1986 (4) TMI 289 - HC - Companies Law

High Court asserts jurisdiction over industrial license dispute, orders transfer and supply of imported oil

Balaji Vegetable Products (P.) Ltd. Versus Union of India

Balaji Vegetable Products (P.) Ltd. Versus Union of India - [1989] 65 COMP. CAS. 134 (KAR.) Issues Involved:1. Jurisdiction of the High Court.2. Substitution of the petitioner's name in the industrial license.3. Entitlement to the supply of imported oil quota.Detailed Analysis:Point No. 1: Jurisdiction of the High CourtThe petitioner argued that part of the cause of action arose within the jurisdiction of the Karnataka High Court. The petitioner's head office is in Bangalore, and communications regarding the substitution of the petitioner's name in the industrial license were addressed to and from Bangalore. The court noted that the registered office of the petitioner is in Bangalore, and under Section 15A of the Industries (Development and Regulation) Act, 1951, the High Court with jurisdiction over the location of the registered office has the authority to investigate matters concerning the industrial undertaking. The court concluded that a part of the cause of action had indeed arisen within its jurisdiction, as several relevant communications were sent to and from Bangalore, and the impact of the refusal to endorse the change in ownership was felt at the petitioner's registered office in Bangalore. Therefore, the court held that it had jurisdiction to hear the case.Point No. 2: Substitution of the Petitioner's Name in the Industrial LicenseThe petitioner sought to have its name substituted in the industrial license for the manufacture of vanaspati. The court acknowledged the existence of an agreement for sale between the petitioner and the third respondent, which was undisputed. The agreement, receipt of part payment, and delivery of possession were all admitted by the respondents. The court examined the definition of 'owner' under Section 2(f) of the Act, which includes the person having ultimate control over the affairs of the undertaking. The court found that the petitioner had the ultimate control over the industrial unit and possession had been handed over. Despite the pending suit for specific performance, the court held that the petitioner was entitled to have the change in ownership endorsed in the license as per Rule 19A of the Registration and Licensing of Industrial Undertakings Rules, 1952. The court emphasized that the Act and Rules focus on the control and management of the unit rather than absolute ownership. Thus, the court directed the respondents to transfer the industrial license in favor of the petitioner, subject to the outcome of the pending civil suit.Point No. 3: Entitlement to the Supply of Imported Oil QuotaGiven the findings on Point No. 2, the court held that the petitioner was entitled to the supply of the prescribed quota of imported oil required for the manufacture of vanaspati at the Sitapur unit. The court directed the petitioner to file an application before the second respondent for any dues in the supply of imported oil from January 30, 1976, onward. The second respondent was instructed to decide on this application within four months. Additionally, the court directed the second respondent to supply the prescribed quota of imported oil to the petitioner from the date of the judgment onwards, in accordance with the relevant rules and regulations.Conclusion:The writ petition was allowed with the following terms:1. The communication dated February 3, 1977, refusing the change in ownership was quashed.2. Respondents were directed to transfer the industrial license to the petitioner, subject to the pending civil suit's outcome.3. The petitioner was permitted to file an application for any dues in the supply of imported oil, which the second respondent must decide within four months.4. The second respondent was directed to supply the prescribed quota of imported oil to the petitioner from the date of the judgment onwards.5. The order must be complied with within four months, and the reliefs and directions are subject to the ultimate result of the pending civil suit.6. The order does not preclude the parties from seeking other interim orders in the pending civil suit.