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Sunday, January 26, 2014

Art.21 of Constitution Section 170 of the Uttar Pradesh Revenue Code, 2006 Section 17 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 - Direction by High court to arrest the Director or Occupier of the company till realization of due as certified by the commissioner as per Act - Division Bench declined to grant stay - New plea in Apex court that the Director is Senior citizen of aged 65 , liable from exemption under sec.170 of Revenue Code and already properties of company were attached and as such with out ascertaining reasons , the arrest is against Art.21 of Constitution - the Apex court rejected on 3 Grounds 1. New plea .2. No liquidation mere attachment is not enough and 3. Promised to pay the due amount to the farmers several times declined to stay the arrest order of director and confirmed the orders of D.B. High court = Anand Agro Chem India Ltd. .. Appellant(s) -vs- Suresh Chandra & Ors. .. Respondent(s) = 2014 ( January - Vol - 1) Judis.nic.in/ S.C./ file name =41176

Art.21 of Constitution Section 170 of the Uttar Pradesh Revenue  Code,  2006 Section 17 of the U.P. Sugarcane (Regulation of Supply  and  Purchase) Act, 1953 - Direction by High court to arrest the Director or Occupier of the company till realization of due as certified by the commissioner as per Act - Division Bench declined to grant stay - New plea in Apex court that the Director is Senior citizen of aged 65 , liable from exemption under sec.170 of Revenue Code and already properties of company were attached and as  such with out ascertaining reasons , the arrest is against Art.21 of Constitution - the Apex court rejected on 3 Grounds
1. New plea .2. No liquidation mere attachment is not enough and 3. Promised to pay the due amount to the farmers several timesdeclined to stay the arrest order of director and confirmed the orders of D.B. High court =
 the
property of the sugar mill has already been attached  to  recover  the  dues
and the sale notice has been  issued  and  unless  there  is  proof  of  the
minimal fairness of willful failure to pay in  spite  of  sufficient  means,
the arrest cannot be ordered and it would be violative of Article 21 of  the
Constitution of India and placed reliance on the decision of this  Court  in
Jolly George Varghese and Another  vs.  The Bank  of  Cochin  (1980)  2  SCC
360.  He further contended that 
in any event the Director, whom he -representing, is a senior citizen above 65 years of age and hence he  cannot be arrested as  a  defaulter  in  payment  of  arrear  of  land  revenue  as
stipulated in Section 171 of the Uttar Pradesh Revenue Code, 2006.

Section 17 of the U.P. Sugarcane (Regulation of Supply  and  Purchase)
Act, 1953 stipulates that 
the occupier of the sugar -

factory shall make speedy payment  of  cane   price  and  in  the  event  of
default,  sub-Section  (4)  stipulates  that  the  Cane  Commissioner  shall
forward to the Collector a certificate specifying the amount of  arrears  of
the cane price due from the occupier and  the  Collector  shall  proceed  to
recover the said amount from such occupier as if it were an arrear  of  land
revenue. 
  Section 170 of the Uttar Pradesh Revenue  Code,  2006  prescribes
the process  for  recovery  of  arrears  of  land  revenue,  wherein  it  is
mentioned that it may be recovered  by  anyone  or  more  of  the  processes
mentioned therein which includes by arrest and detention  of  the  defaulter
and attachment and sale of his movable property.
whether  or
not one of the Directors who is said to be 65 years old  could  be  arrested
as a defaulter and committed to  prison  under  Section  171  of  the  Uttar
Pradesh Revenue Code, 2006, could and indeed ought to have  been  raised  by
the appellants either before the High Court or before this Court  in  appeal
preferred against the order passed by the High  Court.  
No  such  contention
was, however, urged at that stage.

Directors -

had assured the Commissioner that they would pay Rs.160 lacs  towards  price
of sugarcane within two weeks besides an amount of Rs.700 lacs  to  be  paid
in installments, the first of which installment was to be paid on 15th  May,
2013. No such payment was, however, made by the company and  its  Directors.
Thirdly, because there is  nothing  before  us  to  suggest  that  the
company and its Directors are incapable of  raising  funds  for  liquidating
the outstanding liability  towards  dues  payable  to  the  farmers. 
 Simply
because the sugar factory has been attached, is no reason for us  to  assume
that the company or its Directors are  in  any  financial  distress  thereby
disabling them from making the payments  recoverable  from  them.  The  fact
situation in the -present case is, therefore, completely different from that in  Jolly  George
Varghese case (supra) relied upon by Mr. Ram Jethmalani.

12.   In the light of the above, we see  no  compelling  reason  for  us  to
interfere with the order passed  by  the  High  Court  in  exercise  of  our
extraordinary jurisdiction. We regret to say that the  amounts  due  to  the
farmers towards price of the sugarcane and incidentals remains  to  be  paid
to them for several years in the past thereby  accumulating  huge  liability
against the company.  That  is  not  a  happy  situation  nor  can  repeated
invocation of the process of law by the appellant be a remedy for it.

13.   The appeal is devoid of merit and is accordingly dismissed.


2014 ( January - Vol - 1) Judis.nic.in/ S.C./ file name  =41176

T.S. THAKUR, C. NAGAPPAN

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                   CIVIL APPEAL NO.   897         OF 2014
      [Arising out of Special Leave Petition (Civil) No.30515 of 2013]



Anand Agro Chem India Ltd.             ..               Appellant(s)



      -vs-



Suresh Chandra & Ors.                  ..             Respondent(s)



                               J U D G M E N T



C. NAGAPPAN, J.



1.    Leave granted.

2.    This appeal is directed against  the  interim  Order  dated  31.7.2013
passed by the High  Court  of  Judicature  at  Allahabad  in  Writ  Petition
no.14936 of 2013 whereby the Division  Bench  rejected  the  prayer  of  the
appellant to  stay  the  arrest  of  the  Directors  and  occupiers  of  the
appellant company.

-

3.    The facts in nutshell are as follows.
Respondents  1  to  3  supplied
sugarcane to the sugar mill of the appellant in the year 2007-08, for  which
the appellant has not paid the price in  spite  of  several  representations
made by the respondents 1 to 3 herein.
This  led  to  the  filing  of  Writ
Petition in Writ-C no.14936 of 2013  by  respondents  1  to  3  seeking  for
issuance of the Writ of Mandamus directing the appellant herein  to  release
the sugarcane price to them.
The Division Bench of  the  High  Court  after
hearing both  sides  directed  the  District  Magistrate,  Hathras  to  take
immediate action against the Directors and occupiers of the  appellant-sugar
mill against whom several orders have been passed under the  U.P.  Sugarcane
(Regulation and Supply) Act, 1913 and it further observed in the order  that
the District Magistrate may in exercise of his powers cause  arrest  of  the
Directors and occupiers of the sugar mill to recover the  dues  and  in  the
event of such arrest, they will not be released until  they  have  paid  the
entire amount due against them.
The appellant-sugar mill aggrieved  by  the
said order preferred a Special Leave Petition in  SLP(C)  no.16633  of  2013
and this Court by order dated 1.5.2013 dismissed the petition  by  observing
thus :

           -
                   “We have heard Shri Sanjay Parikh, learned  counsel  for
           the appellant and perused the record.


                 A reading of the order  under  challenge  shows  that  the
           appellant has not paid Rs.16.12 crores to the  farmers  for  the
           crushing year 2005-06 to 2009-10, which includes  the  price  of
           sugarcane, the cane development commission and the interest.  It
           is also borne  out  from  the  record  that  vide  letter  dated
           24.11.2012, the Director of the appellant had assured  the  Cane
           Commissioner that the company will pay Rs.160 lacs as the  price
           of the cane within two weeks and an amount  of  Rs.700  lacs  in
           installments, the first of which will be paid on 15.01.2013, but
           the company did not fulfill its assurance.


                 In the above backdrop, it is  not  possible  to  find  any
           fault with the direction given by the Division Bench of the High
           Court and there is absolutely no justification for this  Court’s
           interference with the impugned order.


                 The special leave petition is accordingly  dismissed.……..”




 Thereafter the appellant-sugar mill filed an  application  in  the  pending
Writ Petition in the High Court of Judicature at Allahabad seeking for  stay
of arrest of the Directors pursuant to the order  dated  26.4.2013  and  the
Division Bench of the High Court after -

hearing both sides and after referring to the earlier orders  held  that  no
modification/vacation  of  the  order  dated  26.4.2013  is  required   and,
accordingly, rejected the prayer of stay of arrest.   Challenging  the  said
order the appellant-sugar mill has preferred the present appeal.

4.    We have heard Mr.  Ram  Jethmalani   and  Dr.  Rajeev  Dhawan,  Senior
Advocates appearing on behalf of the appellant,  Ms.  Shobha  Dixit,  Senior
Advocate appearing on behalf of  the  respondents  and  Mr.  Prabodh  Kumar,
Advocate appearing on behalf of the intervenor.

5.    The contention of Mr. Ram Jethmalani,  Senior  Advocate  is  that  the
property of the sugar mill has already been attached  to  recover  the  dues
and the sale notice has been  issued  and  unless  there  is  proof  of  the
minimal fairness of willful failure to pay in  spite  of  sufficient  means,
the arrest cannot be ordered and it would be violative of Article 21 of  the
Constitution of India and placed reliance on the decision of this  Court  in
Jolly George Varghese and Another  vs.  The Bank  of  Cochin  (1980)  2  SCC
360.  He further contended that
in any event the Director, whom he -representing, is a senior citizen above 65 years of age and hence he  cannot be arrested as  a  defaulter  in  payment  of  arrear  of  land  revenue  as
stipulated in Section 171 of the Uttar Pradesh Revenue Code, 2006.

6.    When the matter was listed before this Court on 7.10.2013, Dr.  Rajeev
Dhawan, learned Senior Advocate appearing for the appellant  said  that  the
Directors of the mill undertake to pay  Rs.4.55  crores  representing  fifty
per cent of the total amount to the concerned authority within a  period  of
six weeks and this Court stayed the arrest subject  to  fulfillment  of  the
condition.  Again the  matter  was  listed  on  19.11.2013  and  Dr.  Rajeev
Dhawan, learned senior counsel said that by  mistake  he  made  a  statement
about the total amount payable by the writ petitioner but the amount is  far
less than that and requested  for  time  to  file  additional  affidavit  on
behalf of the appellant.  In the next two hearings the matter was  adjourned
on the request made by the appellant and thereafter the matter was heard.

7.    Section 17 of the U.P. Sugarcane (Regulation of Supply  and  Purchase)
Act, 1953 stipulates that 
the occupier of the sugar -

factory shall make speedy payment  of  cane   price  and  in  the  event  of
default,  sub-Section  (4)  stipulates  that  the  Cane  Commissioner  shall
forward to the Collector a certificate specifying the amount of  arrears  of
the cane price due from the occupier and  the  Collector  shall  proceed  to
recover the said amount from such occupier as if it were an arrear  of  land
revenue. 
  Section 170 of the Uttar Pradesh Revenue  Code,  2006  prescribes
the process  for  recovery  of  arrears  of  land  revenue,  wherein  it  is
mentioned that it may be recovered  by  anyone  or  more  of  the  processes
mentioned therein which includes by arrest and detention  of  the  defaulter
and attachment and sale of his movable property.

8.    The Division Bench of the Allahabad High  Court  in  its  order  dated
26.4.2013  has  directed  the  District  Magistrate,  Hathras,  namely,  the
Collector to take immediate action against the Directors  and  occupiers  of
the appellant-sugar mill against whom several orders have been passed  under
the U.P. Sugarcane (Regulation and Supply) Act,  1913  and  this  Court  has
confirmed the said order.  The Division Bench  in  the  present  application
considered the plea of the - appellant for the stay of arrest and after hearing both sides  rejected  the
said plea by the impugned order and we find no error in it.

9.    We say so firstly because order dated 26th April, 2013 passed  by  the
Division  Bench  of  the  Allahabad  High  Court  directing   the   District
Magistrate to take immediate action against the Directors of the sugar  mill
has already been affirmed by this Court in appeal.  The question
whether  or
not one of the Directors who is said to be 65 years old  could  be  arrested
as a defaulter and committed to  prison  under  Section  171  of  the  Uttar
Pradesh Revenue Code, 2006, could and indeed ought to have  been  raised  by
the appellants either before the High Court or before this Court  in  appeal
preferred against the order passed by the High  Court.  
No  such  contention
was, however, urged at that stage.

10.   Secondly, because the company and its Directors have  not  made  their
promises good by paying even the amounts which they had offered  to  pay.  A
plain reading of order dated 1st May, 2013 passed by this Court in  SLP  (C)
No.16633 of 2013 extracted  above  would  show  that  the  company  and  its
Directors -

had assured the Commissioner that they would pay Rs.160 lacs  towards  price
of sugarcane within two weeks besides an amount of Rs.700 lacs  to  be  paid
in installments, the first of which installment was to be paid on 15th  May,
2013. No such payment was, however, made by the company and  its  Directors.
That apart, the statement made at the  bar  on  7th  October,  2013  by  Dr.
Rajeev Dhawan, learned senior counsel, for the appellant that the  Directors
would pay Rs.4.55 crores is also sought to be withdrawn on the  ground  that
the same was made under a mistake. It is evident that the  company  and  its
Directors have been despite promises made on their behalf committing  breach
of such assurances on one pretext or the other.

11.   Thirdly, because there is  nothing  before  us  to  suggest  that  the
company and its Directors are incapable of  raising  funds  for  liquidating
the outstanding liability  towards  dues  payable  to  the  farmers.
 Simply
because the sugar factory has been attached, is no reason for us  to  assume
that the company or its Directors are  in  any  financial  distress  thereby
disabling them from making the payments  recoverable  from  them.  The  fact
situation in the -present case is, therefore, completely different from that in  Jolly  George
Varghese case (supra) relied upon by Mr. Ram Jethmalani.

12.   In the light of the above, we see  no  compelling  reason  for  us  to
interfere with the order passed  by  the  High  Court  in  exercise  of  our
extraordinary jurisdiction. We regret to say that the  amounts  due  to  the
farmers towards price of the sugarcane and incidentals remains  to  be  paid
to them for several years in the past thereby  accumulating  huge  liability
against the company.  That  is  not  a  happy  situation  nor  can  repeated
invocation of the process of law by the appellant be a remedy for it.

13.   The appeal is devoid of merit and is accordingly dismissed.



                                                  …………………………….J.
                                             (T.S. Thakur)




                                             ……………………………J.
                                             (C. Nagappan)
New Delhi;
January 24, 2014.




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