w w w . L a w y e r S e r v i c e s . i n



The Government of Karnataka, Bangalore & Another v/s The Indian Plywood Manufacturing Company Limited


Company & Directors' Information:- INDIAN PLYWOOD MANUFACTURING COMPANY PRIVATE LIMITED [Active] CIN = U20100MH1944PTC004192

Company & Directors' Information:- R K MANUFACTURING CO LTD [Active] CIN = L27209WB1984PLC037758

Company & Directors' Information:- R K MANUFACTURING CO LTD [Active] CIN = L27209GJ1984PLC098951

Company & Directors' Information:- INDIA MANUFACTURING CORPORATION PRIVATE LIMITED [Active] CIN = U24100DL2010PTC198947

Company & Directors' Information:- S I A MANUFACTURING PRIVATE LIMITED [Active] CIN = U74120UP2013PTC057004

Company & Directors' Information:- S K M MANUFACTURING PRIVATE LIMITED [Active] CIN = U17200DL2011PTC223768

Company & Directors' Information:- S T S MANUFACTURING PRIVATE LIMITED [Active] CIN = U28112TZ2006PTC012940

Company & Directors' Information:- M P PLYWOOD LIMITED [Under Liquidation] CIN = U20211DL1981PLC011451

Company & Directors' Information:- D K PLYWOOD PRIVATE LIMITED [Active] CIN = U20211RJ1986PTC003702

Company & Directors' Information:- A S P MANUFACTURING COMPANY PVT LTD [Active] CIN = U27109WB1991PTC051461

Company & Directors' Information:- A K MANUFACTURING PVT LTD [Active] CIN = U51909MN1988PTC003110

Company & Directors' Information:- I T A C (INDIA) MANUFACTURING CO LTD [Dissolved] CIN = L51109WB1982PLC034689

Company & Directors' Information:- D D PLYWOOD PVT LTD [Active] CIN = U36101DL2001PTC110376

Company & Directors' Information:- B M PLYWOOD PRIVATE LIMITED [Active] CIN = U20211HR1995PTC032603

Company & Directors' Information:- J D MANUFACTURING CO PVT LTD [Active] CIN = U51909WB1996PTC079825

Company & Directors' Information:- G L PLYWOOD PVT LTD [Active] CIN = U20299WB2006PTC107811

Company & Directors' Information:- A S P MANUFACTURING COMPANY PVT LTD [Not available for efiling] CIN = U36900WB1991PTC005146

Company & Directors' Information:- B R D MANUFACTURING PRIVATE LIMITED [Active] CIN = U51109WB1997PTC085188

Company & Directors' Information:- S S PLYWOOD PRIVATE LIMITED [Strike Off] CIN = U51101DL2009PTC191270

Company & Directors' Information:- R J S MANUFACTURING PRIVATE LIMITED [Active] CIN = U27104DL1997PTC090521

Company & Directors' Information:- B U MANUFACTURING PVT LTD [Active] CIN = U51109WB1982PTC035271

Company & Directors' Information:- M M MANUFACTURING PVT LTD [Active] CIN = U26922WB1993PTC059837

Company & Directors' Information:- J. C. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U21099WB2020PTC236821

Company & Directors' Information:- S B MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U31506WB1999PTC088567

Company & Directors' Information:- K. V. J. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U29308DL2017PTC320213

Company & Directors' Information:- A T E MANUFACTURING CO PRIVATE LIMITED [Amalgamated] CIN = U28999GJ1973PTC002296

Company & Directors' Information:- J P MANUFACTURING AND CO PVT LTD [Strike Off] CIN = U51226WB1982PTC034927

Company & Directors' Information:- D. K. MANUFACTURING (INDIA) LIMITED [Strike Off] CIN = U37200WB2011PLC170403

Company & Directors' Information:- S M MANUFACTURING COMPANY PRIVATE LIMITED [Active] CIN = U34300HR1997PTC057824

Company & Directors' Information:- G K MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U34300PB2012PTC036073

Company & Directors' Information:- P & B MANUFACTURING PRIVATE LIMITED [Active] CIN = U29254TN2010PTC076696

Company & Directors' Information:- B. V. H. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U74999GJ2018FTC100633

Company & Directors' Information:- KARNATAKA PLYWOOD PRIVATE LIMITED [Active] CIN = U20219KA1981PTC004158

Company & Directors' Information:- R A MANUFACTURING COMPANY PRIVATE LIMITED [Strike Off] CIN = U36900HR2012PTC047669

Company & Directors' Information:- J M B PLYWOOD P LTD. [Strike Off] CIN = U00271BR1990PTC004238

Company & Directors' Information:- D S PLYWOOD PVT LTD [Strike Off] CIN = U02001WB1978PTC031750

Company & Directors' Information:- G. M. PLYWOOD PRIVATE LIMITED [Active] CIN = U20219PB2009PTC032597

Company & Directors' Information:- N R PLYWOOD PRIVATE LIMITED [Active] CIN = U20219PB2014PTC039003

Company & Directors' Information:- A K R MANUFACTURING PRIVATE LIMITED [Active] CIN = U19200RJ2012PTC041177

Company & Directors' Information:- C N C MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U64204DL2015PTC281449

Company & Directors' Information:- N D PLYWOOD PRIVATE LIMITED [Strike Off] CIN = U20211PB1998PTC021756

    Regular Second Appeal No. 444 of 2016 (MON)

    Decided On, 08 July 2016

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE B. VEERAPPA

    For the Appellants: V. Shivareddy, High Court Government Pleader. For the Respondent: ------



Judgment Text

B. Veerappa, J.

1. This is the plaintiffs’ regular second appeal against the judgment and decree dated 27-8-2012 passed in R.A. No. 4 of 2009 by the District Judge, Madikeri reversing the judgment and decree dated 30-9-2008 passed in O.S. No. 49 of 2000 by the Civil Judge (Senior Counsel), Madikeri decreeing the suit for recovery' of Rs. 2,88,684/- with costs of the suit and also the interest at the rate of 9% per annum from the date of the decree till its realisation.

2. The appellant-State Government, who is the plaintiff before the Trial Court had filed suit for recovery of Rs. 7,54,222.30 ps., with interest at the rate of 18% per annum from the date of the suit till its realisation against the defendant contending that plaintiff 1 is the Chief Secretary, Vidhana Soudha, Bengaluru and plaintiff 2 is the Deputy Conservator of Forests, Madikeri Division, Madikeri. The defendant is the wood based industry to which the Government of Karnataka supplies raw materials (wood) on the basis of agreement executed by the defendant and the Chief Conservator of Forest, Bengaluru on behalf of the Government of Karnataka. The rates of the materials supplied are fixed by the Government of Karnataka from time to time. By Act 1 of 1981, Section 101-A of the Karnataka Forest Act came to be inserted and as per the said section irrespective of agreement of lease or any other document providing supply of timber and other forest produce, the holder of such lease or agreement or any other document shall pay for such supply of timber and other forest produce at the seigniorage value specified in the Rules made or Orders passed by the Competent Authority.

3. It is also the case of the plaintiffs that the State Government by a notification dated 19-3-1981 has revised the seigniorage rate of several categories of timber and other forest produces. However, several wood based industries including the defendant made representation to the Government to reconsider the rate structure. Taking into account of such representations, the Government of Karnataka constituted an official committee to go into the question of revision of seigniorage rate and also to advise the Government thereon. In the meanwhile, the industry including the defendant-industry were allowed to remove the forest produce at the previous rates on 23-2-1981 and an undertaking was given by the defendant-industry and other industries to the effect that they will pay the value of the materials removed after 23-2-1981 at the rates finally fixed by the Government.

4. After taking into consideration the recommendation of the Committee, the Government of Karnataka has revised the seigniorage rate of the entire kinds of wood with effect from 29-6-1982. As per the Order dated 29-6-1982 of the Chief Conservator of Forests, subsequently by the validation clause introduced in Karnataka Act 11 of 1984 published in Karnataka Gazette, Extraordinary, dated 14-6-1984 it was deemed to have been validly made under the provisions of Section 101-A of the Karnataka Forest Act, 1963 with effect from 23-2-1981.

5. It is the further case of the plaintiffs that the wood based industries including the defendant-industry have further represented to the Government of Karnataka for granting them instalment for payment of differential value for the materials removed from 23-2-1981 to 28-6-1982. The Government of Karnataka ordered that the differential value shall be recovered in five equal annual instalment commencing from the financial year 1985-86 with interest at 5% per annum from 23-2-1981 to 13-1-1984 and to 10% thereafter.

6. Tire defendant-industry is one of such wood based industry to which wood was supplied from Madikeri Division during the above said period and total differential value along with all taxes for the material supplied during the above said period has been explained in detail thus:

"The total differential value of the timber so supplied by the plaintiffs to the defendant was Rs. 2,66,518.74. Out of which the defendant paid a sum of Rs. 60,140.60 and the balance to be paid is Rs. 2,06,378.14 So, the defendant is liable to pay a sum of Rs. 1,45,304.42 towards interest. Out of which the defendant paid a sum of Rs. 79,508.45. The balance towards interest payable by the defendant is Rs. 65,795.97. Thus, the defendant is also liable to pay a sum of Rs. 64,817.60 towards forest development taxes, a sum of Rs. 39,102.63 towards sales tax and other charges. Thus, the defendant is totally liable to pay a sum of Rs. 3,78,127.96 towards penal interest. All the above said sums are remained unpaid by the defendant. Thus, the defendant is totally liable to pay a sum of Rs. 7,54,222.30."

Thus the defendant is totally liable to pay a sum of Rs. 7,54,222.30 ps., and in spite of repeated demands and notices issued by the plaintiffs, the defendant has failed to pay the instalment payable to the plaintiffs. Hence, the plaintiffs were constrained to file the suit.

7. The defendant filed the written statement contending that the suit filed by the plaintiffs is not maintainable. The averments made in paras 2 and 3 of the plaint with regard to the notification dated 19-3-1981 and 19-2-1981 were admitted. It was further contended that because the revision was arbitrary, representation was made to the defendant to consider the rate structure as well as its applicability so far as agreement already executed is concerned. It was his further contention that the Official Committee was constituted by the Government of Karnataka to go into the question of revision of seigniorage rate and to advise the Government thereof. Pending findings by the Official Committee, the defendant as well as such similar industries were allowed to remove the forest produces prior to 23-2-1981 rate and also admitted that an undertaking was given by it to pay the value of the materials so removed after 23-2-1981 and other averments were denied. It is the further case of the defendant that itself as well as other similarly situated industries filed writ Petition No. 37964 of 1982 challenging the notification dated 23-2-1981 which was subsequently withdrawn assuming that the plaintiffs would keep up the promise made. It was also denied that the plaintiffs supplied timber valued at Rs. 2,66,518.74 ps. and the balance payable by the defendant was Rs. 2,06,378.14 ps. The defendant further contended that it is not liable to pay any amount towards interest and other charges and specifically contended that the suit filed by the plaintiffs is liable to be dismissed as the suit itself is not maintainable, etc.

8. Based on the aforesaid pleadings, the Trial Court framed the following issues:

"1. Whether the plaintiffs prove that the suit claim to the tune of Rs. 7,54,222.30?

2. Whether the defendant proves the claim made by the plaintiffs is not in accordance with the guidelines issued by the Hon'ble High Court in W.P. Nos. 15778 to 15789 of 1988?

3. What order or decree?

Additional Issue:

1. Whether the defendant proves that suit is not maintainable for the reasons stated in para 17 of written statement?"

9. In order to substantiate their claim, the plaintiffs examined one Sri Sudarshan G.A., as P.W. 1 and produced the documents-Exs. P.1 to P.12. The Deputy General Manager of the defendant by name Sri S.D. Mankikar is examined as D.W. 1 and Exs. D. 1 to D. 6 are marked.

10. After considering the entire material on record, the Trial Court recorded a finding that the plaintiffs have proved the suit claim to the tune of Rs. 2,88,684/- and the defendant has failed to prove the same. The claim made by the plaintiffs is not in accordance with the guidelines issued by this Court in W.P. Nos. 15778 to 15789 of 1988. It was further held that the defendant has failed to prove that the suit is not maintainable for the reasons stated at para 17 of its written statement. Accordingly, the Trial Court decreed the suit in part granting decree for a sum of Rs. 2,88,684/- with interest at 9% per annum from the date of the decree till the date of realisation.

11. Aggrieved by the said judgment and decree, the defendant filed R.A. No. 4 of 2009 before the District Judge at Madikeri, who after hearing both the parties, by the impugned judgment and decree dated 27th August, 2012 allowed the appeal and set aside the judgment and decree of the Trial Court holding that in view of the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, the very suit filed by the plaintiff is not maintainable by relying upon the dictum of the Hon'ble Supreme Court in the case ofTata Motors Limited v. Pharmaceutical Products of India Limited and Another 2008 AIR SCW 4651against which judgment and decree, the present appeal is filed.

12. I have heard the learned Counsel for the appellant.

13. Sri V. Shivareddy, learned High Court Government Pleader appearing for the appellants/plaintiffs contended that the lower Appellate Court has accepted the contentions of the defendant that the suit is not maintainable in view of the fact that the appellants/plaintiffs have not obtained sanction from Company Board. The recovery suit was filed in the year 2000 and the defendant approached the Company Board during the pendency of the suit and the question of obtaining sanction from the Board does not arise. He further contended that the lower Appellate Court failed to understand the above said fact and has wrongly held that the suit is not maintainable. He also contended that the lower Appellate Court while reversing the judgment and decree of the Trial Court has not considered the material placed on record and thereby proceeded to pass the impugned erroneous judgment and decree. Therefore, he sought to set aside the impugned judgment and decree of the Appellate Court.

14. The respondent served and unrepresented.

15. I have given my anxious consideration to the arguments advanced by the learned Counsel for the appellants and perused the entire material on records.

16. The Lower Appellate Court while reversing the judgment and decree of the Trial Court has formulated the points as contemplated under the provisions of Order41, Rule31of the Code of Civil Procedure, 1908 which read as under:

1. Whether finding has been given by the Trial Court on additional issue 1 is justified?

2. If not, is it open to this Court to give a finding on additional issue for the first time?

3. Whether the suit is maintainable in view of Section 22 of SICA?

4. If the suit is not maintainable is it open to the Court to enter into the merits of the case?

5. Whether the impugned judgment and decree calls for interference?

17. While answering Point No. 1, the Lower Appellate Court held that in the written statement at para 17 it is stated that the suit is not maintainable in view of the provisions of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short hereinafter referred to as 'the Act') but the Trial Court has given a caption as reasons for additional issue 1 in para 8 of its judgment by referring to an altogether different aspect of the matter. It has not given any finding on additional issue 1. In no other part of the judgment, the plea with regard to maintainability of the suit under the provisions of Section 22(1) of the said Act is considered by the Trial Court and accordingly, held that in view of the provisions of Section 22(1) of the said Act, the very suit is not maintainable.

18. While dealing with Point No. 2, the Lower Appellate Court recorded a finding that the plea regarding maintainability of the suit being a question of law which no doubt involves some factual aspect, certainly it is open for it to give a finding on that issue for the first time even though the Trial Court has not given a finding. Accordingly, it held that it is open for it to give a finding on additional issue in the affirmative.

19. The Lower Appellate Court while considering the provisions of Section 22 of the said Act as to whether the suit is maintainable and answering Point No. 3 recorded a finding that D.W. 1 has stated in his further chief-examination on 12-3-2007 that the industry is considered as sick industry and in this regard, he has produced the documents-Exs. D. 3 to D. 6. Ex. D. 3 is the certified copy of the letter written by the Registrar of the Board for Industrial and Financial Reconstruction to the defendant which discloses that letter of the defendant bearing No. SEC/IPM/BJFR, dated 23-5-1985 had been received on 26-5-1995 and the same was registered as Case No. 53 of 1995. Ex. D. 5 is a summary record of proceedings of hearing held by the Board on 25-1-2001. In the entire cross-examination, no where it is suggested to D.W. 1 that the defendant is not a sick industry and no reference was made to the Board and no case is registered. In fact no question was put to D.W. 1 with regard to Exs. D. 3 to D. 6 in his cross-examination. Therefore, it is clear that the defendant-industry is treated as a sick industry and therefore, the reference made by it was registered by the Board.

20. The Lower Appellate Court while considering the provisions of Section 22 of the said Act held that the suit is not maintainable in view of the dictum of the Hon'ble Supreme Court in the case of Tata Motors Limited, at para 10 held as under:

"Section 22 of the Act must be interpreted giving a plain meaning to its contents. An enquiry in terms of Section 16 of the Act by the Board is permissible upon receipt of a reference. Thus, reference having been made on 27-12-2001 and the suit having been filed on 17-12-2012, the receipt of a reference just be held to be the starting period for proceeding with the enquiry. The effect of the provisions of the Act has been considered by a Three Judges Bench decision of this Court inTata Motors Limited v. Pharmaceutical Products of India Limited and Another, (2008)7 SCC 619, wherein it, in no uncertain terms, held that SICA is a special statute and, thus, overrides other acts like a Companies Act, 1956 stating:

"31. SICA furthermore was enacted to secure the principles specified in Article 39 of the Constitution of India. It seeks to give a effect to the larger publ

Please Login To View The Full Judgment!

ic interest. It should be given primacy because of its higher public purpose. Section 26 of SICA bars the jurisdiction of the Civil Courts."" 21. In view of the above, the material documents clearly indicates that the defendant-industry is a sick industry which is not in dispute and it is also not denied by the D.W. 1 in his cross-examination. The Lower Appellate Court after reassessing the entire material on record and after following the procedure as contemplated under the provisions of Order41, Rule31of the Code of Civil Procedure, 1908 held that the suit filed by the plaintiff is not maintainable and therefore, the impugned judgment and decree passed by the Trial Court is liable to be set aside. Accordingly, the Lower Appellate Court has allowed the appeal. 22. Admittedly, the material on record clearly depicts that the defendant is a sick industry as per the material documents-Exs. D. 4 to D. 6, which are not disputed by the plaintiff and in view of the provisions of Section 22(1) of tire Sick Industrial Companies (Special Provisions) Act, 1985 and the law declared by the Hon'ble Supreme Court in the case of Tata Motors Limited, stated supra. Tire impugned judgment and decree passed by the Lower Appellate Court recording a finding of fact that the suit is not maintainable is based on the legal cogent evidence on record and is in accordance with the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. No substantial question of law is involved in the present appeal. Accordingly, the appeal is dismissed at the stage of admission.
O R