Supreme Court of India

DIAMOND PLASTIC INDUSTRIES ETC.versusGOVERNMENT OF ANDHRA PRADESH AND ORS.

Citation: 1997 INSC 512
Decided: 9 May 1997
Disposal: Disposed off
Bench: K RAMASWAMYD P WADHWA

Holding

The BIFR's decision binds the parties and the State Government is obligated to implement its direction regarding payment to the appellants.

Summary

The appellants, Diamond Plastic Industries and others, set up an ancillary unit for watch components under the Ancillary Development Programme of Hyderabad Allwyn Limited, a state government undertaking. A dispute arose over the amount payable to them, leading to a writ petition in which the High Court directed the government to appoint a Plant Level Committee and issued a mandamus against HAL. The Division Bench altered the mandamus to be directed at the State Government. Subsequently, HAL was declared a sick industry and the matter was referred to the Board for Industrial and Financial Reconstruction (BIFR), which took over the watch manufacturing division and issued a binding decision on assets, liabilities and payment. The appellants claimed the balance amount beyond the Rs.27 lakhs already paid, asserting that the State Government is bound to implement the BIFR's direction. The Supreme Court held that the BIFR's decision is binding on the parties and the State Government must comply, disposing of the appeals.

Issues considered

Whether the State Government is bound to implement the direction of the Board for Industrial and Financial Reconstruction (BIFR) concerning payment to the appellants.
Whether the reduction in the price of the watch components from Rs.5.81 to Rs.2.48 is legally valid.
Whether a mandamus should be issued against the State Government instead of Hyderabad Allwyn Limited.

Subjects

ancillary industryBIFRsick industrymandamuspayment disputestate government undertakingBoard for Industrial and Financial Reconstructionimplementation of guidelinesprice reduction

Judgment

A                   DIAMOND PLASTIC INDUSTRIES ETC.
                                         v.
             GOVERNMENT OF ANDHRA PRADESH AND ORS.

                                   MAY 9, 1997

B                 (K. RAMASWAMY AND D.P. WADHWA, JJ.]

          Sick industry-Taken over by State Govemment-Decision of BIFR
    regarding payment-Binding 011 the pa1ties-Payment pending to party-State

c
    Government directed to implement the direction issued by BIFR.
                                                                                  ....
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3629 of
    1997.

         From the Judgment and Order dated 23.4.94 of the Andhra Pradesh
    High Court in W.A. No. 16293 of 1992.
D
            Narasimha P.S. Rina N. and V.G. Paragasam for the Appellants.

            A.T.M. Sampath, Y.P. Rao and T. Anil Kr. for the Respondents

            The following Order of the Court was delivered :
E
            Leave granted.

            These matters are disposed of by a common order.

            While adopting the revised and updated guidelines for the implemen-
F tation of Ancillary Development Programme by the Public Sector
  Enterprises, by proceedings dated October 3, 1979, the Hyderabad Allwyn
  Limited which has been a State Government undertaking, invited applica-
  tions from the entrepreneurs to set up various ancillary industries for
  supply of required goods. The appellants have set Up ancillary unit for
G supply of watch boxes, watch strips and dial holding rings. There was a
  dispute as regards the payment of the amount and the resultant liability.
  In regard thereto, a writ petition came to be filed in the High Court.
  Learned Single Judge by his judgment dated January 19, 1988 directed the
  Government to appoint Plant Level Committee and follow the enforceable
  guidelines issued thereunder; ancillary industries are the units coming
H within the Scheme; and, therefore, the recommendations of the Plant Level
                                      380
        DIAMOND PLASTIC IND. ETC. v. GOVT. OF ANDHRAPRADESH 381

    Committee should be enforced. Accordingly, a mandamus was issued to             A
    the Hyderabad Allwyns Limited (HAL). Feeling aggrieved by that order,
    the appellants filed a writ appeal. The Division Bench by its order dated
    March 15, 1991 while upholding that the findings given by the learned
    single Judge, directed that inst.ead of HAL mandamus be issued to the
    State Government to comply with the direction issued by the Single Judge.       B
    It would appear that prices of DHR were reduced from Rs. 5.81 to Rs.
    2.48 the appellants felt aggrieved and contend that the reduction is bad in
    law. It is not in dispute that since subsequently HAL became sick industry,
    the matter was referred to the Board for Industrial and Financial


-   Reconstruction which has gone into that question. M/s. Voltas Ltd. has
    started functioning after take over of all the units except watch manufac-
    luring Division which was taken over by the State Government with regard
    to the respective assets and liabilities. The decision of the BIFR binds the
                                                                                    C


    parties. We are informed that Rs. 27 lacs have already been paid to the
    appellants. The appellants are claiming the balance amount, whatever be
    the liability, as per the undertaking before the BIFR that binds the parties;   D
    the State Government is also bound to implement the direction issued by
    the BIFR.

           The appeals are accordingly disposed of. No costs.

    G.N.                                                   Appeals disposed of.

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