinder filed on behalf of the petitioners and if this fact has any bearing upon the factual state of requirement, it is quite clear that yet a sizeable market is available to the Indian manufacturers and the apprehension entertained by the petitioner appears to us a mere figment of imagination(23) Admittedly, YKK was granted permission to set up integrated plant for manufacture by the Government of India on 7th July, 1995. It is thus clear that the note of the Minister of State is dated 5th September, 1995 after the permission was granted to YKK. The question is what is the effect of such a note. Shri Om Prakash, Deputy Secretary to the Government of IndiaIn our considered view, it would not be possible to direct the first respondent to impose the condition in tune with the note dated 5th September, 1995 made by the Minister of State. The Minister of the cabinet rank holding the protfolio of Industry has granted the approval to YKK Corporation on 7th July, 1995. It is a matter of government policy and in our opinion no sustainable ground was urged before us to hold that the approval granted to YKK was contrary to the government policy. The Court would not be justified in inter ering in such matters when it is satisfied that a grant of approval to YKK was neither irrational, non for any extraneous consideration. Incidentally, it may also be mentioned that the third and fourth respondent have commenced the production of zippers in their factory at Bawal, Haryana on 21st March, 1997 with the investment of 90 crores. Any change in the terms and conditions of the approval at this stage may lead to several legal complications.(27) For the foregoing conclusions, we are of the considered view that the petitioner has made out no case for grant of any of the reliefs claimed in this petition under Article 32 of the Constitution of India.