TaxTMI 
TaxTMI 
1998 (9) TMI 657
X X X X Extracts X X X X
X X X X Extracts X X X X
....rnment of India to YKK. Accordingly, YKK through its subsidiary company m/s YKK Zippers, Singapore (p) Ltd., the third respondent set up integrated plants at Bawal in Haryana. (2) The petitioners claiming to be the members of various trade unions operating in the companies engaged in manufacture of zip fasteners have filed this Writ Petition under Article 32 of the Constitution of India seeking mandamus to quash the permission granted to YKK for setting up "INTEGRATED PLANTS" for manufacturing metallic and non-metallic zip fasteners in India. In addition to this prayer, a Writ of Mandamus is also sought to set aside the Notification No.S.O. 309(E) dated 30th May, 1986 and for declaration that new industrial policy of 1991 is in violation of the Industries (Development and Regulation) Act, 1951 (for short 'the Act'). First respondent is the Union of India and the second respondent is Foreign Investment Pormotion Board (FIPB). (3) It is alleged by the petitioners that zip fasteners and its components were being manufactured in India since 1949. eversince 1971 the manufacturing of zip fasteners has been reserved exclusively for the small scale sector. Zip fasteners are b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der dated February 28, 1997. The Special Leave Petition was allowed to be withdrawn by this Court. (5) Zipper Association of India than filed Civil Writ Petition No. 3297 of 1975 in the High Court of Delhi, at New Delhi under Article 226 of the Constitution of India challenging the New Industrial Policy, 1991 and office Memorandum No.9(90)/91-FC (1) dated 22.8.1991. There was also a challenge to the Notification No.309/E dated 30.05.1986. In these proceedings respondent Nos.3 and 4 were arrayed as respondents. The High Court of Delhi vide its judgement and order dated 1.7.1996 dismissed the writ petition. Special Leave Petition (C) No.1952 of 1996 was also dismissed by this Court on 15.7.1997. The present Writ Petition was filed on September 23, 1996 under Art.32 of the Constitution of India by Zippers karamchari Union and it was tagged and heard along with Special Leave Petition. This Court by its order dated 12.8.1997 admitted Writ Petition for final disposal but dismissed the Special Leave Petition. It is in this backdrop we have to examine various challenges led by the petitioners in this Writ Petition. The third and fourth respondent are thus required to face the second rou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s intent is quite clear that the zip fasteners (metallic and non-metallic) were reserved for small scale industry under Section 29-B(2B) read with Entry 38(3) in the Schedule of the Act. But however, the Central Government may constitute an Advisory Committee consisting of such persons as have in the opinion of the Government necessary expertise to give advice on that matter. The question that needs to be considered is as to whether the Notification dated 30.5.1986 issued under the Act is valid and sustain role. The relevant portion of the said Notification reads as under:- Against Sl.No.148, for the entries in the second and third columns, the following shall be substitute namely:- "30391301 Zip fasteners non-metallic except in the case of integrated plants manufacturing all components". Against Sl.No.387, for the entries in the second and third columns, the following shall be sustituted, namely:- "34090601 Zip Fasteners metallic except in the case of integrated plant manufacturing all components". (8) From the preamble of the notification itself, it is quite clear that in view of the recommendations made by the Advisory Committee constituted under sub-section 2-B of S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thought it fit to accept the same and consequently the Notification came to be issued on May 30, 1986. (13) The Bombay High Court after considering the ambit of sub-section (2B) of Section 29-B and Sections 10, 11, 11-A and 13 of the Act held that the Notification dated 30th May, 1986 was not violative of any of the provisions of the Act. This dereservation is holding the field since then. (14) It was then contended by Mr. Shanti Bhushan, Learned Senior Counsel that the Notification dated may 30, 1986 issued by the Central Government is arbitrary, irrational and discriminatory. This Notification has brought about an artificial classification in the small scale units and an integrated plant which is violative of Guarantee of Equality contained in Article 14 of the Constitution of India. The said Notification is totally detrimental to the small scale units which are manufacturing zip-fasteners (metallic and non-metallic). In our considered view, there is no substance in this submission because the integrated plant is a class by itself and totally different from the small scale industry which is engaged in manufacturing zip fasteners metallic and non-metallic. The submission raised....
X X X X Extracts X X X X
X X X X Extracts X X X X
....YKK to set up an integrated plant for manufacturing zip fasteners (metallic and non-metallic) with its hundred percent equity capital without any export obligation. He submitted that grant of such permission to YKK would mean that they can expand the industry as they like. They could also use the sophisticated machinery where minimal labour is needed. The production would be on huge scale and resultantly thousands of labourers engaged in the small scale units in manufacturing zip fasteners (metallic and non-metallic) would be rendered jobless and that is how the petitioner would be vitally affected in a very immediate near future. In a social welfare state and particularly India being a developing country when labour is available in abundance who are equally competent to meet the needs of the country in producing zip fasteners (metallic and non-metallic), their talent will go waste and they would be rendered jobless. He, therefore , urged that the Notification dated May 30, 1986 must be struck down. To supplement this submission, he drew our attention to the statement on Industrial Policy of Government of India and in particular paragraph 30-B (I), (III) and (V) which read as under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Policy. He however, conceded that expression and used in Clause V "............. access to high technology and world markets" could be read as 'or' yet the approval granted to YKK to start integrated plant for manufacture of zip fasteners (metallic and non-metallic) would be totally opposed to the Industrial Policy of Government of India. This submission again does not appeal to us. Because it has come on the record that YKK has acquired a world wide reputation in the manufacture of zip fasteners (metallic and non-metallic). Mr. Hiroshi Mitani, Managing Director of 4ht respondent in his affidavit dated July 31, 1997 has highlighted the salient features of YKK corporation in the field of manufacturing zip fasteners all over the world. It is stated "YKK have the would richest variety of items which are required by customers. YKK Zippers are produced by using high technology. The chart prepared with the nucleus technology along with new technology is annexed as Annexure "B". In paragraph 14, it is stated "a large number of Indian exporters, manufacturers etc. are already using Zippers made by YKK to meet the standard required in International Market. In the domestic market ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aring in the affidavit of Shri Hiroshi Metani in paragraph 12 is contested on behalf of the petition ers contending that many of these Indian companies have been rendered non-functional because of variety of reasons. But, however, the fact rema ins that some of the Indian companies have started integrated plants for manufacture of metallic and non-metallic zip fasteners, Whether they are successful in their attempt Orr not is really not a devisive factor. In this behalf, it is really not a decisive factor. In this behalf, it is also necessary to highlight the ratio between the production and requirement of zip fasteners (metallic and non-metallic) in India. In paragraph 7, Shri Hiroshi Mitani has stated that in 1997, the production of YKK was 2.2 corer pieces . The said figure was calculated on the basis that Indian Market size is abo ut 100 crore pieces. Therefore, YKK production was 2-3% of the Indian Market in the year 1997. In 1998 onwards the production of YKK is going to be 9.2 crore pieces i.e. 9-10% of the local market. There is no effective denial to t his statement in the rejoinder filed on behalf of the petitioners and if this fact has any bearing upon the factual sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such a note. Shri Om Prakash, Deputy Secretary to the Government of India. Ministry of Industry, in his affidavit has stated: "........... A copy of a note allegedly signed by the then Minister of State for Industry, dated 5-9-1995 has been filed from which it appears that Shri M.Arunachalam on 5-9-1995 as the then Minister of State for Industry had recommended that the permission granted to MS. YKK Corporation be amended to include a 75% export commitment. In this connection, I submit that the file in which this note is said to have been written by the then Minister of State for Industry is not available in the concerned office, i.e. Office of the Development Commissioner for Small Scale Industries. I am making this submission on the basis of communication No. 9(10)/95-Chem. dated 22-7-1997 from the office of the Development Commissioner for Small Scale Industries." (24) He further stated that the Industry Minister is a cabinet rank minister and a note made by the Minister of State can only be his viewpoint/recommendation to the Industry Minister who has to take a final decision on such recommendation. The grant of approval to MS YKK Corporation with the approval of the Empo....