Case: Steel Authority Of India Ltd Vs. Shri Ambica Mills Ltd. &amp; Ors

2. The first respondent-Company is engaged in the manufacture of steel tubes through its Ambica Tubes Division. For the purpose of manufacture of steel tubes, hot rolled strips in coils are required as raw material. These hot rolled strips were being supplied at the relevant time to the manufacturers of steel tubes like Ambica Tubes (hereinafter referred to as "the importer") through the appellant subject to certain conditions. The manufacturers who are given raw materials must possess the import licence and have to carry out certain export obligations. The obligations concerning this for the period in question, namely, April 1983 to March 1984 were given in the import and export policy for that period. Previously a public notice in respect of the Scheme for supply of raw material by Steel Authority of India Ltd. (hereinafter called "SAIL") against advance import licencewas issued on 11-12-1982. For the period 1983-84, it was announced, the Scheme published on 11-12-1982 would be continued. According to that, the importer becomes eligible for supply of goods on compliance of the conditions fixed in the Scheme in particular, the conditions of producing advance licences, duty exemption entitlement certificate, legal undertaking/execution of export bond and furnishing of irrevocable letter of credit. The appellant as an indigenous supplier under the aforesaid import and export policy for 1983-84 made an announcement of the prices at which the raw material will be supplied. That announcement was published in The Economic Times on 10-6-1983 under the caption "Scheme for Supply of Certain Categories of Indigenously Produced Steel Materials at Competitive Prices against Valid ImportPursuant to the abovesaid announcement, the importer submitted licences requiring supply of about 3768 tonnes of hot rolled strips in coils. It was found that the licence submitted by the importer (Ambica Tubes) did not mention that it was an advance import licence nor was it accompanied by Duty Exemption Entitlement Certificate and the bond. In addition to the submission of licences, the said Ambica Tubes however submitted Letter of Credit dated 19-8-1983 on the same date, namely, 20-8-1983. In the Letter of Credit also there were certain infirmities and when the same was pointed out, it was rectified and submitted beforeOn receipt of the licence and the Letter of Credit, the appellant by a telex message dated 23-8-1983 pointed out the defects in the licence/release order and also stated that in view of the defects, the appellant is not taking any action on the Letter of Credit for theIn reply to the telex message, Ambica Tubes sent a letter on the same date (23-8-1983) informing the appellant that the original release order in duplicate and the Duty Exemption Entitlement Certificate booklet had been submitted to the Joint Controller at Ahmedabad and would be sent to the Bombay SAIL office on receipt of the same. The relevant documents after carrying out the corrections were factually furnished to the appellant by Ambica Tubes only on 26-8-1983. In the meanwhile the appellant enhanced/revised the price of their supplies (steel materials) from Rs. 2460 to 2750 per MT on and from 25-8-1983. Since the relevant documents after carrying out the corrections with necessary enclosures were received by the appellant only on 26-8-1983, the importer (Ambica Tubes) was required to pay the price for the release of steel materials at the revised rate, namely, Rs. 2750 perAmbica Tubes made representations that they having submitted Letter of Credit and the necessary documents, though defective, well before 25-8-1983, the revised charges should not have been applied. The appellant gave a detailed reply to the representation of the importer. The importer moved the Gujarat High Court on 18-6-1984 for quashing the announcement made by SAIL revising the price and for direction that the supplies must have been made at the pre-revised price and for consequential refund of difference between the pre-revised and revised prices. The appellant resisted the writ petition by filing a detailed reply to the affidavit filed in support of the writThe High Court proceeding on a wrong premise, namely, that SAIL (appellant) was a department of the Union of India but its administration is run separately in the interest of efficiency; held that the importer (Ambica Tubes) was not responsible for the defects painted out in the licence/release order and it was the office of Joint Chief Controller of Imports and Exports alone responsible for the defects for which the importer should not be punished. In other words, the High Court was of the view that the licence though defective must be deemed to have been presented on 20-8-1983 long before the revised price was announced. Therefore, the appellant was not entitled to charge for the supply of raw materials at the revised rate. The High Court also directed the refund of the difference between the pre-revised and the revised rates. The High Court further observed that the action of the appellant "in not registering the petitioners Indent No. 7 of 1983 dated 19-8-1983 latest on 24-8-1983 was an action bad at law, arbitrary andWe are not concerned with the other relief granted against Union of India in thisThough the main relief in the writ petition was the challenge to the right of SAIL to fix the price from time to time, the High Court left open that issue without deciding the same. The entire reasoning of the High Court is found in paragraph 16 of its judgment which reads asWe have analysed the facts above very clearly and held that the petitioners had done whatever was required to be done by them. They had procured the release order in time. One hand of the Government acting in the Joint Controllers office committed some blunders because of the lackadaisical fashion in which the things are handled there. It forgot to mention about the Duty Exemption Entitlement Certificate. It forgot to mention that it is an advance release order, though the covering letter did mention it. The petitioners no doubt got these things rectified, but because of communication difficulties, there was a delay of a day or two. How can that fortuitous circumstance be exploited by SAIL by seeking a pound of flesh ? They should have seen reason and should not have chastised this petitioner-Company for the faults of the employees of the very Union of India, their masters. Such amendments required to be made later on because of the negligence and carelessness of the employees of the Union of India are to be legitimately treated as having been effected retroactively. This is the only reasonable and rational way of looking at the things. Negligence of one branch of the Union of India cannot be capitalized by another branch of the very Union of India. This action is per se arbitrary, capricious and whimsical. Such an illegal action was taken by the Ahmedabad office or Bombay office. Another regional office of this very SAIL say at Madras or Bangalore would not do such things and citizens like the petitioners would be favourably treated there. In this sense of the term, it could he said that possibly inconsistent stand, and therefore, discriminatory stand, can be there in the action of Respondent 1. On this short ground, the petition of the petitioners can be allowed, because we hold that this executive power has been exercised by the SAIL absolutely unreasonably and capriciously. There was not an iota of justification for them to sit tight on that date 24-8-1983 and all that was required to be done was done by these petitioners. If such things are allowed to go, it would set a very bad example in the working of the rule of law in practical and final analysis. It is because of this necessity of striking out the action of the public authority, namely, the SAIL, that we are inclined to entertain this petition and decide it and if for that purpose we have to strike a departure from the normal rule of not entertaining even the money claims, we would very willingly do so, so that such actions would not be repeated in future. We, however, add that here essentially the challenge was to the right of fixation of price at any capricious time and that was the subject-matter of the petition, but we are not required to go into it and, therefore, we do not go into it. Otherwise, much could be said in favour of the petitioners when they contend that the prices are required to be fixed quarterly. The term quarterly would mean every three months and the SAIL has fixed the price on 11-12-1982, 14-3-1983, 7-6-1983, 25-3-1983 and had we been required to decide this question, we would have in all probability interpreted clause 6 read with clause 10 to mean that the prices are to be fixed for the period of three months and they are to remain operative for that period, but we are not to be understood to have expressed any final opinion on that point because the ultimate relief of the petitioners can be granted without deciding the point.Aggrieved by the judgment of the High Court, the present appeal is filed by the SAIL

Court's reasoning:
16. Coming to the merits of the case, we accept the contention of the learned counsel for the appellant that the High Court went wrong in holding that SAIL was a department of the Union of India.In Western Coalfields case this Court held as follows : (SCC p. 136, 7 parais contended by the Attorney General that since the appellant Companies are wholly owned by the Government of India, the lands and buildings owned by the Companies cannot be subjected to property tax. The short answer to this contention is that even though the entire share capital of the appellant Companies has been subscribed by the Government of India, it cannot be predicated that the Companies themselves are owned by the Government of India. The Companies which are incorporated under the Companies Act have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings are vested in and owned by the Companies, the Government of India only owns the share capital."In view of the above decisions of this Court, we have no hesitation to hold that the High Court erred in thinking that SAIL was a department of the Union of India and most of the reasons given in the judgment are based on this wrongare afraid, we cannot accept the above reasoning of the High Court as we have pointed out that the basic error committed by the High Court was in assuming that the appellant was a department of the Union of India. We have already noticed that there are number of judgments of this Court taking the view that a company though fully owned by the Union of India when incorporated takes its own entity/identity and cannot be considered as department of the Union of India. Further, it is seen from the records that the importer in this case is not a new entrant to plead ignorance though that may not be an excuse. He has presented applications for registration before and after the application in question and, therefore, it must be taken that the importer knew fully well about the requirements for registering the indent. It is also relevant to note that the appellant on receipt of the application for registration expressly and in writing replied not only pointing out the defects but also stated that they are not taking any action on the Letter of Credit enclosed along with the licence. It is also an admitted fact that the indent was registered only on 26-8-1983 when all the relevant documents after curing the defects was presented on that date. Under these circumstances and in the light of the Scheme published by the appellant, we hold that the importer (Ambica Tubes) cannot claim as of right that its order must be deemed to have been registered for supply of raw materials on 20-8-1983 when the documents with all defects wereWe cannot agree with the contention of Mr. Parekh that mere presentation of an irrevocable Letter of Credit covering the value of requirement of raw materials is sufficient for registering the indent. We have already set out para 2.3. Para 2.3 of the Scheme announced an 10-6-1983 decides the price to be paid for theproduction of Letter of Credit will not be sufficient to determine the price ruling on the date. It must be given by an import licence-holder eligible to get the supplies under the Scheme. In this case, we have seen that the importer will not fall under the category of "import licence-holder eligible to get supplies under the Scheme" as on the date when the Letter of Credit was presented, the licence/release order was defective. Therefore, we cannot agree with Mr. Parekh that the importer having produced the Letter of Credit well before 25-8-1983, the price payable for the supplies must be a pre-revised one